Surveyors and commercial agent Baker Harris Saunders, which specialises in the City, West End and New York markets, did not meet analysts’ profit forecasts of some £4.5m, instead climbing 11% to £3.8m (£3.4m). This compares with recently reported hikes of 66% and 40% from competitors Fletcher King and Debenham Tewson & Chinnocks. However, BHS points out that profit margins at 43% (51%) are higher than most quoted agents.
Managing director Johnathan Edwards blames the lower than expected figures on increased costs, arising from staff expansion, new premises and computerisation. The increased resources are to service long-term projects (such as the King’s Cross redevelopment) which will not contribute income for some time.
In addition, deals envisaged for the second half (notably the preletting of 450,000 sq ft at Little Britain, EC1, to solicitors Clifford Chance) have been delayed. Transactions in the Square Mile, BHS’ core business, contributed 52% (73%) of turnover, which in total rose 44% to £8.8m (£6.1m).
BHS currently has instructions on 5.6m sq ft of City office space. Despite the softening market conditions, Edwards says: “We are confident of the demand for quality space, particularly with the current restructuring in accounting firms.” He adds: “The West End is the key to next year, along with deals in the City. But margins will still be under pressure from rising salaries.”
