Two of the Bay Area’s largest residential brokerages are about to expand their residential turf war into the commercial market.

Two of the Bay Area’s largest residential brokerages are expanding their residential turf war into the commercial market and Pacific Union International stoked the fire earlier this month by taking a shot at Compass’ latest pursuit.

Compass CEO Robert Reffkin

Compass announced earlier this month it would be launching a commercial real estate division, drawing on the expertise of the recently acquired Paragon Real Estate Group. The only problem is – Pacific Union International CEO Mark McLaughlin claims the company hired most of Paragon’s team three months ago, including Steven Pugh, the company’s former chief executive of commercial real estate. Beside him, four others jumped ship to join Pacific.

Before it was acquired by Compass, Paragon’s commercial team boasted approximately 20 agents, according to the firm.

“I got a kick out of Compass’ announcement because they say they’re getting into commercial, but most of the Paragon team joined us about 90 days ago,” Pacific Union CEO Mark McLaughlin told Inman.

Compass declined to respond to McLaughlin’s comment.

The New York City-based real estate technology company is bringing its proprietary technology platform into the commercial real estate business, according to the August 3 announcement. In addition to San Francisco, the company will also have a footprint in New York with former Eastern Consolidated brokers Adelaide Polsinelli and Ronda Rogovin, “two of New York City’s top commercial brokers,” according to Compass.

“Part of our decision to merge with Compass was the resources they offered and we are excited that those resources will extend across residential and commercial,” said Bob Dadurka, founder of Paragon Real Estate Group. “We are delighted to be a part of that success.”

Compass’ market rival Pacific Union International has also recently grown its commercial real estate footprint throughout the state of California, with the hiring of Stephen Pugh, formerly Paragon’s CEO of commercial real estate.

Pacific Union’s commercial division focuses on every aspect of commercial real estate, including retail, hospitality, multifamily and office properties, according to a company announcement from earlier this year. Paragon’s commercial division focused on apartment buildings, tenant and landlord representation, office and retail space and land acquisition and development. There’s a lot of room for overlap.

Steven Pugh, head of Pacific Union International’s commercial division

Pacific Union’ decision to expand its commercial real estate presence was based largely in part on bringing Pugh into the fold, McLaughlin told Inman, not any particular market factors. 

“In a not very active way we have always been looking for someone to join the business, be the president of commercial and really grow it,” said McLaughlin. “We never really found the right person until Pugh came along.”

Pacific Union International CEO Mark McLaughlin

Since hiring Pugh, Pacific Union’s commercial real estate business has grown exponentially. It opened a second office in Los Angeles and the overall operation – which was about five people – has grown to 45 real estate professionals, according to the latest data on Monday. By the end of next year, McLaughlin predicts the company will have hired between 150-200 real estate professionals and that the division will have closed $500 million in sales.

The division’s crowning listing right now is the Trinity9 portfolio – nine multifamily properties in San Francisco valued at $85 million.

“Our business has always been driven by good people and constrained by the lack of good people,” McLaughlin said. “For us, it was simply, we found the right talent.”

When Compass acquired Paragon, it claimed to be the market leader in San Francisco, both by sales volume and market share. McLaughlin rebuked those claims in a statement to Inman shortly after the acquisition.

“We do need to set the record straight on the recent Compass announcement about its San Francisco Bay Area market share,” McLaughlin said. “The combination of Compass and Paragon in the city of San Francisco is unprecedented and impressive. Its claim regarding San Francisco Bay Area market share is incorrect, misleading, and very premature versus Pacific Union’s continued exceptional performance.”

The two brokerages both claim to be the leaders in residential market share for the Bay Area, but now they’ll have another sector in which to battle it out for market supremacy.

Email Patrick Kearns

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