Why experience has kept real estate’s old guard relevant

COMMENT As one of the “old guard” referred to by EG’s editor several weeks ago, this is the second of my articles on the agency world through the decades (click here for the first). This one focuses on the 1970s and 1980s, when I left my internship at Royal Sun Alliance, held roles at CBRE/Fletcher King and then made equity partner at CBRE at the age of 32. It’s amazing how unsophisticated it was back then, particularly as I was looking at it at the time from a graduate’s perspective. In the early part of this period, the real estate investment market had just moved past its genesis. Domestic institutions had been investing meaningfully for the first time in real estate and firms such as CBRE had 20-plus mandates for investment acquisitions – the beginnings of UK asset management as we know it today. There was little international buying in London or the UK outside of residential. During this time, I started working in property management. At this point, lease records were handwritten on blue index cards, and we had to wind up our calculators, which had printed paper rolls, like an old-fashioned till. The lucky ones among us had Hewlett-Packard calculators, which not many of us really understood, let alone knew how to use. There were no mobile phones. We shared a Wang computer between about 30 of us. The importance of passion Performance analysis and databases were unsophisticated and rare. We had been taught about IRR at university but few used them as performance measures and, indeed, few understood them. Development appraisals were done by hand. Overall, presentation standards were poor. They were accompanied by out-of-focus slides and property details were for only the biggest and best brochures, otherwise it was basically summary letters, poor photography and copy maps which were quite often unclear. I know what you are thinking and it is below basic – so far removed from the sophisticated and off-the-shelf proptech that one can purchase today for a small sub. But we had passion. We soaked up knowledge into our brains rather than relying on data spat out by systems, and we used our instincts on how buildings would perform on the market. And it’s this experience that keeps the old guard relevant today. We did see the beginning of improvements during this period. By 1987 we had computers, but no e-mail system. We began to understand IRR. We began to move to digital records, simple calculators and computerised valuations and appraisals, as well as computerised presentations. We even had mobile phones, but they initially took the form of a backpack and then a brick-like object. Peak to trough At the forefront of all this development were the new asset managers – at this time not institutionally based, as the institutions were only managing their own in-house funds – and the major agencies. There were also niche agencies such as Wright Oliphant and Mason Philips, but these agencies relied on their early access to information and who they knew, rather than sophisticated databases. Up until 1987, the market had largely been domestic, with a smattering of international buyers, mostly Middle Eastern and Swedish – the latter getting caught on the wrong side of one of the UK’s property cycles. As an aside, previous real estate cycles seemed to last about seven or eight years from peak to trough and back again, unlike today’s fast-correcting and uncertain wobbles. This period saw the disappearance of some household property names, good and bad, including Amalgamated Property, Basil Samuel and Harry Hyams. During this period, I was buying and selling domestic UK real estate in the main three sectors of offices, retail and industrial. Because of the lack of sophistication, the best learnt a “feel” for property – is this missing now? I enjoyed the learning, the discovery of maths in property investment, and even first-class rail travel to Leeds with breakfast thrown in with my old pal John Monoogian – does it get any better? This challenging period meant that surveyors (now the old guard) learnt how to perform and find new opportunities against any economic backdrop, while it was also the start of internationalisation and the evolving maturity of the UK property market – something I will discuss in greater depth in my next column. John Slade is director of Sladesco, chairman of Duff & Phelps and senior adviser at Allianz Real Estate