Leaps of Faith

City agents are jumping ship to position themselves for an upswing. Hardeep Sandher reports More than 20 high-profile City of London agents have moved firms or started up on their own in the past 12 months - in preparation for an upturn in the market. CBRE figures show that the Square Mile ended 2012 on an optimistic note with investment volumes of £8.9bn - up from £6.1bn in 2011. Office take-up was up by 22% - on 2011, at 4.2m sq ft - although this was well below the long-term annual average of 5.1m sq ft. Investment transactions in the City have already reached £1.6bn in the first two months of the year, and more than 1m sq ft of space is under offer, so there are hopes of an uptick in 2013. In anticipation, the big firms want to beef up teams by poaching the best agents. Meanwhile, experienced agents see an opportunity to set up on their own and dedicate their time and experience to a few select clients that will pay them well. The hopping of agents from one firm to another and spawning of new start-ups is part of the property agency lifecycle - and often occurs after a recession. Cushman & Wakefield started to “bulk up” in February 2012. It poached two of CBRE’s big hitters, Digby Flower and Andrew Parker, who joined as head of central London and head of City office agency respectively. The departure was a blow for CBRE where the duo had worked for a total of 40 years. However, for Cushman it was part of a plan to become a “top three” player in the City of London market, emulating its success in New York, where it is number one. Since Flower and Parker joined, the firm has been appointed on high-profile schemes such as Brookfield’s 600,000 sq ft Principal Place and WR Berkley’s 500,000 sq ft “Scalpel” tower on Lime Street. CBRE responded in April by hiring one of Knight Frank’s top leasing agents, Chris Vydra, as a director. But there were more departures from CBRE in August, when Dan Roberts, head of City leasing, left to join niche firm GM Real Estate as partner. Sam Boreham, a director in Jones Lang LaSalle’s City leasing team, also joined as partner. Specialist agencies’ appeal has grown. Investors in the City appreciate the personal approach of the smaller firms and dealing directly with an experienced partner who takes a hands-on role in getting their deal over the line. At large firms, a team of mid-level agents will work on a deal for a client, overseen by a director. The success of the small firm is epitomised by GM Real Estate, which in 2012 came third in the City of London investment agent league table by Property Data - after CBRE and Jones Lang LaSalle - by number of transactions and by total transaction volumes. GM Real Estate completed 20 deals valued at £2.2bn. On the leasing side, some of the City’s biggest developers are choosing smaller firms to market their schemes. Brookfield Office Properties and Oxford Properties appointed GM Real Estate alongside Jones Lang LaSalle to let their 500,000 sq ft London Wall Place scheme last year, soon after Roberts and Boreham joined. As big fish in a smaller pond, top agents join the niche firms as partners, giving them a juicy cut of some of the UK’s highest transaction fees. Of the top five biggest agency firms, only Knight Frank remains a partnership. This partnership fee model may explain why in September, BNP Paribas Real Estate had to say goodbye to leasing agents Jeremy Trice and Tim Davies, and investment agent Mike Pope. They left to form Gryphon Property Partners with Jones Lang LaSalle letting agents Colin Hargreaves and Catherine Carr. Partner Davies says: “I and several of the other partners [that started Gryphon] had actually worked at smaller firms previously. I had been at Morgan Pepper. We were bought by BNP Paribas Real Estate and we spent four years there. If I do a deal, I will benefit directly. I’ll have to work harder, but it is more hands on Tim Davies, Gryphon Property Partners “I enjoyed my time at BNP Paribas Real Estate but there is a market for smaller firms that work more closely with clients. From my point of view, the rewards are more tangible, too. If I do a deal, I will benefit directly. I’ll have to work harder but it is more hands on.” The same month, Ross Davies, Jones Lang LaSalle’s European director joined Capital Real Estate Partners as a partner, and BNP Paribas Real Estate suffered further departures - of investment agents Shaun Gorvin and Daniel Silverman. The duo set up another niche firm, GS Capital Advisors. Gorvin says they hope to move away from the traditional agency relationship, to provide advice to targeted clients. “The market has changed, and clients can be overwhelmed with five or six agents offering them a building,” explains Gorvin. “The agents are obviously hoping to make a fee but the client might not know who to trust or not, or if the deal being offered is a good one or not. “Our aim is to get close to a few key private clients and advise them on those purchases, honestly and independently.” Other departures in the City in September have focused neither on agents joining large corporate firms or a niche firm. In September Montagu Evans suffered an exodus when Toby Pentecost, an associate in the team, left to join developer Quadrant Estates as an associate director. Simon Crotty left for Colliers International’s City agency team, and veteran City agent Martin Wallace left to go client side, and joined Brookfield Office Properties as head of leasing. “I would never have left Monties to join a competitor [agency] and it was a tough decision to resign from the partnership,” explains Wallace. “But the opportunity to join Brookfield would never come around for me again. “Both the size of the portfolio [in London] and the timing of this journey - the train is just leaving the station for Brookfield in London so to speak - meant I couldn’t turn it down.” The departures have left some bigger firms with holes in their City teams, which they now need to fill, if the expected upturn materialises. BNP Paribas Real Estate was the first to do so when it poached three City investment agents from GVA in December. Richard Garside - former head of GVA’s City of London team - James Hiatt and Tom Hood joined BNP Paribas Real Estate as senior director, associate director and senior surveyor respectively. Cushman & Wakefield continued its attempt to beef up its team by poaching CBRE’s senior director Robert Murphy to head its City development team in January. James Walker, a director at Deloitte Real Estate, joined CBRE as a director in January as well. CBRE and Deloitte Real Estate are likely to want to fill the holes left in their teams, while GVA is already trying to hire agents to replace those it lost last year. The next moves are already starting to spawn