New niche agent Hargreaves Goswell Down launched last week, led by the three eponymous City agency veterans. Robert Gibson asks them why they want to take the risk of going it alone now, of all times, and checks out some other recent start-ups trying to make a name for themselves
“As of tomorrow I’ll have no life cover, mobile phone or company car,” says Angus Goswell, former head of City agency at Cushman & Wakefield Healey & Baker, on the last day of June. But as one of the three founding partners of central London’s newest niche agency he still celebrated the first, not the fourth, of July as “independence day”.
The first of July saw the official launch of Hargreaves Goswell Down. The firm will trade from the sumptuous surroundings of the former boardroom of Guardian Royal Exchange in the City’s Royal Exchange.
The new outfit is backed by the financial muscle and European network of Swedish-based Catella Property Group, which is making its return to the UK. Catella’s previous UK operation closed after it decided not to back its UK directors over merger talks.
For Colin Hargreaves, former chairman of CWHB’s City office, and Goswell, 1 July also marked the end of a year’s enforced notice period, including six months of gardening leave, from their former employer.
It is also the end of an era for the two former CWHB equity partners. Had he stayed until 24 July, Hargreaves would have clocked up a quarter of a century with the firm. Goswell’s service was a mere 14 years but then his father, Sir Brian Goswell, was at Healey & Baker for 42 years. Little wonder Hargreaves says: “Leaving a large organisation where you have been for a long time is both scary and exciting.”
The third founding partner, Stephen Down, a senior City investment agent and former head of central London development at Insignia Richard Ellis, no doubt shares the mixed feelings. Technically he remains on gardening leave from IRE for the rest of his six months’ notice. But he is hoping that he will get “time off for good behaviour” as Insignia is unlikely to enforce the same terms as CWHB.
CWHB was shaken by the unprecedented decision of two equity partners to leave and set up in competition. It also had to deal with angry clients when Hargreaves and Goswell were told to drop day-to-day contact with them, six months into their 12-month notice period. The pair estimate that the loss of fees and spin-off income from clients who took their business to other agents has cost CWHB more than £3m.
The figure is disputed by Andy Gulliford, CWHB’s deputy senior partner. “We have restructured our team, which is now younger and stronger and gets deals done. This is illustrated by our letting of Chelsfield’s 165,000 sq ft Riverside House, SE1, to Ofcom, the biggest deal in the City this year.”
Hargreaves and Goswell had a very public falling out with their employer. But other firms are suffering their fair share of internal discontent. “There are a lot of very good but very fed-up people out there. It is partly the market but it is also partly the changes to corporate structures,” says Goswell.
Rich pickings for firms seeking staff
Discontent is one of the driving forces behind start-ups but also provides rich pickings for those firms in the fortunate position of being able to recruit. HGD itself, for example, is on the prowl for talent, and has the cash at hand from Catella to be able to make attractive offers.
“I feel like a kid with a £50 note going into a sweet shop,” says Down.
HGD is about to announce another City appointment from one of the larger firms and is also planning to set up a West End office within 18 months. “Our next appointments are unlikely to be equity partners but this is by no means a shut door, particularly in terms of appointments in the West End,” adds Down.
Hargreaves argues that no large firm can afford to be complacent. “This is a good time for us to launch because of the disarray of the larger firms that are reinventing themselves. Some of them will succeed, but others won’t. None is going to avoid a bumpy ride.”
Goswell adds that some of the bigger firms have followed a course similar to that taken by the investment banks. “Once firms shift from a partnership to a corporate structure, the balance changes from looking after your peers to only looking after yourself. Suddenly, it’s quarterly bonuses and living for today and there is no long term.
“It’s changed the face of the business for the worse, in my opinion.”
Hargreaves agrees: “The big American takeovers have meant those firms’ businesses have become supermarkets on very short-term drivers. It’s all about getting the fees in. I won’t miss any of that.”
The trio feel that, of the larger firms, FPDSavills has the best management structure but question whether its highly competitive and individualistic>
So what will be so different about Hargreaves Goswell Down? “Our formula will not be complicated. We hope to focus on fewer clients than the larger firms but look after them really well,” says Goswell.
“I don’t think anyone does central London very well. Our dream would be to do that. Our model is to provide highly experienced people focusing on a limited market. The client gets the very best advice and we make good money.”
Down nods agreement. “The key thing is providing responsibility and accountability together in one place for the client. We don’t want to have a big management structure. We want a place where the principals do the business,” he says.
Hargreaves points out that “in a small market like the City you don’t need to be part of a big machine”.
“Interestingly, if you look at New York, some of the most successful brokers are not part of a big machine,” he says.
The evolving HGD business plan for this year is based on the firm winning instructions for central London agency, investment and development work. “You can work out for whom we acted in the past and therefore who we would like to act for again,” says Hargreaves.
“Most of these clients have been painted into a corner by CWHB, anyway. They were forced to employ someone else and it is going to be difficult for these clients to turn around and say ‘we have now changed our mind and have gone back to where we started from’. But there may be other things we can help them on behind the scenes.”
Out to win business
He refuses to confirm market rumours that the firm has secured former CWHB client Old Mutual. Hargreaves did confirm, however, that another former CWHB client, Standard Life Investments, would be one of their first lunch appointments.
