Current Coldwell Banker CEO Charlie Young said Thursday that he plans to leave his company next year but also argued that the firm is well-positioned to thrive even if a recession hits in the near future. He explained that he will step into an advisory role in January and then leave the company altogether in March.
More than 600 leaders from Coldwell Banker’s brokerages attended the summit in Chicago, and as Young finished speaking he mentioned that it would likely be his last time addressing that audience. A moment later, as he walked off the stage, the room erupted into a standing ovation.
Young’s departure will be part of a major organizational restructuring across several Realogy-owned brands, including Coldwell Banker, that was first announced last week.
Ryan Gorman, currently CEO of NRT, will take over after Young steps down, overseeing a unified Coldwell Banker that includes both franchises and company-owned brokerages.
Charlie Young discusses the future of his company and his career at Coldwell Banker’s leadership summit in Chicago Thursday. | Credit: Jim Dalrymple II
During a conversation with Inman Thursday after his speech, Young said that he doesn’t know yet what he is going to do after leaving Coldwell Banker. But he also said that the merger of the brand’s franchise and company-owned business — a merger that precipitated his departure — has long been in the works and is the right thing for the firm to do at this time.
“It’s logical, it makes perfect sense,” he explained. “I’ve done this for 17 years. It’s a perfect time for me to go and find my next challenge.”
But despite the afternoon’s last-day-of-school vibes, Young argued that Coldwell Banker has the scope and the scale to weather a potential market downturn.
Although neither he nor Gorman — who also spoke with Inman Thursday — would go as far as to predict a recession, a recent survey of real estate economists found that 85 percent believe a downturn will come in either 2020 or 2021. A month after that survey, another report revealed that homebuyers are also bracing for a recession.
Whatever happens though, Young said Thursday that if a recession does come in the near future, scale and size will be key factors for real estate businesses hoping to weather the storm.
The idea is that as the market sours, consumers turn first to companies that have well-established track records and that they trust. As a result brands — such as Coldwell Banker — naturally have advantages over smaller players during a recession, according to Young.
“Brand matters in a tough a market,” Young explained. “If there’s going to be a recession, I want to be on the team that has marketshare and has scale in the market. If I’m an agent, if I’m a company, I want to be on that team because that’s where the safe harbor is.”
Gorman agreed.
“When the market gets tougher,” he told Inman, “if you have the resources to be able to take advantage of that, to take advantage of some of the weaknesses of your competitive set, to take advantage of the fact that consumers have a new need for different insight than they did before and be able to deliver that, then you can grow.”
Ryan Gorman at Coldwell Banker’s leadership summit in Chicago Thursday. | Credit: Jim Dalrymple II
Although he didn’t mention anyone in that “competitive set” by name, Gorman did say that there are currently players in the real estate industry that “don’t see the value in belt-tightening and who frankly only see value in growth.” He also noted that those unnamed competitors have also “never actually been through a recession themselves.”
Gorman could have been describing any number of upstart real estate giants. Compass, for example, was founded in 2012 — as the recovery was already underway — and has become a kind of arch nemesis to Coldweld Banker’s parent Realogy.
The burgeoning iBuyer market is led by Opendoor, which was founded in 2013, and a number of even younger companies. And a handful of other startups have sprung up with a variety of business models that offer alternatives to traditional brokerages.
Time will tell what happens in a recession to aggressive, tech- and growth-oriented real estate startups. But both Young and Gorman are betting on the established brands.
“I want to be on, candidly, a team that’s seen this movie before,” Gorman said. “There are a lot of folks in the market today who’ve never experienced a down market before and have certain views about what they would do in that case. But then there are those of us who have not just survived, but thrived in a down market.”
