(New York-NY) — Town Residential has closed its resale and leasing doors…for good.
On Thursday, April 19th, managers were informed that the 600 agents that called Town Residential their home were now free agents. Then, on Friday, April 20th, the Astor Place office was visited with boxes from Home Depot and agents were asked to start moving out.
But what led to the downfall of this billion dollar firm?
According to TheRealDeal.com, Andrew Heiberger, CEO, and founder of Town Residential was trying to pick up the pieces of the firm’s financial downfall for some time now. On April 16th, he was sued for the nonpayment of $120,000 in rent at the firm’s Upper East Side office. However, the lawsuit isn’t the first sign of financial trouble the firm has seen. The bitter legal battle between Heiberger and company partner, Joseph Sitt, was followed with reports of the firm’s inability to make payments and pay commission to its brokers on time.
In fact, after a sharp rise in 2015, it was named the fifth largest firm in Manhattan, the firm saw a drastic drop with deal volume in Manhattan down 24 percent by 2016.
It was also reported that firm was well known for its annual holiday party that exceptionally expensive and lavish, making it utterly evident money was being spent in all the wrong places.
What does Andrew Heiberger have to say?
This CEO didn’t have many words regarding the closing of TOWN Residential.
“Friday was truly a sad day, many friendships and careers were disrupted by the unenviable decision that had to be made to pivot away from sales and rental brokerage. Everyone that worked at Town, past, and present, all experienced something very special and despite moments of controversy and challenges, the brand held strong.” He said in a tweet last week.
Heiberger said it was the cost of commissions and competitive recruitment climate that ultimately led the decision to close the resale and leasing division of the brokerage.
However, he has stood by his decision to close the division and is proud of the $13.5 billion in real estate deals it has accomplished over the years.
What happens to the agents?
Since Town’s closing last week, rival firms have already claimed more than half of its ex-agents. And, just last week agents received a far from comforting email from the firm saying it would release exclusives to agents’ new firms for a 25 percent referral fee. A let down for many agents who considered TOWN Residential a second home, and the realization that many of them won’t be working amongst each other anymore.
“I loved everyone in my office, and I soon realized, we were about to be scattered. That’s when my heart wasn’t just broken or even shattered; it was shredded. The pain was raw, and it sounds insane that anyone would feel this way about work but this work wasn’t a curse, it was a treasured gift. The love for others was genuine, so it hurt to suddenly and unexpectedly say goodbye.” Says Johnathan Agrelius, a former agent at Town Residential.
What should NYC be expecting in the upcoming future?
Compass is looking to buy out Town Residential’s office in the Flatiron District. A strategic move for Compass. Their CEO, Robert Reffkin says the firm has been looking to increase its NYC presence and is currently valued at $2.2 billion.
Town’s agents have been recruited by Compass, the Corcoran group and many other big-named firms in the city, and though they will be scattered amongst each other the talent they brought to the real estate industry will still be evident.
“I wish it had happened some other way, but in the end, I hope the vision continues as we scatter to other firms.” Says Agrelius as he begins his careful search for his next firm.