Tuesday, April 5, 2011

WSJ: "As Grubb Struggles, Its Chief Weighs Options"

A long article in WSJ today about the difficulties at Grubb & Ellis. A must-read if you are following the GBE trade. This paragraph echoes one of my early observations about these human services firms:

In recent years, in a bid to boost its brokerage business, Grubb has increased the "split," the percentage of commissions that brokers get to keep. The firm hoped to attract better brokers by offering them roughly 65%, compared with the 50% to 55% being offered by other firms. But the move cut into the firm's profits.
Right. It doesn't take that much capital to start a brokerage firm, which means that the employees have quite a bit of negotiating leverage to demand higher splits.

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