Deloitte Real Estate has agreed deals to offload the majority of its transactional staff.
- The asset and property management team of 48 will be transferring to Knight Frank, including partner Julian Stocks. Stocks is one of the UK’s best-known advisors and will join Knight Frank as an equity partner.
- DRE’s West End leasing and City leasing teams, lease advisory and lease exit teams which total 19 people, will transfer to Gerald Eve. The teams include partner and head of transactions at DRE, Stephen Peers; head of the lease exit team, Mike McChesney; head of lease advisory, Tony Guthrie and Steve Johns, head of City leasing.
Click to skip below and find out what Gerald Eve will gain in the London office league tables with the moves
- The City investment team, which totals four people and is headed by Jamie Olley, is transferring to Savills. The team also includes Thomas Reeves, Jamie Binstock and David McArthur.
A further team of 17 focusing on national investment and led by John Rodgers has yet to have its future finalised. Two parties are in detailed discussions, one of which is understood to be Lambert Smith Hampton owner Countrywide.
The transfers, including those for the national investment team, are expected to conclude on 31 May.
The changes are as a result of a formal strategic review of its agency and investment businesses which began in February. The review was prompted due to conflicts arising from being part of a big-four accountant and US Securities and Exchange Commission regulations.
The Deloitte Real Estate business will still have close to 600 fee earners following the transfers. Led by Nigel Shilton, it continues to have expertise in tax, audit, consulting, financial advisory, construction, planning and development and occupier advisory.
WHAT THEY SAID
Today’s announcement on the future of the teams leaving Deloitte will bring an end to a three-and-a-half month process to address problems that have occurred at its real estate business due to conflicts.
Nigel Shilton, senior partner at Deloitte Real Estate was keen to highlight that the transfers were not as a result of weaknesses relating to the staff involved but purely because of conflicts and regulation.
Deloitte expanded the size of its real estate business and transactional element in particular when it bought Drivers Jonas in 2010.
“It is good to end the uncertainty and it is a positive step forward for the various teams. Most of the bits of the business have realised synergies with Deloitte but what we have been finding is that one or two parts of were struggling for various reasons – risk and regulatory and SEC issues – that were limiting growth. It has been no fault of the teams that are exiting – they have just been conflicted,” he said.
Although the core elements of the DRE business are performing well, with annual revenue of £244m and winning mandates to advise the likes of Network Rail and on the Palace of Westminster, competing with the largest firms on the transactional side had become difficult.
“If you look at the transactional side of things and the consolidation in the market, it is not getting any easier to compete. You need to either be niche and boutique or large and global,” Shilton added.
Having seen strong demand to take on the teams, Shilton says that he expects to see more merger and acquisition activity in the near future.
“For quality teams and individuals like these there is lots of interest in the market. Most are very acquisitive and there are interesting names out there that wouldn’t be well known in the UK that are looking to come in and establish themselves. So for the next 12 to 18 months it will still be an active market and when you have the likes of LSH with financial backing it is always going to be a hot market.”
DRE announces sales of Agency, Lease Advisory & APM businesses https://t.co/TNUF0VuuTe
— Deloitte Real Estate (@DeloitteUK_RE) April 18, 2016
The biggest transfer of staff from Deloitte will be to Knight Frank, with the 48-strong property team moving over. Julian Stocks currently leads the team and will join as an equity partner. However, Tim Robinson, Knight Frank’s head of property asset management, will continue to lead the department.
“We will need to integrate my team with their team. I have no intention of getting back into managing lots and lots of people again though – I will be back to looking after clients and rainmaking,” Stocks said, who joined DRE in 2013, having been UK managing director at Tishman Speyer.
The major mandates that Stocks looked after at Deloitte, The Pollen Estate and The Mercers Company, will also transfer to Knight Frank.
“It is only right that I transfer with that business,” Stocks said.
Undertaking more property management business at Deloitte had become a particular problem because of conflicts with its audit business.
“One of the issues we have, as Deloitte grows its real estate audit business, is as property management draws together service charges and all of that sort of stuff, as an auditor, you can’t audit your own numbers and management information. You can’t audit Deloitte work that has been done as part of property management,” explained Nigel Shilton, DRE senior partner.
Stocks praised the way the review had been undertaken at Deloitte and the process of transferring stagg had been dealt with.
“The grown up and collaborative approach Deloitte has taken has been quite something. It has been a collaborative approach and although it has taken a while, it has been done right. We have been allowed to choose the right home for each business,” he said.
“We only had two criteria – doing what was best for clients and what was best for the people moving and things really have been done eight by both. We are moving from one great partnership to another and we will be at a home that sees property and assets management as a core team.”
Alistair Elliott, senior partner & group chairman, Knight Frank, added: “Julian and his team run a fantastic operation with a first-class client base. Their culture is very closely aligned with our own, and I have no doubt that they will be an excellent fit.
