CB Richard Ellis’s decision to create an auction department at a time when commercial sales have been heading in a southerly direction was calculated to help clients maximise proceeds from their property sales and fill in a missing link in the global agent’s repertoire.
But despite a challenging landscape, the pairing of Chris Mills, former development director at Highcroft, with John (Tiny) Townsend, former head of commercial auctions at Cushman & Wakefield, to create an auction department may pay dividends for the agency. The pair last worked together in 1994 at Erdman Lewis.
On many levels it is easy to see what supporting beliefs may have underpinned CBRE UK’s managing director Martin Samworth’s decision.
Mills and Townsend, who is the lead auctioneer and main spokesman, are an engaging double-act. They combine an ability to connect with clients with an impressive track record and a depth of knowledge. Their first appearance will be at the debut auction on 10 November at London’s Millennium hotel.
Both men have a tangible competitive edge. Beneath the badinage and bonhomie is an appetite to establish a highly successful business model that will give Allsop, Acuitus and Jones Lang LaSalle a run for their money.
Townsend says: “It is a challenging time. The market has been very squeezed, but it could well go the other way. More receiverships are going to come through. Two years ago we anticipated they would do so but they have not. However, there is a large quantity of debt to be renegotiated and much of it will not be.”
The commercial auction world has passed through an undeniably turbulent time in the past three years, sending receipts down by more than half.
This was highlighted by Cushman & Wakefield, which brought down the curtain on its auction department in May. At the time, David Erwin, C&W’s chief executive officer of UK capital markets, said: “The reality is today that volumes and prices in commercial auctions sales are falling and our focus is on continuing to expand and invest in higher-margin areas of our capital markets business.”
So with an eye on profit margins, Mills and Townsend are going to be involved in smaller private treaty sales, online and room sales for up to £4m, and private auctions for larger lots at the eye-catchingly on-trend CBar in the basement of CBRE’s swish new offices in Henrietta Street, WC2.
Long-held dream
According to Townsend, the prospect of working for CBRE is far from recent. He says: “We had been talking about it since 2005 but for various personal reasons it has taken this time to come to fruition. We started talking again in 2009 but this was put on hold until spring 2010 because my wife, Sally, was terminally ill.
“From my perspective, it is an extremely attractive proposition to work for the biggest firm in the world, with a vast array of clients and a depth of regional presence that I would have been unable to reach in Cushman & Wakefield. Townsend does concede that it is a tough marketplace, but he believes the recent stock market volatility means that commercial property can give better returns, and more receivership sales are beginning to filter through, however pricing is difficult.
“Stock is beginning to flow in and we would like to get around 50 quality lots. There are a number of big corporate companies that are now considering auctions via CBRE because it is an option, and in the past they would have gone elsewhere,” says Townsend.
He adds: “We plan to hold six sales next year and though we are pitted against Allsop, Acuitus and Jones Lang LaSalle, we feel they do not have the sheer coverage we have in this area. where we can find almost anything we want from experts in the fields of pharmaceuticals, automotives, property. The response to the launch of our department has been phenomenally positive from everyone so far.”
They say the decision to offer clients an array of options, from private treaty, to auction, private auction and online sales, is simply “horses for courses”.
“The ideal size for auction is around £1m but we can deal easily with lots of £4m or even £5m,” says Townsend. He cites the last C&W sale, which saw the gavel come down on a lot in King Street, EC2. This had been offered for sale prior through private treaty, but sold in the room at just under £6m.
As for online auctions, Mills believes they could well be an alternative option for larger or more difficult lots: “We are aiming to offer a service in-the-round. It is an area that CBRE have not had access to in the past. It has not been selling smaller and lower priced investment lots and this is what we will be mopping up and adding to its investment offering.”
The six-person team, including David Margolis, Martin Christopher, Sarah Butterworth and administrator Heidi Pritchard, will also continue to work in joint agency with other agents as general auctioneers.
Mills says: “There is a spirit of co-operation in this company that I have never witnessed and we have the advantage of knowing its senior operators personally before we came here because we have either worked with them before or been to college with them, so the relationships are already established.”
John townsend
Education Ampleforth College, York
1983 joins Edward Erdman’s auction department, after earning BSc in Estate Management at Thames Polytechnic
1987 wins ISVA auction competition by “selling” Clifton suspension bridge
1988 named head of the auction team
1996 joins Healey & Baker
2000 takes over as head of auctions.
2011 joins CB Richard Ellis.
Widowed. Has one son, Harry
Chris Mills
Education Bristol Polytechnic
1983 joins Strutt & Parker as agent
1986 joins London & Metropolitan Estates as director
1992 joins Colliers Erdman Lewis
1994 joins Hartnell Taylor Cook as auction partner
1997 joins Countryside Commercial
2001 joins Friarsgate Developments
2005 joins Highcross as director
Married to Pippa. Has three daughters
Private investor Tony Kalatschi of Flowdrive: “The decision to hire John Townsend and Chris Mills is profile-raising for auctions as a sector and what you would hope for from a big company. I have worked with John for 25 years. He brings a depth of experience, wisdom, market knowledge and skill that I trust. It is a difficult market but the team will be successful. It is a great opportunity for them.
“There are definitely signs the banks will be disposing of lots on lease expiry, though it may be more difficult to sell bigger lots at auction. I have found that it is better to put smaller lot sizes in at the present time. There will be growing pressure on people to sell more quickly, especially in the secondary sector.”
Bill O’Hara, Paradigm Real Estate Managers: “As a practitioner, John Townsend has a unique insight into auctions. His guidance into where valuations are at the moment is quite exceptional and he has clarified a lot of issues for us particularly while the stock market has been so volatile.
“Auctions are a separate world, quite distinct from the mainstream investment market. It is cyclical, and he understands the cycles within his own sector wonderfully well.
“I am sure CBRE’s presence will be enhanced in the wider property market because of the acquisition of John, Chris and the team and it will be a very slick operation.”
