National estate agency Humberts has endured an unusual year by any measure of business performance.
In May this year the then loss-making 176-year-old company went into administration and, when it did, redundancies were predicted by its MD Ian Westerling as a buyer was sought for the profitable parts of the company’s operation.
But in an astonishing turnaround, in May it was bought out of administration by upmarket holiday rentals firm Natural Retreats and its business model turned on its head. This included focussing on half a dozen ‘hubs’ mostly off the high street to replace its traditional network of branches.
The strategy was greeted with some scepticism within the industry; estate agents are married to their high street branches both by long leases and local rivalries. Many continue to believe that, in the face of intense local competition, withdrawing from the high street is madness.
But industry business consultant Michael Day told DealMakerz that it is only a matter of time before these leases come up for renegotiation, at which point the sector may witness a huge migration from traditional offices as more agents join the ‘hub club’.
The senior industry player at the heart of this drama is Tim Simmons, Humberts’ Chief Operations Officer and the man responsible for launching its hubs.
He has been with the company since 1999 and has been promoted three times since the beginning of the year, rising from Head of Residential in January to his current role.
DealMakerz talked to him at the company’s new hub in Poundbury, Dorset, which is to be its first operational off-high-street business address, one of seven it is due to open.
Its Poundbury hub will serve Dorset while the others will cover Devon, Somerset, the Cotswolds, Kent/Sussex, Cheshire and the Lake District, although Tim says Humberts has plans to expand this operation and he’s already been talking to other estate agency groupings to begin this process.
“Every month since Natural Retreats took control of the business has been a profitable one.
“Our competitors always concentrate on the fee cheque at the end, while we’re trying to completely do things a different way by offering a lifestyle concierge through Humberts Living that will offer an additional revenue stream. This will include services such as interior design, gardening and home improvements.
“Humberts Living is now in its third month and has been growing by about 250% a month.”
“As a business we found that we were in buildings with very restrictive leases which were difficult to quit because of the dilapidation liability. The one good thing about going into administration is that it has freed us from these onerous commitments, so that’s why we were able to do it. It’s how people consume property now”. – Tim Simmons
“After we were bought by Natural Retreats I talked with the new owner Matt Spence very shortly after that and we discussed our plans for closing our high street network,” says Tim.
“We were in Bath at the Spaces co-working building discussing what to do and we began drawing the hub plan out on a piece of paper.
“He and I decided that because broadly speaking our offices are in groups, by centralising them it would not only save costs but our staff would be a lot more efficient and productive.”
“For example, we have three Dorset offices and all of them used to have an office coordinator who took all the telephone calls, did all of the admin work and had to have their own photocopier and printer.
“Now they all work together on the same floor, use pooled equipment and by working together they’ve found they work together much more efficiently.
“I always felt that people coming into traditional branches felt a bit awkward having a private meeting in an open office and they weren’t a nice environment.
“A lot of them haven’t changed in the last twenty or thirty years and are pretty decrepit and Humberts were no exception to that.
“We wanted to create somewhere clean and fresh that was a creative and nice environment for staff and customers.”
“Our hubs are to be very different to traditional estate agent branches, which I believe will soon have the same relevance as a Blockbuster video branch; traditional agent offices are not how people look for properties now. We found they were just where staff went in for meetings but not much else.
“Now, our property consultants come in to have their meetings and can use the desk space, but they are largely field based with a laptop, phone and car. “This gives them much more flexibility in the way they work, supported by a base team.
“While we look for new properties for the other hubs, they are based in serviced offices sourced via one of our sister companies.”
“A lot of our competitors are saying privately to us that it’s a brilliant idea but publicly saying we’re ‘just’ an online agent, which of course we’re not.
“One of the problems of competitors is that they’ll always try to compete against you even if they know they’re going against the grain; they say they’re proud to be on the high street but in reality, they’re probably not.
“As a business we found that we were in buildings with very restrictive leases which were difficult to quit because of the dilapidation liability. The one good thing about going into administration is that it has freed us from these onerous commitments, so that’s why we were able to do it. It’s how people consume property now.
“For some of our buildings, it would have cost us £100,000 to leave them because they are often in Georgian town centre buildings and, when you start adding up the dilapidations, it’s exorbitant. Often agents find they both can’t afford to stay but they can’t afford to leave either.
“No, I don’t think so; it’s just changing. People will soon go there to be entertained and maybe even live, but not to shop. I visit a lot of them with my job and you see row after row of branches with no one in them
“And yet they’re so expensive to run with rates, heating and car parking to pay for. They’re just a place for staff to liaise. So why not move it all off the high street?”.