As an international economic crisis dumps widespread woe on the commercial real estate industry, Los Angeles-based giant CB Richard Ellis Inc. is bracing for trouble.
For decades, it has been the big-dog deal maker and property manager helping hammer together the office core of the nation's downtowns, its far-flung industrial parks and vast shopping districts.
Today, its core business is suffering right along with the property owners it represents who can't sell their buildings and the landlords who are losing tenants.
For a business that works largely on commission, there just aren't so many big transactions -- and less money to go around.
That's evident in its stock price, its layoffs and the sharp skepticism from investors about prospects for the world's largest commercial real estate services company.
Real estate company stocks are being clobbered, and shares of CB Richard Ellis are no exception.
In the last year, its shares have plummeted 75% in value. They closed at $5.05 on Wednesday.
Faced with a contracting real estate market and falling profit, the company has scrambled to cut costs and eke out new revenue sources while acknowledging that times are hard and likely to stay that way for a while.
The company said it had cut $190 million in fixed costs this year, in part through eliminating about 1,100 budgeted positions from a workforce of 29,000, mostly through layoffs and attrition. It reduced other expenses such as travel and marketing. CB also ended its deferred compensation program for managers and sales professionals and will get a $100-million tax deduction in 2009 by stopping the program.
Meanwhile it is still doing big deals. Its brokers arranged a 1.35-million-square-foot lease expansion last week in New York for Viacom Inc. and relocated Taco Bell's 181,000-square-foot headquarters in Irvine last month. On Wednesday the brokerage announced that it won the job of marketing distressed residential and commercial properties taken over by the Federal Deposit Insurance Corp.
The company's largest investor and board chairman is San Francisco financier Richard Blum. Married to Sen. Dianne Feinstein (D-Calif.), Blum led efforts to take the company public in 2004 and now owns almost 15% of its stock.
At the helm is President Brett White, a former broker who runs the company from its headquarters in West Los Angeles.
