A new day dawning For firms of all sizes and ages, the market is slowly starting to recover. But, as Nadia Elghamry learns, it still needs hard work
THE START-UP ONE YEAR ON
Eager to take on the big jobs
The market was roaring when Jamie Green walked away from his secure job as partner at Bidwells in the spring of 2008 to set up Juniper Real Estate. By the time he was ready to launch six months later, having been joined by Mike Ayton from CB Richard Ellis, the market had turned from Minotaur to mouse.
Green is realistic. “No one saw what was going to happen in September 2008,” he says, “but I took a long-term view that if, in three to five years, it still wasn’t moving, I would be 42-43 and still re-employable.”
For Ayton, the signs in the market were already stark. He had moved from agency work to concentrate on development. “The market turned down, and pretty much every one of the major projects went on hold or was cancelled,” he says. “It was not hard to see what was happening in London, and I knew it would spread.”
A year on, and Cambridge-based Juniper’s income has been, as expected, “quite lumpy”, says Green. “We are battling a headwind,” he adds, although income is ahead of their expectations for the year, and the company started 2010 with a £2.5m off-market investment purchase.
Green says that, for the first nine months, there was some run-off from his work at Bidwells before “we started to get some traction”.
Ayton says they do not want to be like other one- and two-man bands. “We have a business plan to take on the bigger jobs,” he says. “We’re not taking on the big boys, but we can offer extra-specialist care.”
The duo spent last year in London gathering support for the idea. “We hope that when the London agents get something local they might come to us, as they might not necessarily want to alert the big companies, such as Savills or Bidwells,” Green says. “We spent days in back-to-back meetings, starting at 8am for breakfast, and then we’d get back on the train at 7pm stuffed full of food and coffee.”
The past months have not all been meetings, however. “I was doing the hoovering the other day,” laughs Ayton. “And I was cleaning the sink,” says Green.
The pair set up the business without a bank loan, and are not in a hurry to take on staff just yet. Says Green: “We are lean, mean and hungry. If it goes well, we’ll spread, and it won’t be long before we need secretarial support, but at the moment there are no plans to have a Juniper franchise.”
THE START-UP TWO YEARS ON
Targeting one-year rather than one-month income
When Erinaceous hit the headlines two years ago, Vanessa Penn saw the opportunity to take the business over and become the only female-led company in the region. “Erinaceous had started to say that it did not want the provincial offices,” she says, “and it was obvious to me that Ipswich would be one of the ones to go.”
She took the brave move to relocate her Penn Commercial office out of town, a move deemed unthinkable by others in the local market, and now manages two-and-a-half people from her office overlooking Fox’s Marina and Yacht Club.
The usually reserved Penn says: “It was scary at the time. It has not been the best time to start out and, while the agency work was just the same, I was having to deal with cash flow, budgets, promotions and paying people’s wages. You have to spend as much time doing that as the fee-earning.”
While many who come from the corporate world miss the referrals and support this provides, Penn says: “We’ve actually had more work because there was so much bad press surrounding Erinaceous. It was losing clients.”
Two years on and, after what Penn describes as a “lot of hard graft, putting out press releases and getting our boards up”, she has increased her market share to become the sixth most active agent in the region, and paid herself a “little something”. The firm has also started to get approaches from London agents to work together.
Penn believes the key to success has been the company’s stock. “You need to take on everything as long as it’s sensible,” she says. “Unless you get the stock, you can’t do the business.”
Penn says that she wants to open another office 15-20 miles away in five years’ time, and hopes to have driven turnover to £1m by then. “I’d like to get some one-year income rather than one-month,” she says. “There are a few strategic sites, but it may be five years before the big sites come back.”
Franchises are on the cards but, as Penn says: “Property isn’t like a burger. We could franchise, but not for another year. We can build up the and franchise the systems – the brand, the database and the website – as a lot of surveyors haven’t got a clue about all that.”
ESTABLISHED COMPANY THE LIFER
Outsourced staff to the local authority; now pushing a refreshed brand from new premises
Now might seem like an odd time to be investing heavily in your business, taking on new premises and launching a revamped brand. But Norwich-based Arnolds is forging ahead with just those steps.
The company is undergoing what managing partner Guy Gowing describes as a “huge change”. Two partners retired and were bought out late last year, leaving an average age of 41.5. “There will be a rebranding and a freshening of the image to move the company into the 21st century,” he says.
The team are ditching their offices on Prince of Wales Road and moving up the hill, to sit cheek by jowl with the big corporate firms of Bidwells and Savills.
“We are investing in the future because it feels like a good time to do it,” says Gowing. “We are moving into more space, but are not paying more rent. All the equity is upfront from the partners, which means we can make decisions without shareholders banging on the door.”
Gowing joined the company – then Hockley – as a graduate in the 1990s, and has built his career at the firm. “When I came in, it was a dire market,” he recalls, “absolutely on its knees.” The experience taught him to “take nothing for granted. Once you think a deal is done, it’s no good putting your feet up.”
He adds: “In 2005 and 2006, there were too many people who put out the marketing brochures, did a few calls and rested, but you have to keep pushing and working.”