“We continue to focus on developing our property asset management platform across the UK, and these appointments give us substantial confidence about increasing our market share in the management arena.”
With Gerald Eve taking on 19 new staff, it will instantly bolster its transactional business as it aims to diversify its largely professional advisory income.
It will take on four new teams, West End leasing, headed by Stephen Peers; City leasing, headed by Steve Johns; lease exit, headed by Mike McChesney and lease advisory, headed by Tony Guthrie. As a result, Gerald Eve’s total headcount will hit 450.
Simon Prichard, Gerald Eve’s senior partner, said: “We spoke to a variety of businesses within it including those that went to Savills and Knight Frank. You can’t stand still. One thing I have learnt since having been on the board here is you have to keep reinventing and moving forward. Our strength is in consultancy. We have a fantastic client mix but it has a very annuity flavour to its income profile in the sense that it is consultancy work rather than brokerage led.”
Gerald Eve counts many of the landed London estates amongst its clients, which it undertakes planning, development and strategic land work for. Pritchard hopes that increasing its transactional staff will allow it to undertake a greater variety of work for those types of clients.
“Where we have been lightweight is on the transactional side in London and now having those people on the ground to work in central London office markets in particular, means that we will be able to make a real impact straight away rather than just growing organically,” Prichard added.
Peers added: “We have been flattered by the level of interest in the transactional teams and our sole focus has been to select the right suitor with a platform for growth and a culture the whole team could buy into. Gerald Eve is a firm which does both and, to be honest, this feels very much like a homecoming. We are confident that our arrival alongside Gerald Eve’s existing transactional teams will create a much enhanced market-facing business with a very real opportunity to grab market-share.”
McChesney said: “When weighing up our options, it was important for all of us to join a real estate focussed business that had an understanding of the value our specialist teams could bring. Our lease exit and dilapidations advisory business alongside Gerald Eve’s existing strengths in occupier services and business rates is a compelling offer and we look forward to making a material contribution to the overall business as we move forward together.”
Guthrie added: “One of our key drivers in this process has been maintaining the strong links which exist between the lease advisory and agency teams. Collectively we all agreed that Gerald Eve offered the right credentials in terms of a highly reputable brand and a team focussed culture. I am confident that, having explored various alternative options, we have secured a really positive outcome that will be in the best long-term interests of our clients and our people.”
What will Gerald Eve gain?
Gerald Eve’s stands to power up the London league tables as a result of taking on the Deloitte Real Estate staff. According to EGi’s London Offices Research league tables it would gain 14 places in London overall with the biggest gains in the West End where it would climb 16 places.
Hover over the bars below to see absolute values.
Source: EGi London Offices Research
| London league table rankings 2015 | ||||
|---|---|---|---|---|
| Gerald Eve | Deloitte Real Estate | Deloitte/GeraldEve | Move | |
| Overall | 29 | 18 | 15 | ^14 |
| City Core | 15 | 12 | 10 | ^5 |
| West End | 34 | 26 | 18 | ^16 |
| Midtown | 9 | 9 | ^9 |
Gerald Eve acquires key transactional teams from Deloitte: https://t.co/xIzhuXEfd7
— Gerald Eve (@GeraldEveLLP) April 18, 2016
‘This feels very much like a homecoming’ Deloitte to transfer transactional teams https://t.co/ISb4jJZNKA 4 teams to join @GeraldEveLLP
— Jerry Schurder (@JerrySchurder) April 18, 2016
The four-strong City investment team of Deloitte Real Estate is moving to Savills. Led by Jamie Olley it also includes Thomas Reeves, Jamie Binstock and David McArthur.
They will be integrated into the existing City investment team and form part of the firm’s wider central London investment team led by Stephen Down.
The DRE City investment team and the Savills investment team know each other well, having worked together on the £700m sale of the Gherkin, EC3, at the start of last year.
Down said: “This focussed team of well-regarded London investment specialists, led by Jamie Olley, will be a superb addition to Savills where we continue to add to the business to fulfil our ambition to be the leading central London investment consultancy.”
Olley added: “We look forward to joining the London investment team at Savills which we consider to be the ‘premier’ investment agency in central London given the success they have had across London and on some very significant high-profile transactions over the last few years.”
Deloitte Real Estate’s City Investment team to join Savills: https://t.co/zKdADLSpep
— Savills (@Savills) April 18, 2016
SEE ALSO
Top five London agents
| Top five London agents, EGi Research | |||||
|---|---|---|---|---|---|
| Market share (%) | CBRE | JLL | Knight Frank | Cushman & Wakefield | Savills |
| 2015 | 23 | 22 | 14 | 12 | 12 |
| 2014 | 23 | 22 | 12 | 14 | 12 |
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London league table listings
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