Compass Expansion Irks Rivals
Since October, Compass, a real estate brokerage firm headquartered in Manhattan, has opened four South Fork offices — an aggressive expansion that rivals the company’s recent growth in other markets.
“Of the top 100 agents in the country, half are in Los Angeles, New York, and the Hamptons,” the company’s co-founder and chief executive officer, Robert Reffkin, said. “We want to be a luxury brokerage firm in the largest cities in the world. The Hamptons are at the very pinnacle of high-end and luxury.”
The four new South Fork offices include its Bridgehampton outpost and an office soon opening in the former Peloton shop on Main Street in East Hampton. Compass merged with Strough Real Estate Associates in Sag Harbor in early January and is awaiting village approval for a black-and-white sign out front. A 3,900-square-foot Southampton office, on Nugent Street, will open next month. Mr. Reffkin said the goal is to be in the 30 wealthiest cities in the world in the next three years.
The growth of Compass, a combined real estate and technology company, has been swift. Since launching in New York City three years ago, it now has some 700 employees and agents, with offices in Washington, D.C., Miami, Boston, Los Angeles, and Santa Barbara, Calif. “We’re traditional in that we have brick-and-mortar offices and different in that we employ our own in-house engineers,” Mr. Reffkin explained.
Though the company is valued at $800 million, Mr. Reffkin said $135 million had been raised in venture capital from a “diverse set of investors — including Goldman Sachs, 13 real estate developers, and seven New York billionaire families.”
Despite its rapidly expanding footprint of about an office each month in Los Angeles and the South Fork, Mr. Reffkin said, “Everything is local,” with the real estate business still based on local, hard-earned expertise. “We’re not focused on buying companies, just great agents.”
Ed Reale, formerly a real estate attorney and top sales manager at Brown Harris Stevens, joined Compass in October. Based in Bridgehampton, he is the region’s senior managing director.
Besides the company’s proprietary technology and in-house marketing and public relations capabilities, Mr. Reale said he was drawn to a company where “culture is a top priority.”
“We’ve hired some of the best agents on the East End but we’re very selective about who is brought in because of the desire to have collaborative, cooperative, and ethical people working for us.” Mr. Reale said. So far, he said, Compass has hired “25 agents and counting,” with recruitment ongoing.
Nevertheless, its rapid expansion has come at a cost, with several lawsuits under way. Ashley Murphy, speaking for the company, confirmed that they were pending.
In November, Brown Harris Stevens sued both Compass and Mr. Reale, alleging that Compass had unlawfully poached its competitors’ employees and that Mr. Reale had violated a non-compete agreement.
In December, Saunders and Associates sought a temporary restraining order against Compass and three of its agents, alleging that Meg Salem, a former Saunders agent who had been a Compass recruit, had accessed a password-protected Saunders database and used it to obtain thousands of listings and other confidential material. Ms. Salem is no longer affiliated with Compass.
Drawing a comparison to Google, Mr. Reffkin brushed off the potential for controversy, stating that “lawsuits are typical for successful companies entering new markets to get sued across every industry.”
Because new agents come to Compass without their previous listings, Mr. Reale cautioned that it was still early to assess the firm, with each agent tasked with building back his or her inventory. According to its website, Compass has 11 properties in the Northwest Woods area of East Hampton and eight in Montauk. Sag Harbor, Shelter Island, and Water Mill have one listing each.
“We’re very pleased with what’s happened so far,” Mr. Reale said, adding that he remains focused on the task at hand: “To continue to grow and grow sensibly and bring in more agents and do more business.”
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This story has been updated. An earlier version indicated that Saunders and Associates had obtained a temporary restraining order against Compass.