Senior executives from both firms did not return phone calls seeking comment, but sources say there were apparently too many internal hurdles to overcome. CB Richard Ellis' $750 privatization plan, which would have brought expansion possibilities for both companies, was not cited as a cause.

"On paper it looks like a deal that would help both of them," says one South Bay insider. "CB would get into the Peninsula and Silicon Valley, where it hasn't been a particularly strong player, and Cornish & Carey would be able to move into San Francisco. Of course, the move might also have a diluting influence on their respective strengths, but those things are usually glossed over by the excitement of a deal like this one."

The nagging question of how to combine a regional, family-operated powerhouse like Cornish & Carey with a global corporate player such as CB is one with which the parties have yet to come to terms. "Cornish & Carey has a strong, local reputation on the Peninsula and in the Valley," says another source. "They are part of the fabric of the community. There is no doubt that CB would gain by being part of that. What I don't understand is what is in it for Cornish & Carey. I don't see them making a big dent in the San Francisco market."