Pros/Cons of having your debt team in-house

Most of the major brokerage houses over the years have acquired boutique debt/mortgage brokerage shops. My first guess is that at the corporate level, it makes sense to vertically integrate.

That said, I've heard from brokers that the relationship can sometimes be awkward, where the I/S people are obligated to send deals to the D/E team and and vice-versa. I would love to hear some opinions about this relationship.


Some examples I am thinking of:

Newmark acquired Regency Capital

JLL and HFF (duh)

CBRE has an in-house debt team

Cushman recently formed a partnership with Greystone


MEANWHILE:

There are plenty of outfits that do just fine being independent. 

Just in California, there are George Smith Partners, PSRS, Gantry, BWE, Alison Company.


So what gives? What should a prospective mortgage broker think about in terms of which team to join? 


-thx

 

"supermarket" firms are pretty much common in all forms of finance/real estate/insurance these days. Everyone wants to create "one-stop shopping" so pretty much all major CRE brokerages offer IS, DE, and Leasing, those are "core" of CRE brokerage. Boutique/specialty CRE firms exist because they are small (often spin-offs/people leaving). Really, this is just trend everywhere. Same for acquisitions, big shops are buying smaller shops. Banks did the same years ago, just normal business response to a competitive industry and fundamentally offers commodity service with little real differentiation. 

 

Spot on. 
 

it’s also team/office specific. Sometimes there are egos and sharp elbows, other times there are brokers that truly care about offering their clients the very best service, and they all refer business internally. This is rare though. Most of the time the sales guy doesn’t like the debt guy involved, because if the owner refis then sales doesn’t make as much, etc. Plenty of other scenarios as well, but you get the idea. Really, just get on a team that is run by a rain maker. Doesn’t matter if it’s a boutique or major brokerage. 

 

Can't speak to the sell side, but buy side I see literally no downside to having an in-house debt team assuming your firm is large enough to support the salaries. Debt is far more complex than a lot of people give it credit for, and after moving to a firm with an in-house debt team it quickly became clear how many important factors were being missed by the acquisitions guys at a small shop that was less specialized.

 
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