Published: 12/10/2023
It goes without saying that the above statement isn’t strictly true. I’m sure, the Qatar Investment Authority (State of Qatar)(Wikipedia, 2023), which now has including the Shard and the HSBC tower in Canary Wharf does? I also think Bloomberg who in 2017 invested 1 Billion (The Times, 2017) developing their new European HQ in the middle of the city do?No, what I’m talking about is the ‘mass market’ of commercial property. The commercial property which is owned or rented (55% of UK’s commercial property now is rented) (Property Data Report, 2017) by ‘Joe Public’. The hairdressers, local pub, MOT garage, coffee shop or retail businesses which are at the heart of our local high streets and communities.
SME’s are the lifeblood of our economy
There is a distinct lack of credible market data out there to help quantify how big the SME commercial property market is, which, I think says a lot about how much attention has paid to this end of the market. However, what we do know is that there are 5.5 million small businesses (0-49 employees) in the UK, which represents 99.2% of the total and they generate 51% (2.1 trillion) of the turnover of the UK’s private sector and three-fifths of its employment FSB 2022
I’ve no doubt that there will be some people reading this article, who thought it would be something interesting or controversial about the Mayfair retail investment market or the city fringe office market, and now they realise it’s about commercial estate agency at its lowest level (in terms of capital and rental value) then they may decide they are not interested in that and stop reading, because, well…quite frankly who cares?
For those people who click the cross on the top corner at this point, I say. Adios. Because we’re talking about the SME commercial property market, and nothing else.
SME is the ugly, gritty end of the property market – where your clients are most probably not property professionals and likely to own just one building and therefore won’t deliver you repeat business and certainly won’t be taking you for lunch in Mayfair to celebrate a successful deal anytime soon!
However, there is a hidden gem within this challenging landscape. By understanding the unique dynamics of SME clients, you can tap into a largely untapped market that holds immense potential for growth and profitability.
According to NatWest group SME confidence in the UK has reached its best level in 11 months. This increase in optimism can be linked to lower inflation and improved supply circumstances, both of which have boosted general company sentiment.
A market not for the feint hearted
Personally, it’s the only end of the market I’ve ever worked in since I entered the commercial property market in 2011. Having let many shops and offices and sold plenty of ‘shops & uppers’ and small consented development sites I think I’m as well placed as anyone to comment on this market. And it’s not for the feint hearted.
As an agent you generally cover quite a broad distance in order to service your large client base. So if your based in South East London (as we are) – as an agent in the SME commercial property market, you could feasibly be dealing with property in Woolwich and Croydon on the same day (I would hope our agents at Whozoo are more organised than booking those meetings on the same day…….).
And in terms of asset type, well, it’s ultimately anything that isn’t a residential house or flat. So transactionally an agent in this market could expect to deal with shops, offices, warehouses, ‘shops and uppers’, development sites with planning, development sites without planning, churches, nursery’s, pubs and a wide range of other interesting uses for commercial or investment property.
Spreading your expertise so widely across so many asset types and a large geography, someone might say, that we end up being ‘jack of all trades, master of none’ – with no specific niche or focus. But the niche, the focus, is the end of the market we operate in. The low value commercial and development market, or, the SME market. This in itself is a niche. We adopt a targeted approach, focusing solely on commercial properties. This allows us to develop specialised expertise and in-depth knowledge of the market, enabling us to better serve our clients' unique needs. By tailoring our marketing efforts specifically to commercial property owners, investors, and tenants, we attract a niche clientele of businesses, developers, and institutional investors.
A bunch of misfits but we do care
You are likely to be a certain type of person to be working in this market, not necessarily fitting the mould of your traditional commercial agent. The SME commercial agency market is serviced arguably by ‘misfits’ perhaps people who didn’t quite land jobs at a surveying practice in the West End. But I think that’s what makes it so fun and interesting.
We work with an incredibly diverse set of clients at Whozoo, particularly now that we are operating nationally. It’s common that they hold only one commercial property asset and have no interest in reinvesting the money once they have sold it. Typical clients could be Steve of Steve’s MOT Centre’ who has been there 40 years, paid £8,000 in the 1970’s for the building and plans to move to the Costa Del Sol to enjoy his retirement. (For any of the Steve's out there reading this, we have Capital Gains Tax Advisors we can put you in touch with!)
So what’s important about this?
The important factor here is that Steve has worked for 40 years, providing the local market in Croydon with the best service he possibly could when undertaking MOT’s for his customers. So when it comes to Steve packing up and investing in a new pair of Ray Bans, doesn’t Steve deserve that same exceptional service from his commercial agent? In fact, at the very least doesn’t Steve deserve to not be treated like an idiot because he doesn’t know what a Section 106 is and that his commercial agent is responsive, respectful and honest with him?
I’m not convinced this is the case at the moment.
I think there are too many agents in the SME market seeing Steve as an opportunity. As a sitting duck, as someone who doesn’t know about commercial property, so therefore is treated very differently from any professional selling clients.
Consider this – who does the quality of service matter more for – Steve and his MOT centre or the Qatar Investment Authority (QIA) now that they might have a vacant building in Canary Wharf.
Sure the numbers are bigger for QIA but there won’t be any people at QIA who that building is their one and only pension.
So there is an argument to say that actually, quality of service for Steve needs to exceed that of the big multinational real estate owners – because the value of the sale of Steves MOT garage means proportionally more to Steve, at a personal level.
Going from dishonest and not interested to Average?
At Whozoo, our goal is to improve the quality of commercial services at the low to mid-market level across the UK. There are no national brands actively tackling this issue, so we’ve put our hand up and taken charge. We’ll lead from the front in terms of trying to achieve the highest quality service in the SME market. Including exceptional marketing, full transparency on marketing metrics, total operational and administrative support for our agents. All with the purpose of delivering excellent service to the client which helps them achieve their goals of maximising value through a clean and tidy transaction.
The good news is, we’re not needing to go from Good to Great to see a big improvement. I think as a start we need to go from dishonest and not interested to Average – and I believe the clients would feel a big change.