The beginning of 2009 was extremely quiet, says Gowing. “We took the chance to outsource some of our people to the local authority,” he says. “That tided us over, helping us to pay the bills, until we were through the worst.”
Nine months later, those on secondment are back in the Arnolds fold, and the team has grown from 39 a year ago to 43 today, including a graduate and a new residential valuer. “Recruiting is a lot easier than it was,” says Gowing. “There are so many good graduates, and we have plans to grow further in the immediate future, probably towards the end of the year.”
With hindsight, Gowing says that the company probably should have started to actively promote earlier, when the green shoots of recovery were becoming more pronounced, but has now set an ambitious strategy.
As part of its five-year plan, Arnolds has set geographic targets. Gowing will not go into details, but says that, in the residential business, for example, the company is in two areas and would like to be in six. He says: “Now the market is better, we are keen to expand and, within the year, we’ll be operating in new areas and new sectors.”
THE START-UP SIX YEARS ON
Sticking to what they do well – agency work and now into their second dip
In 2003, when Will Mooney and Ben Oughton bought out Januarys’ Cambridge-based commercial agency, they described the market as tough. “That last year was dire,” says Mooney.
In the fourth quarter of 2002, Bidwells’ figures showed that a little over 200,000 sq ft had been signed for in the Cambridge offices market – and that was considered a bad quarter. By Q4 last year, Mooney’s and Oughton’s company, Jeffersons Commercial, was battling through its second dip, with the market dropping back another 15% on this.
Mooney says that the market is now just coming back, but he adds: “If anyone had to make the decision to set up last year, then it wouldn’t have happened – you would not try to do it today. Most of those who went solo last year had the position forced on them.”
The idea behind the company, says Mooney, “was to stick to what we did well, which is agency”. That has got harder as the work and the fees have shrunk. “Some ask why do five 10,000 sq ft deals when you can do one 50,000 sq ft,” he says, “but it gives us brilliant board position.”
Unfortunately for Jeffersons, as the recession has continued, the “big guns” have been taking on smaller work as well, but Mooney believes that larger firms cannot give the same service as Jeffersons can. “Sometimes I ring people back, and they thank me for returning their call because nobody else has bothered,” he says.
Mooney and Oughton set up Jeffersons when Mooney had been with Januarys for 16 years, eight as an equity partner. He had just turned 40, and was unhappy with the direction the firm was taking. He decided that it was time either to put up and shut up – or move .
Negotiations about the buyout began, even through Mooney suffering a vicious bout of salmonella. “It was like breaking up with a person,” he says. “It rumbled on and we were trying to fix things. Then you realise the pendulum has swung past the point where you can fix it, and you’ve got to negotiate something out of it.”
Today, the team is made up of three fee-earners, two in the support team – and often an office dog. There is more administration to divide up, but Mooney says: “We run the ship very tightly, and I am closer to the costs of the business.” He says that, sometimes, staff are still in the office at 7.30pm. “The flip side,” he says, “is that if you want a half-day off to go to the theatre, or your dog is sick, then we are relaxed about it.”
Mooney would like to fill a fourth surveyor position but says: “I’ve learnt to be cautious about bringing anyone into the fold, and making sure they are the right person. Someone could make a lot of money, but we are a small team, and you’re very exposed if you don’t perform. That scares some people, and they would rather hide in a big team.”
ESTABLISHED FIRM AMONG THE FIRST TO ADAPT
Cambridge market down 50%, so taking on smaller work to maintain profits
It might be surprising that a firm dating from 1825 was one of the first to move when the recession bit.
Phillip Woolner, partner at Cambridge-based Cheffins, says that the agent was one of the first, regrettably, to cut its staff. “We took the view that the market was only going one way, and we cut our cloth accordingly,” he says.
Woolner had already operated through one recession. “It helped, because you could see this one coming,” he says. “You knew we were in for a correction, but nobody saw the financial crisis, and that finance has not come back yet.”
Woolner moved from Bidwells to set up Cheffins’ commercial division in 1998. Today, the young partnership – with an average age in the 40s – runs a commercial team which is “down a couple” on 18 months ago, with five-and-a-half fee-earners and one consultant.
Woolner suspects that the number of average-sized deals in the market has dropped by 50% in the past year, but the company did more than its average number of deals in that time.
“We took the conscious decision not to be too fussy,” he says. “We realised that not many big deals were happening, and we needed to do as many little ones as we could to get the cash flow in and remain active. We’ve taken on instructions that we would have turned down in the good times, so we could get the boards up and keep the advertising going.” But he admits: “Everyone is fighting over the same thing.”
Yet the recession has also brought opportunities, and Woolner says that the company’s auction business has grown. “People needed results quickly, and were prepared to put property on the market at prices that looked cheap,” he says.
Woolner says that, towards the end of last year, he felt the worst part of the recession was over, and the team set a five-year plan to move the business on. He is coy about whether the plan is based on organic growth or a more aggressive M&A strategy, but hints: “We are always looking into these sorts of things.”
