“It’s not a rehearsal, don’t f*ck it up.” That was the mantra drilled in to Stephen Hubbard by his long-term client Gerald Ronson. And as CBRE’s UK chairman prepares to retire from the firm after more than 40 years of service, it’s clear the advice stuck.
Over the course of his career, Hubbard became one of the biggest dealmakers in London. He was Ronson’s man, advising the property legend on all of his central London investments from the early 1990s, including the iconic Heron in the City. He acted for the Crown Estate on the sale of a 25% stake in the UK’s most famous shopping street, Regent Street, to Norges Bank Investment Management and most recently – in his last big hurrah before quietly departing from Henrietta House – completed the €1.3bn (£1.1bn) sale of Green REIT to Henderson Park.
The numbers add up to multiple billions of pounds, with seemingly – or not that he’d admit, anyway – no f*ck up in sight.
Hubbard joined the industry straight from school and jokes that passing his RICS qualification was his first taste of academic success.
He moved from Reading, Berkshire, aged 21, to do what he thought would be three years of experience in London before heading back to the Home Counties.
But three years suddenly became 43.
It’s a long time to stay with the same company and it’s something that Hubbard says baffles some of his younger colleagues.
“People just can’t comprehend how you can stay in a business for 43 years,” he says. “I just had a breakfast with 20 of our young people and none of them were probably over the age of 31 or 32 and they were marvelling at how anybody could be around here for longer than they have been alive – significantly longer.”
But Hubbard says the business he joined 43 years ago, Richard Ellis, is nothing like the one he will be leaving later this year.
When he joined, the firm had a global workforce of just 500 people and a UK employee base of 300. Today the UK business employs 3,500 and globally that number tops 90,000.
He says it is the “extraordinary transformation” that the business has been through and the opportunity to continue to learn that has kept him motivated and loyal for so long.
Trend-spotter
For Hubbard, one of the biggest learnings during his career – and one which has enabled him to be involved in so many high-profile deals – is the ability to spot trends early.
“The main thing I have learnt in my career is to try and keep ahead of the trends and spot trends that were coming up,” he says.
Hubbard points to his first big investment deal in the early 1980s as an example – the £45m sale of a big retail block in central London.
Hubbard, via an introduction by the firm’s Dutch office, acted for Dutch pension fund PGGM on the acquisition of the former Swan & Edgar department store at Piccadilly Circus, the block that later housed Tower Records. But it wasn’t the lot size itself that made the deal such a trendsetter – it was the first major UK property play by an overseas investor.
The deal sparked something in Hubbard and he set off on a global hunt for more investors wanting a slice of the UK investment market. International investors now dominate the central London real estate market, accounting for, on average, 80% of all transactions.
“It was the first significant overseas capital coming into the London market and I just sensed something,” says Hubbard. “I decided ‘There’s something in this, I think I need to invest my time in it’ and I did. I travelled the world talking to sources of equity that could potentially invest over here. I wasted a lot of time in the US thinking that the US money would come across but it didn’t. But I was much more successful around Europe, in the Middle East and in Asia.”
Hubbard says it was being able to spot that trend – and then acting on it – that was the most defining moment in his career. That it was that shift in focus to overseas investment into the capital that got him into the big London transactions he built a reputation around.
Portraits: Tom Campbell; Heron Tower and Swan & Edgar: Shutterstock
Trusted adviser
While Hubbard is too humble to admit it, it is his reputation as an adviser that will be his legacy when he leaves CBRE, not the number and value of deals he has done.
Hubbard says he is lucky enough to become a trusted adviser to his clients, not just a broker.
“I think one of the threats to the industry is that a lot of clients want trusted advisers, they don’t want brokers. The difference between them is that a trusted adviser will tell a client when not to do a deal,” he says.
“And there is an increasing number of people who are not necessarily following those principles. If that continues, the profession will have a declining influence in the market. It will have a role in the market but it will be a broking role rather than an advisory role.”
As a trusted adviser, Hubbard says his most uncomfortable times have been the boom times. While the crash in the early 1990s felt like “falling without a parachute” and brought with it the discomfort of having to lay off people for the sake of the firm’s survival, it is the good times when he starts to worry – “Unless I’m selling,” he jokes.
“Inevitably you have clients who are wanting to buy at that time and while you say ‘I think this market’s looking too pricey’ they’ll tell you they need to get their money away. You might miss some deals but a year or two later they are saying ‘You were right. Can you help me sort out this mess I’m in?’ And they come back.”
Trust him. He knows.
The future of advisory
When Hubbard first joined Richard Ellis, it had one computer, in its own room that churned out valuations data.
At that time, it was very high-tech. And even then people were concerned that technology, the robots, would one day take over.
“The prediction then, and one that has been a constant prediction through my career, was that technology was going to take over,” says Hubbard. “It’s consistently been wrong.”
He adds: “The challenge we have now is collating the enormous quantities of data that we as a business have and transforming that into client output. But it still needs that personal dimension to create that.”
For Hubbard, the real threat to the future of advisory is not the robots but a lack of understanding of the fundamentals that are driving real estate decisions.
“We have an enormous knowledge of real estate, but what our industry lacks is people with financial acumen to interpret what real estate can do in the financial markets,” says Hubbard.
“I think the industry going forward has got to become much more financially aware. It’s got to understand the role property plays in the wider financial world. And it’s got to understand, alongside that, the role property plays in the occupier world and understanding the way occupiers are thinking, which is changing so rapidly,” he adds.
“There are too many people in the industry who are relying on the status quo and trying to keep the status quo. But both the occupier side and the capital side are changing quicker than I can remember at any time in my career.”
“I would counsel, strongly counsel, against anybody getting into capital markets without having gone through the occupier side the business,” says Hubbard, “because unless you can understand how an occupier thinks, how are you going to reflect it in what’s going to be a decent investment in the long term?”
It is not a rehearsal, after all. Don’t f*ck it up.
Quick-fire questions
What has been the biggest defining deal of your career?
The biggest defining deal was a more recent one, which was advising the Crown Estate on the sale of a 25% interest in Regent Street. We’d pinpointed 12 global institutions and went round the world and presented it to them. It was an amazing opportunity, one of the best in the global investment market. And Norges turned out to be the ideal partner for the Crown in terms of culture and compatibility.
What floats your boat outside of work?
My passion is boats and I’m invested in a boat yard in Cornwall, which I am a director of. We build about 10 boats a year. It’s an amazing company and is growing very quickly. I’ve also just bought one of the little ships that did the original Dunkirk evacuation – they are boats with the equivalent of a blue plaque on them. I’m doing it up because we’ve got the 80th anniversary Return to Dunkirk next May, where 70-80 boats will be going across in a fleet.
What are you going to miss most?
The people. Great friendships, great people, great teamwork, great buzz. A very exciting environment, a very invigorating environment. And I’ve loved every minute of it.
What does it take to be a trusted adviser?
Experience and knowledge. Knowing the asset and the market and having the confidence to put across a view and support it. It’s a true differentiator.
Will you be having a retirement party?
I never enjoy retirement parties. I have always regarded them like going to a wake but the dead person is still standing there. I don’t want to be the dead person standing.
To send feedback, e-mail samantha.mcclary@egi.co.uk or tweet @samanthamcclary or @estatesgazette
