Richard Gatto (left) and Fahri Ozturk, both first vice presidents in Marcus & Millichap’s Saddle Brook office, visit a multifamily property at 129 Halstead St. in East Orange. The duo recorded a banner year in 2020 alongside their team of brokers and support staff. — Photo by Aaron Houston for Real Estate NJ
By Joshua Burd
Like so many other brokers, Rich Gatto and Fahri Ozturk felt and heard their clients’ anxiety as COVID-19 sent shockwaves through the commercial real estate market in March 2020.
They were all the more relieved when their worst fears were not realized.
“Owners were forecasting Armageddon for April collections,” said Gatto, a first vice president with Marcus & Millichap. “Then, come July and August, we had four or five months of much better collections than anyone expected.”
Even in the hardest-hit areas, he added, “owners were looking at collection rates in the mid-90s. They were feeling pretty positive and they were pleasantly surprised by the resiliency of their tenants, so that was a time when there was a lot of optimism.”
Ozturk and Gatto have carried that optimism forward through the ups and downs of the pandemic. That’s no surprise for a duo that not only withstood the crisis, but managed to have their best year since forming a team under the Marcus & Millichap banner.
Namely, the Saddle Brook-based brokers closed $205 million in transaction volume in 2020, including the $92.5 million sale of a 24-building, 702-unit portfolio in Essex County. They’ve now completed more than $710 million collectively since joining the firm nearly five years ago, they said, and they’re poised to continue that momentum in 2021.
“What tends to happen during economic downturns is that some brokers leave the business, some struggle and others actually capture market share during that turbulence,” said Brian Hosey, a first vice president and district manager with Marcus & Millichap. “And they are, of course, an example of a team that captured market share.”
Hosey, who said Gatto and Ozturk “stand out in the marketplace as brokers that are honest and really have their clients’ best interests at heart,” expects another strong year from the team.
Gatto, 42, and Ozturk, 38, brought different backgrounds when they joined the brokerage and advisory firm in 2016. Ozturk had been in commercial real estate since 2006, in a series of roles for New York City-based owners such as Broadway Partners and Thor Equities. He became a broker in 2013 when he joined Massey Knakal Realty Services, which was acquired by Cushman & Wakefield in 2014, before moving to Marcus & Millichap.
For his part, Gatto spent more than 15 years on Wall Street, starting as a broker with Bear Stearns before moving into the field of equity derivative sales in late 2007. When he joined Marcus in spring 2016, it was a chance to realize a longtime goal of entering commercial real estate, while pursuing a career that he felt would be more transferrable to his children.
“We feel that we’re very fortunate to have our backgrounds,” said Ozturk, also a first vice president, noting that their respective experience allows them to be “very structured (and) very transparent” as brokers and as leaders of their seven-member team.
Ozturk was still with Cushman & Wakefield when he and Gatto first crossed paths in 2016, they said, noting that they were competing for a listing that ultimately went to Marcus. As Gatto recalled, the client wished she could have also worked with Ozturk, so when the latter joined Marcus several weeks later, it only made sense for them to join forces.
The deal, which involved a development site in Maplewood, closed in late summer 2017. It wasn’t long before the two struck a formal partnership and began to build a dedicated team. The group went on to grow its average deal size from around $5 million in 2018 to $10 million in 2020, they said. They’ve also helped Marcus climb the ranks among middle market brokerage houses in categories such as Essex County multifamily transactions, where it leads among seller brokers, according to CoStar.
“I think one of the main reasons that we ended up partnering up is, aside from both feeling aligned morally and ethically and having the same work ethic, we said one and one feels more like five than two,” Gatto said. “Building a team gives us the ability to scale up and take our process to be able to service more clients at one time — and ultimately close more deals.”
The Ozturk Gatto team today also includes brokers David Ferber, Jed Matricaria and Henry Fuentes, along with Daniela Corbosiero and Jillian Hennin as administrative sales assistant and marketing coordinator, respectively. As Ozturk noted, the group “had a good momentum coming out of 2019,” leading to 18 deals either in contract or with an accepted offer in the first quarter of 2020. Then came the COVID crisis in mid-March, he said, when “it seemed like the market was collapsing” and its pipeline was in danger of suddenly drying up.
But the brokers were resolved “to make sure that our clients were going to close the deals that they gave us,” Ozturk said.
“We were not prepared to participate in the recession at all,” Gatto added. To a large degree, that meant making sure their clients were aware of the government and industry resources that could help them weather the pandemic.
“And that was a huge component of what we focused on — making sure that they knew of every program that was available to their tenants, that they knew of every program that was available to themselves, whether it be educating clients on (federal Paycheck Protection Program loans) or on rental assistance programs locally or on the state or national level,” he said.
Ozturk added that the team “essentially became a direct bridge” between clients and those that were providing the resources. That helped clients “get clear information directly,” he said.
The Ozturk Gatto team ultimately closed 17 of those 18 deals, helping to maintain its momentum as it worked on listings that were still active and others that were set to hit the market. That translated to new business by mid- to late summer, they said, as cases had fallen and clients became more encouraged about the path forward.
It was around that time that the group was hired to market the 24-building, 702-unit portfolio in East Orange and Irvington. Gatto, Ozturk and their team closed the deal on Dec. 31, representing a partnership of ERCT Capital Group, MAVeCap and Metropolitan America in the $92.5 million sale to Spaxel LLC.
“This was a special deal for us since we worked with the seller to assemble the entire 702-unit portfolio over the past two and a half years,” Gatto said at the time. “It was rewarding to help our client generate a significant return, even more so because we were able to execute in the middle of a pandemic.”
He noted that Eric Anton and Chris Warner of Marcus’ Manhattan office represented the seller, a New York-based multifamily developer and operator. That was all the more noteworthy given that it was the buyer’s first acquisition in New Jersey, Gatto said, which reflects a trend of new entrants to the state that continued during the pandemic.
“There’s definitely new blood into the market,” Ozturk said. “And we can say that confidently.”
They expect that North Jersey will continue to attract first-time buyers, which dovetails with a Marcus platform that is “geared toward migrating capital from different markets and different offices,” Gatto said. It was no surprise, then, to see that trend amplified during the pandemic.
“If you think about it, psychologically … when you get punched in the face and you feel a little beat up, you kind of look around for answers — and people typically look around for answers outside of them more than inside,” Gatto said. “And I think that’s no different than any real estate owner, where COVID shook people up. They were concerned about their property’s ability to perform and they started looking outside of their markets for other opportunities.
“That’s really what we’ve been focused on — bringing in that out-of-market investor to generate the best deals for our clients.”