In July this year 176-year-old estate agent Humberts revealed it was making a journey ‘away from the high street’ with five new regional hubs replacing many of its non-franchised traditional offices.
Although this was a shock for some, Humberts’ hubs in Poundbury, Tunbridge Wells, Cirencester, Exeter and Bath are a result of a seismic changes within the UK economy and the property industry driving agents to think afresh about their business model.
These include rising rents, high business rates, competition from online hybrids such as Purplebricks and eMoov, a decline in high street footfall in some towns and increasing digitisation of people’s lives.
Although these factors played a part in Humberts decision to go ‘off high street’, it had its own particular circumstances to deal with too.
The business, which at one point went into voluntary administration, was making a considerable loss prior to its purchase by holiday lets firm Natural Retreats and since then has been implementing radical changes.
The key idea is to centralise itself and become a full-service agency managing both private lets and holiday rentals as well as sales from its new hubs, while employing Property Consultants in the field.
These changes are for non-franchised operations, it should be noted, as its franchised ones remain on the high street.
“Connells’ business prides itself on its customer focus and intimate market knowledge, something which we believe can only be achieved through ‘boots on the ground’ in the locality that they operate, and which subsequently provides the best outcomes for our customers,” says Connells boss David Plumtree.
The hubs emerged from the Natural Retreats deal during which Humberts had the choice of taking the high street leaseholds with it or looking for an alternative while retaining most of the staff, DealMakerz has been told.
Launching the new hubs, at the time CEO Matt Spence said the move was in response to consumer needs and to make the company relevant to the market today.
Mark Hayward, Chief Executive of NAEA Propertymark, says: “The new Humberts model isn’t that different to other agents such as Keller Williams, which has trained staff but no high street presence.
“Our members report continuing good levels of footfall into their branches but there is clear evidence Millennials don’t want to do that and instead prefer to go online.
“Take Foxtons, for example. They still have high street premises but in effect they are a static billboard for their business while much is done offsite including sales progression.
“Estate agency is changing and there are a lot of different models out there so it will be interesting to see how it progresses; remember although fee levels have dropped, the number of branches has increased by between 10% and 15% since the recession.”
As Mark points out, Keller Williams operates hubs although it calls them ‘market centres’, enabling its agents to use them for meetings, training and mentoring.
“People no longer need to visit a high street office when buying, selling, letting or renting a property,” says Ben Taylor, Managing Director of Keller Williams UK.
“Consumer processes are changing, and the property industry needs to keep pace. Agents sitting in an office waiting for people to come in are wasting valuable time and could instead be actively pursuing new opportunities or visiting prospects.
“However, we believe that serviced offices are the way forward as they provide agents with the space they need but are significantly cheaper than paying for an expensive presence on the high street.”
Such enthusiasm for ‘co-working’ spaces off the high street has few friends within the big national chains.
David Plumtree, Connells Group Estate Agency Chief Executive, told DealMakerz that Connells Group has “absolute commitment to its high street estate agency operation and there is no intention to dilute this with the introduction of regional hubs”.
“Our high street branches provide the best service for customers who value the ease of face-to-face accessibility and which undoubtedly aids our relationship building with them.
“Connells’ business prides itself on its customer focus and intimate market knowledge, something which we believe can only be achieved through ‘boots on the ground’ in the locality that they operate, and which subsequently provides the best outcomes for our customers.”
Like it or not, most agents agree that the emergence of hubs and the withdrawal by some agents from the high street has been spurred on by the rise of hybrid agents, and their low-fee, home-working-local-agent approach has altered some consumers’ view of what an agent is.
It’s a trend that Russell Quirk, CEO of eMoov, says he predicted two years ago when the former traditional agent said there would be fewer branches which would instead offer ‘extended coverage’.
“My criticism of high street branches in the past has been around fees but look at it in more depth and it’s about there being too many, and that their cost are being passed on to the consumer,” he says.
But agents who think they can ‘hub’ or ‘hybrid’ themselves out of trouble or into greater growth should realise it’s not as easy as it looks.
“You need to spend several years, as we have, building a team, a marketing strategy and the technology predicated on not having any branches,” says Russell.
“It is entirely different to running a branch-based estate agency business. You can’t just have a ‘hub and spoke’ model or serviced offices, it’s all about who you recruit, how you run them internally, and the tech you have to have in place to service your team and the customer.
“What’s really different is how you acquire customers – you have to understand how SEO, PPC and public relations work to make you look and feel like a local estate agent.”
But not all innovators are big players. Lodestone, a two-branch estate agency in Somerset, recently opened its second ‘off high street’ branch.
Lodestone was started by Cathy Morris-Adams and Sue Macey who say their key (and refreshingly simple) reason for moving off the high street was to avoid the tourists and tyre-kickers who used to take so much of their staff’s time.
Nevertheless, they say it’s also been facilitated by the advent of the big portals like Rightmove, which they say have completely changed the game and that only “serious buyers use the internet”.
“Rightmove isn’t our only tool by any means and we talk in-depth to people face-to-face or on the phone to understand every detail of their lives so that they feel they can trust us,” says Sue.
She says the ‘ridiculous’ cost of having a shop front has also been a major factor for Lodestone and that traditional high street branches are too small to house the size of teams it needs to service properties and clients properly.
The flipside of this is that agents who do go off the high street have to work harder at ensuring potential vendors, buyers, tenants and landlords know ‘they exist’. Lodestone also says it works very hard engaging with the local towns that are located in.
“We are modern agency with traditional values, but we work hard to exploit the modern digital world including social media and particularly Instagram, which we use to show off the ‘lifestyle’ of a property,” says Sue.
“Lodestone gets around 4,000 visitors to our website every month but 37% of that traffic comes from social media.”
Despite the pioneering efforts of industry players from local independents like Lodestone to £100m firms eMoov, the majority of the industry spurns hubs and continues to invest heavily in high street branches, despite the economic and technological winds blowing hard against their windows. The question is, how long can they resist?