Here’s the scenario: your agency team walks into the presentation room as part of the latest London agency beauty parade. You have a knock-them-dead PowerPoint presentation ready, you have checked each other for protruding nasal hairs, and you feel like you know the client’s business better than they know it themselves. It can’t go wrong.
In today’s market, these kinds of beauty parades matter more than ever. With developer expectations high, and pre-building completion deals increasingly commonplace in both the City and the West End, competition among agents is intense.
But there is one thing you have not quite worked out – and that is worrying you. What do the developers sitting on the other side of the table want? Not what do they say they want, but what do they really want? Deep down.
Today, EG can say.
Hines, the Houston-based property empire, knows what works on both sides of the Atlantic. Its modus operandi is to source third-party overseas capital to invest – or co-invest – in prime London assets. Sixty London, the £245m Amazon HQ, and 25 Cabot Square, the £223m sale and leaseback with Morgan Stanley, are good recent examples.
According to UK managing director Ross Blair and David Steinbach, US-based chief information officer for the Hines Global REIT, the answer is clear the moment you walk in the door.
Blair explains: “I’m not fussed by the content of the PowerPoint, because the people who know what they’re talking about will be obvious.
“Most property tasks take years, not weeks or months. I’ve got perhaps five years ahead with these people, week in and week out. Yes, they need market knowledge, and yes, of course they need the back-up services. But the question I ask myself is: ‘Can I see myself interacting with them for years?’ If I can’t, it’s going to be a pain.”
Steinbach agrees. “When you see them walk into a room you want them to be ready and focused, you want to know what kind of ideas they’ll add, and you want to know whether they are creative. It’s pretty evident from the first meeting whether for them it’s just another presentation.”
Getting an invitation to the beauty parade is a sign that the first “Can we work with you?” test has already been passed – or nearly passed.
“We don’t invite people unless we’ve met them before,” says Blair. “Essentially they’ve already passed or failed that test long before the beauty parade.”
Once you’re through the door, another set of criteria begins to count. “The top things for us are creativity and getting the deal done,” says Blair.
“I want agents who can see their way to the finishing line. I want their aim to be to close the deal, and to understand that both parties want this deal. My criticism is that some seem to be filling in nine-to-five and losing sight of the fact that both parties want to do a deal. I want agents who are creative and can ensure both sides get there.”
Proving that an agent – and his or her team – can complete a deal is followed by two other inter-related requirements: market knowledge and, increasingly, market-making skills.
Some UK developers admit privately that market knowledge is more or less the only thing they seriously look for from agents. Everything else is a bonus.
“Market knowledge is key,” says Blair. “In the UK we have a very transparent market, and you want to know what’s going on – whether it’s fact or gossip – because we need a feel for what competitors are doing, what occupiers they are talking to, what they plan to do next. Knowing what’s going on is crucial.
“This is why I’m personally not concerned when agents are acting on both sides of a deal. And there have been times when the same agent has been simultaneously taking a fee from me, and from the other party to the deal. That kind of thing makes some people nervous, but in fact it opens up space for the agent to make the market. They have intimate knowledge of both sides, and without that the two sides might seem too far apart.”
Here, too, personal impressions count. Talking in clichés and waffle will not impress. “Some people are very good at making markets. Some get it, and cut through all the nonsense. And some don’t,” says Blair, icily.
With all this in mind, Blair and his colleagues at Hines are not worried about the potential for a handful of global surveying firms to dominate the market.
“Yes, the big firms bring definite advantages, because we benefit from the peripheral services,” he says. “But I’m not concerned about consolidation in the agency business.
Blair is not alone. Many UK developers share his laid-back view (see panel).
So now you know. To please developer/investor clients, London agents should avoid talking waffle, show how to get deals done, and show how to create new deals. Last, but definitely not least, be likeable. With those four points sorted, agents have nothing to worry about.
Locals are tight-lipped
While US-owned Hines was happy to talk about its view of the agency world, local businesses were not so open.
AXA Real Estate, CapCo, and British Land were among the long list of big names who preferred to remain tight-lipped about their views of London agents. All the major London names politely declined EG’s invitation to offer agents some helpful hints on-the-record.
“Nobody will talk because these relationships are too important to talk about,” one insider told EG, under condition of anonymity.
Going international
Having an international perspective helps to win new agency business.
Agents with cross-border contacts are almost worth their weight in gold for investors such as Hines.
Hines’s David Steinbach says: “Cross-border is significant because it brings leverage, and opportunities, even at the simple level of bringing people together in one room at a conference.”
An agency big five?
Could we be heading for a Big Five surveying firms dominating their market, like the Big Five accountants?
Senior developers doubt it, and say they wouldn’t be upset if we were. They are intensely relaxed about concerns over increased conflicts of interest.
Great Portland Estates chief executive Toby Courtauld is not worried by agency consolidation, takeovers and mergers. “We’re not short of choice,” he says. “The agency market is full of talent.”
He adds: “I’m not worried about a Big Five because niche firms are springing up all the time. The fact is that surveyors do not play the same kind of role as accountants. Their agency input is different, and they don’t need the same kind of big capital behind them to cover their risks that the accountants do. Simply, it’s less complex. What we want from them is a window on the market.
“Conflicts of interest are something you deal with. They’re apparent in all walks of life.”
GPE’s London office development pipeline includes 75,000 sq ft at St Lawrence House and another 217,000 sq ft at Rathbone Place, both W1.
For more on consolidation and mergers see EG London’s 8 November edition.