David Paine, development director at Standard Life, is complimentary about Hargreaves and Goswell but declines to say whether he will be putting business their way. “Colin and Angus worked with Standard Life Investments on marketing one of our City developments, 10 Gresham Street, EC2. They are an astute, highly professional team and I wish them well.”
HGD does already have some work to be getting on with, however. Hargreaves says it has disposal instructions and will also be acting on “a couple of acquisitions that are not generally known about in the market”.
Despite the weak letting market, the trio feel they have got the timing “just about right”, and argue that, when the market is down, “clients are more likely to be less impressed with their existing advisers”.
One helpful byproduct of the poor state of the City market is that it has allowed HGD to acquire its unique offices. Few other agents can boast wood-panelled offices lined with thick carpets and lit by crystal chandeliers. Hargreaves is even slightly nervous that it may be over the top. “We looked at more predictable space in Gresham Street and Liverpool Street. But we’ve secured a very economic and flexible deal. Bearing in mind what we do, you’d expect us to get the very best for the very least.”
The firm has set its first year’s overheads at £200,000 but has a big safety net in the form of the funding from Catella.
Down retorts: “Some might say HGD haven’t got the balls because we are doing a deal with Catella, but I don’t see it like that. We recognised that clients like niche expertise but also that we are operating in a world financial market, not Birmingham or Manchester. We still have the risk in our equity stake and day-to-day management but we also provide our clients with the reassurance of a well capitalised firm with European connections.”
“It would be wrong to say we didn’t think very carefully about giving away a slice of the action but we think we’ve got a terrific deal,” says Goswell.
The approach from Catella came about a year ago. HGD is a private limited company and both sides contributed to the working capital but Catella has the largest equity stake. Goswell says: “We take the bulk of the income out of the deal. Otherwise we might as well have gone to work for another firm.”
The three are emphatic that their decision to set up for themselves has been the right one, but Hargreaves confesses that his fears in his darkest moments are: “Am I going to make any money at all? And why spend three or four years building up a business when just sitting on the gravy train is easier?”
Colin Hargreaves
Born 1954 Educated the College, Cheltenham, Bath University and Reading University
1978 joined Healey & Baker
1985 H&B salaried partner
1987 H&B equity partner
1996 UK board of management
2001 Chairman of CWHB City office
2002 Resigned. Founds HGD
Lifestyle Lives in Highbury. Married to Karen, with one son, Harry. Interests are politics, skiing, shooting, opera and music. Member of the Carlton Club.
Angus Goswell
Born 1967 Educated Sherborne and Oxford Poly
1989 Joined Healey & Baker City agency
1992 In New York, aiding H&B’s initial jv with C&W
1995 Back with H&B’s City office agency team
1996 H&B partner
2000 CWHB equity partner
2001 Head of CWHB City agency
2002 Resigned to become founding partner of HGD
Lifestyle Married to Wiz (Elizabeth) with two children, Archie and Georgie. Hobbies include shooting, wine tasting and golf
Stephen Down
Born 1961 Educated Pangbourne College, Berkshire University of Westminster
1985 Richard Ellis central London investment
1989 Director of commercial property investment advisory boutique owned by Hambros Group
1995 Joint MD of City office of Colliers CRE
1999 Head of City investment IRE
2002 Head of central London development IRE
2003 Resigned from IRE to become founding partner of HGD
Lifestyle Lives in London, and is married to Sue, with three children, Rebecca, Jack and Elspeth. His interests include theatre and opera, sailing, running half-marathons, game shooting and skiing
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Niche start-ups promise dedicated service |
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Optic Asset Management is run by former CB Hillier Parker directors David Offen and James Young, and based at St George Street, W1. The niche property asset management firm was started by Offen in January, who was joined by Young in March. The pair are supported by Peter Robertson, former facilities manager at Jones Lang LaSalle. Young says: “We will provide the sort of high-level, continuous service that is difficult for larger firms to provide. We will only recruit senior surveyors.” They have already poached the remit to manage Tiger Properties’ £120m portfolio from CBHP. Offen adds: “We will be targeting private property investment firms. But we will also attract institutional clients that are keen on adding value, rather than reports which don’t add anything.” Spring 4, which specialises in corporate occupier work, was founded in November by four senior directors in Lambert Smith Hampton’s City office. The firm trades from Cheapside, EC2, and is led by Hugh Stallard, former chief executive of LSH’s City team. The other founders are John Martyn, a landlord and tenant specialist; Ian Campbell, a former head of LSH’s City office, and City director Richard Peperell, who specialises in corporate occupier work. Campbell says: “The downturn offers an opportunity to reach clients disillusioned with their agents, and who are therefore more receptive to good ideas. “We got to the stage where we got fed up with being small cogs in a big machine and wanted to become masters of our own destiny. The fact that we have funded ourselves demonstrates our self-confidence. We have just taken on former LSH City senior surveyor David Perrins.” Duncan Allison was founded as a niche investment company in March, after investment duo Ian Duncan and Graham Allison left NAI Gooch Webster’s City office following its merger with Colliers CRE. It trades from Warnford Court, EC2. Duncan says: “We shared an ambition to one day set up our own business. This means being able to dedicate our time to advising investment clients and doing deals. There is also the flexibility to work with whoever you want in any location, be that London or Europe. “Despite the difficult tenant markets in central London and Europe, we have been fortunate in our timing in that the investment market is still strong.” |
