Bucking the national trend is good, right? But when your market is outperforming pretty much every other outside the capital there is a whole heap of pressure to go with it.
Cambridge has outstripped every other regional market – with the possible exception of Aberdeen – hands down. As the rest of us talk about triple-dip recessions, in Cambridge agents talk about the prospect of prelets and speculative development.
But just how great does it feel from inside? Well, maybe not that great. In 2011 the Cambridge market signed the largest regional deal in the UK, the 84,000 sq ft prelet to Microsoft. Off the back of that anything would look sad. Add in stock drying up, which has started to severely curtail take-up figures, and it is as if someone has taken all the icing off the cake and left you with the dry doughy bun.
“I think we knew there weren’t going to be the big meaty deals,” says Rob Sadler, Savills’ director of commercial for the eastern region. “If you look at the size of our deals for this year, there are a number of small deals that we didn’t have before and some would say they are not traditional Savills deals, many would think they are too small for us.”
He adds: “It was important to keep on top of everything, and they do make a significant contribution to the end-of-year total.”
Many agents almost wish they had the availability problems in other parts of the country, but is that just a case of “the grass is always greener”? Someone who has been on both sides of the fence is Bidwells’ head of office agency, Chris Reeve, who joined its Cambridge-based office team last summer from the distinctly less sunny Reading market. He says: “If you compare it to the Thames Valley it is a completely different set of problems.
“Here the real problem is lack of stock and lots of enquiries; in the Thames Valley it was lots of stock and sporadic enquiries.”
As a result, Bidwells’ energies are turning from brokering to consulting on longer-term property strategy as the market focuses on prelets.
Reeve says: “This makes the job of an agent rather complex as these involve complicated critical paths – not quite as complex as the chain reactions those boffins at the university are tackling, but it’s getting close.”
Smaller deals, interspersed with long-term consultancy work that may or may not bear fruit makes for pretty lumpy income. Reeve agrees: “Agency firms are having to dig in for the long term, but it does create shorter-term pressure points if you are smaller and having to pay the bills on a weekly or monthly basis.”
So what if you are not one of the big boys? Andrew McGahey became one half of MP Real Estate – the other being Savills’ Neil Perrin – last September after leaving Lambert Smith Hampton. “When it’s just two guys it will always be lumpy income, but you manage your cashflow and don’t go mad when you get your first chunk in,” he says.
The problem with bigger jobs, explains McGahey, is: “You have to make sure they are not abortive, most agency work is deal-driven and if you don’t do the deal then you don’t get paid.”
McGahey’s strategy is to look at the wider eastern region, as far west as Birmingham and as far south as north London. He says: “It is more about client focus and where they are going. We don’t have To Let boards up, we are working with clients and sourcing things, a lot of our stuff is off-market, we are not sitting and waiting for things to come along, it’s not really productive.”
Others are channeling different avenues – more recessionary business, some might say. Cheffins, already one of the largest auction houses in Europe for machinery and well known for its jewellery and fine art auctions, is looking to grow its property auction business.
It is something John Granger, consultant for Cheffins, says the company should have done anyway. “A lot of the auction houses have expanded and there is a lot more auction work around. It is not just the receiverships and work from the banks but public bodies and authorities that need transparency of an auction house or the government that is under pressure to sell surplus land.”
On agency, it is the same old story of nibbling away at an ever smaller slice of the cake. Phil Woolner, director of commercial at Cheffins, sums it up: “We are all doing smaller deals, and if you are not doing smaller deals then you are not doing deals.”
Strutt & parker enters cambridge market
Look out, there’s a new boy in town. Next month, Strutt & Parker will open an office in Cambridge. And much like at school, the new boy is being eyed with a certain amount of trepidation and suspicion.
Strutt & Parker, known for the strength of its estate agency, is opening not just a residential operation – which will include city centre agency – but planning, development and crucially commercial.
Starting with 25 people, the aim is to expand the operation to around 35-40 people in five years.
To say others in the market are eyeing the operation cautiously would be an understatement. “If I said I wasn’t worried or watching what they are doing very carefully I’d be lying,” said the head of one agency.
Behind the scenes there is talk of heads of agencies livid at approaches made to their staff – not that they would ever admit it publicly.
The first wave of Strutt & Parkers will be recruited from existing offices, but as the business grows there will definitely be recruitment from the local market.
Will Gemmill, currently in the Chelmsford office, will head the operation. Phil Dennis will cover the commercial side from its new offices on Hills Road.
But why now? Gemmill says: “If you look at the Cambridge statistics it is robust, akin to some of central London. We see it as a growth city.”
