Rob Kim/Getty Images for The Cantor Fitzgerald Relief Fund
Howard Lutnick, chosen by President-elect Donald Trump to be commerce secretary, has had a winning streak that extends beyond Wall Street and his investment banking firm, Cantor Fitzgerald.
In 2011, the billionaire arranged for his affiliate financial company, BGC Group, to purchase the New York-based commercial real estate services firm Newmark for an undisclosed sum.
In the ensuing years, BGC pumped in capital to buy up talent and acquire smaller rivals, brought Newmark public in 2017, and played a role in its management, with BGC executives taking posts at the firm and Lutnick chairing its board of directors.
The results have turned heads in the ultra-competitive real estate business.
The company, once focused on New York City's office market, is now mentioned alongside global powerhouse rivals like JLL, Cushman & Wakefield, and CBRE.
"Howard helped Barry transform transform Newmark from a regional player to now a global one," said Alexander Goldfarb, an analyst at Piper Sandler who covers Newmark, referencing Barry Gosin, Newmark's CEO.
"It's one of the best positioned real estate players today," Goldfarb added, noting that he has an "overweight" – or buy – rating on Newmark stock.
Now, Lutnick's move to Washington would leave Newmark – along with Cantor and BGC – without one of the architects of its success.
Lutnick has said he will divest his shares in Newmark and BGC, which is also public, and step from his leadership roles at the companies and also Cantor, which is privately owned.
Newmark executives say the firm has the talent and momentum to continue its path without Lutnick in the boardroom.
"I'll miss Howard," Gosin, who is 74, said. "But the day-to-day business runs."
Nonetheless, Lutnick has played a direct hand in the company's rise, observers said, using his Rolodex in corporate America, for instance, to help its executives open doors and win business.
"A lot of big tenant representation assignments, a lot of capital markets stuff came out of BGC and Howard's relationships," a former New York broker at the company told Business Insider. The person did not want to be identified because their past employment agreement with Newmark prevented them from speaking publicly about the company or its executives.
Newmark's performance has added to the lore of Lutnick's 40-year career, during which he built BGC and Cantor, where he is also CEO, into major players in the financial industry.
Before the BGC acquisition, Newmark was owned by a handful of the firm's top producing brokers, CEO Gosin, and the Gurals, a New York real estate family that owns a large portfolio of office properties.
BGC paid a little more than $60 million in cash and stock, according to reports at the time – a fraction of its roughly $3.8 billion market capitalization now.
Lutnick "saw a great opportunity to apply scale and professional management to a business and capitalize on a very fragmented industry," said Mark Weiss, a former Newmark broker who left the company in 2016 to head to rival Cushman & Wakefield. "And he did just that."
Lutnick's involvement bankrolled the business. The famously charming executive could also soften Gosin's bluntness.
Scott Panzer, a prominent commercial real estate leasing broker who left Newmark two years before BGC's acquisition for competitor JLL, bumped into Gosin and Lutnick together at the World Economic Forum in Davos, Switzerland, in around 2012.
"Oh my god you're here?" Panzer remembers Gosin telling him. "I think I'm going to have to rethink my membership to this."
"Howard and I both looked at one another, and we both started laughing," Panzer recalled.
Panzer said he is now cordial with Gosin and that he admires the transformation of Newmark that he and Lutnick were able to accomplish.
Gosin would not comment on the incident.
Early in his tenure at Newmark, Lutnick drew ire from some dealmakers at the company for rejiggering its employment contracts. The new terms required brokers to accept about 10% of their commissions on deals in Newmark stock that would vest over time.
In 2014, Newmark purchased Grubb & Ellis, a commercial real estate services firm, out of bankruptcy. Some brokers from Grubb chose to leave in the merger. One former Grubb broker said that the employment contract he was offered contained onerous provisions, such as a sweeping non-compete restriction should he eventually leave the new company.
"You wouldn't even be able to drive a taxi cab," he said.
While the changes that Lutnick initiated may have ruffled some brokers, they eventually proved prescient, helping to retain talent and yielding profits for those who remained at the firm as Newmark's stock rose.
"Howard was helpful in setting up the business, in giving me the backbone and the foundational knowledge of how to do it differently — how to innovate, how to create a partnership, how to build a business for the long term," Gosin said.
More recently, Lutnick attracted shareholder outrage when he was awarded an enormous $50 million bonus from Newmark in 2021.
"There are some people who will not invest in Newmark because of that," Piper analyst Goldfarb said.
That anger has faded as Lutnick's vision of an ascendant Newmark has come to fruition.
"We are well in the conversation," Gosin said, referring to Newmark's increasing competitiveness in the top tier of the commercial real estate services and brokerage businesses.
David Falk, the president of Newmark's New York region and a leading leasing broker at the company, agreed. He said that Lutnick and Gosin had effectively built up other service lines at the company in ways that impressed clients and helped Falk – and other brokers at the firm – win assignments. The company's deep bench of talent, he said, is a far cry from the past when Newmark lagged major competitors in ancillary areas such as financing, property management, and investment sales.
"I hated the fact that 15 years ago, I would go to a meeting and I was maybe bringing someone I thought could handle an assignment, but I didn't feel great about it," Falk said. "Now we have stars everywhere."
