“Our first deal was Moor Place – 167,913 sq ft – and it is stamped on my brain,” says James Townsend (above left), co-founding partner of Kontor. “We went from viewing the building to signing within 10 days – it was quite a learning curve for a young guy leaving CBRE.”
That acquisition, like many of Kontor’s deals to date, was for WeWork, the $10bn (£6.6bn) shared workspace start-up which has been growing at break-neck speed. Luke Appleby (right) and partner Townsend owe much to WeWork for their own rapid growth.
“We didn’t know it was going to happen,” says Townsend. “We were leaving CBRE and we knew we might be giving up this relationship. I was offered a job internally with [WeWork] so I had to come clean about our plans. They said: ‘OK, well, we want to keep working with you, so talk to us when you are ready’.”
Townsend and Appleby, both now 30, met four years ago while at CBRE. Townsend worked in central London tenant representation; Appleby with landlords in the City and fringe.
The low-profile nature of the instructions they were typically tasked with handling for tenants and landlords meant they ended up on several deals together. Often those deals involved the sort of creative occupiers that could afford only what at the time was cheap fringe space. But time spent with small occupiers in low-key areas gave the pair a good insight into what was fast becoming one of London’s most important growth sectors.
Realising that big agencies preferred to focus on established occupiers, which generate bigger fees, Appleby and Townsend decided to go it alone in order to focus on the start-ups they were getting to know. The theory was that they might not deliver much in the way of fees now, but at least one or two of them might make the leap from start-up to multinational, and with WeWork they hit the jackpot.
“We saw the opportunity to work with smaller businesses at the early stages of their growth,” says Townsend. “If you are a start-up working with founders of other businesses it means you build up that trust very early on. At a big corporate agency you have targets to hit. As a small business we can focus on smaller occupiers and give them the love during their initial phases of growth, to grow as they grow.”
That “cultural alignment”, as Appleby puts it, was crucial for Kontor, and the founders spent a long time working out their brand before launching.
They were eager to demonstrate to start-ups that they were the same as them – that they “hung out in the same places, shopped in the same places, liked similar things”, says Appleby.
Townsend adds: “One of the things about real estate is that it can be a bit stuffy. If we were going to cater for tech and creative businesses, the brand needed to be aligned for them to use us.
By the same token, Kontor has focused on occupier sectors rather than London geographies in an attempt to truly understand the businesses they seek to advise. That approach has helped them win work internationally, advising clients on acquisitions in cities including Berlin, Paris and Amsterdam. While local agents are brought in for on-the-ground advice, Kontor is retained as a trusted adviser.
Beyond WeWork, the firm has won instructions from tenants such as Propercorn and Runway East and it has recently secured its first instruction to dispose of space in Berlin. The new instructions have enabled the firm to start hiring. In autumn last year it offered work experience placement Jack Fryer a full-time role and it has recently hired Sam Dawson from Instant Offices to help advise occupiers that want flexible arrangements instead of fixed leases.
Looking back, Appleby admits the decision to go niche was “a bit risky”. But he says they were confident it could be successful. Both are convinced that proptech – the emerging cluster of start-ups devising technologies for the property sector – is going to shake up the industry, introducing transparency to a market whose opacity has long been a source of power for agents.
If that is the case, when clients have access to most of the same information and opportunities as agents, will there still be a place for niche firms? Absolutely, says Townsend.
“It will be more about the service you provide, your negotiating skills and the consultancy side of things than just day-to day-brokerage,” he says. “People are going to want more for their money.”
