The merger of property advisory business Cushman & Wakefield with DTZ Zadelhoff creates a new Dutch market leader and C&W's largest unit on the Continent.
After several months of negotiations, in mid-November it emerged that Cushman & Wakefield will merge its Dutch business with DTZ Zadelhoff under the C&W banner. The 13 partners of DTZ Zadlhoff are selling their participations for an unknown sum to the international advisor. The move will create the largest real estate advisor in the Netherlands with 575 employees working for banks, institutional and private investors, developers and users of commercial real estate. C&W has its headquarters in the Atrium building (pictured) in the Zuidas business district of Amsterdam.
The name DTZ Zadelhoff, a well-known institution in the Dutch real estate advisory sector since the end of the 1960s, will disappear following the merger. That does not mean that the name will necessarily disappear altogether from the Dutch property scene: the founder of DTZ Zadelhoff, Cor van Zadelhoff, who was bought out of the partnership last year, continues to have the rights to the name Zadelhoff.
After the international arm of DTZ was renamed Cushman & Wakefield in spring 2015 and talks with the Dutch partnership DTZ Zadelhoff in which C&W had a stake were initiated from London, there was a lot of speculation about who would take the lead. Given the larger size of DTZ Zadelhoff, it seemed that the partners in the organisation, led by Jeroen de Bruijn, would play a key role in the new Dutch entity. However, the honour went to C&W's Dutch head Jeroen Lokerse as a tribute to the role he played in building up the Dutch C&W team.
Support from Brett White
Lokerse received the support of the team around Brett White, the former CEO of CBRE until 2012, who has played a role in C&W's expansion since the beginning of 2015. Under White’s leadership, CBRE evolved into the biggest real estate advisor in the world and he aims to repeat this feat by strengthening C&W and turning it into a fully fledged competitor of CBRE ahead of an expected IPO in 2017 or 2018.
Prior to the merger with C&W, DTZ Zadelhoff worked in a partnership structure with 14 partners, of whom 13 will take part with limited liability. Eleven of the partners will join C&W as salaried employees while two of the partners, Frans van Hoeken and Loek van der Kroft, have decided to pursue their careers outside the company.
It took awhile before the takeover in the Netherlands was realised. At the beginning of this year, DTZ Zadelhoff and C&W announced that they had failed to come to an agreement in the Netherlands even though the international merger had already been implemented. Lokerse: 'But it was already clear then that we wanted to come to an agreement. After all, C&W had a significant interest in DTZ Zadelhoff, so a sale to a third party was not a logical course.'
The logic of a takeover of DTZ Zadelhoff, given their strong position on the Dutch market, remained clear. 'Globalisation is a megatrend in the market, and the wave of consolidation among real estate advisors continues. DTZ Zadelhoff and C&W are to a large extent complementary and together can stand up to the challenge of international trends while remaining dominant on a local and regional level,' Lokerse told PropertyEU's sister publication PropertyNL in a recent interview.
Strong starting position
Lokerse and his team have a strong starting position against the background of the Dutch company that he has helped build up in the past few years. 'When I joined eight years ago, C&W was essentially an English company in the Netherlands. I said: we are a Dutch company with an international platform.'
While C&W was focused strongly on international clients in the past, the company succeeded in building up a position among Dutch private clients as well. During the past few years C&W Netherlands took on a range of new staff and earlier this year, the company made waves with the expansion of its valuation and advisory team with 12 senior valuers, all of them originating from ING.
Lokerse claims there are great opportunities to create value from the takeover of DTZ Zadelhoff because the latter was forced to defend its decade-long dominance in the Netherlands, whereas C&W was driven primarily by gaining market share by differentiating itself through quality and reputation. 'For us, being big is not a goal in itself. We do want to be the market leader worldwide though. That doesn’t mean we want to be the biggest, but we do want to be the best, with the best people, because that leads to the best valuation of our services by our clients.'
DTZ Zadelhoff’s profit margins are lower than those of C&W, because of the difference in economies of scale, but also in the focus and organisational structure. Lokerse: ‘They did well in terms of turnover, but had to watch the costs very closely. DTZ Zadelhoff was already trying to remedy this situation over the past few years by making the organisation more efficient and by putting more focus on the core regions.
Greater specialisations
'After the takeover of DTZ Zadelhoff, C&W is the market leader in the Netherlands and the largest advisor within C&W on the European Continent. We can accelerate and create greater specialisations now. One example is valuations, where we have until now been active mainly in the area of banking and investment. We have strengthened our position in the field of portfolio valuations of housing, health, land and council valuations. But we will also look closely at the regions because we can also increase our dominance locally.'
Lokerse explains that in regional markets, too, it is important these days to have a connection with international capital and occupiers markets. Only then is it possible to give good advice to a buyer or seller or to determine the right value as a valuer. 'A company that is only active regionally or internationally won’t make it anymore. Look for example at the retail market which the coming years will be dominated by international retailers and new entrants.'
Asked whether the merger would lead to job cuts, Lokerse said he didn’t have an answer yet, but added that there were no plans for major cutbacks. On the positive side, he said, an ambitious DTZ employee now has far more opportunities and the same applies to the current staff at C&W.
Lokerse sees opportunities for expansion in strategic advice, structured finance, corporations, healthcare, leisure and investment management. At the same time, there are activities that C&W will not do because they are too expensive for the organisation. 'I don't see us renting an industrial warehouse for a company in the southernmost province of the country.'
