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Inside the Cushman & Wakefield-Pinnacle Deal

Marla Maloney

Cushman & Wakefield saw an opportunity to expand its portfolio of services with the acquisition of Pinnacle.

Commercial real estate powerhouse Cushman & Wakefield (NYSE: CWK) is set to become the first of the global real estate services firms to enter the apartment property management business.

Last week, the Chicago-based firm announced that it entered a definitive agreement to purchase Pinnacle Property Management Services, the third-largest multifamily property management firm in the U.S., with more than 169,000 units across 839 properties.

Rick GrafThe apartment management business has undergone significant consolidation during the past decade, highlighted by Greystar's 2015 purchase of Riverstone Residential Group. Discussions around the deal started more than two years ago between Pinnacle CEO and 2020 National Apartment Association (NAA) Chair-Elect Rick Graf, who will lead Cushman & Wakefield's national multifamily property management platform, and Marla Maloney, President, Asset Services for the Americas, Cushman & Wakefield. 

"We started thinking about this concept and getting to know each other and our firms," Maloney says. "You must establish trust and work well together because you're building something no other real estate provider has built before, which requires careful thought to ensure you get it right."

The acquisition, which is subject to customary closing conditions, including the receipt of applicable antitrust approvals, will provide Cushman & Wakefield with the opportunity to expand its portfolio of services.

"Multifamily has become a major institutional investment property class," says Maloney. "We are a full-service firm, but we previously lacked proven expertise in multifamily property management. With the acquisition of Pinnacle, we will have the expert knowledge to further seamlessly execute our clients' investment strategies in the multifamily space and have gained access to long-standing client relationships.

While Cushman & Wakefield looked at other firms, Pinnacle, which ranks behind only Greystar and Lincoln in units managed, offered the size it sought. "Pinnacle's scale and size were differentiators, and we were laser-focused on them," Maloney says.

The acquisition will give Cushman & Wakefield a foothold across 20 multifamily housing markets and will significantly enhance the firm's ability to meet the ever-growing demand for fully integrated real estate services from multifamily housing investors.

Maloney is keeping the door open to expanding beyond Pinnacle's current footprint. "We are committed to being where our clients are," she says. "We understand growth markets and where capital is being placed, and want to be able to deliver services in those markets. So, I think there is a growth opportunity here."

Maloney wouldn't rule out future acquisitions of other management companies, but she says the near-term focus is integrating Pinnacle's platform.

"Right now, we are focused on the closing and planning for a thoughtful integration of Pinnacle into our platform and expanding our presence in existing markets."

Cushman & Wakefield was attracted to Pinnacle's "high-performance" culture, and its current employees should "count on continued dedication to clients," according to Maloney.

"We appreciate and respect Pinnacle's culture of giving back to their communities," Maloney says. "We'll continue to invest in their business and people. Being a service company, it's our people who will deliver value for our clients, and Pinnacle's high-performing team will be crucial to our success."

Upon closing of the transaction, Cushman & Wakefield will manage a total of more than 869 million square feet for its investor clients across the Americas, and the new platform could provide new avenues for Pinnacle's team members. "We are absolutely focused on career pathways throughout all product types," Maloney says. "As we come together, I think there will be many opportunities for the Pinnacle employees to grow their careers in ways that might not have been possible before. And we are so excited about that."

Technology is a focus area of ours and has been transforming the way companies like Cushman & Wakefield deliver services in the commercial space, which is probably ahead of apartments in innovations, Maloney says.

"We're looking at ways, for example in client accounting, to use robotics to streamline the accounting process and further enhance quality, which helps create meaningful work for our people."

The sharing of space through co-working has also taken off in the multifamily space with co-living concepts. "There are certainly synergies as it relates to our concierge-related approach to office assets, and there are opportunities for us to implement our strategy in multifamily," Maloney says.

As Cushman & Wakefield moves toward closing this acquisition and integrating Pinnacle into its platform, it's easy to wonder if some of its competitors, such as JLL and CBRE, will follow it into apartments. "I don't know, but it's a good question," Maloney says.