Business Centres Association makes peace with agents
Copyright: David Lawson
Published in Property Week October 2009
After more than a decade of bickering, Julie Calder reached the end of her tether. ‘We knew it couldn’t go on,’ she says. ‘So we sat down and worked out a compromise.’ Divorce was out of the question. If the partnership dissolved, what would happen to the 750-strong family, not to mention more than 50,000 little ones who relied on a secure and stable home?
Now the odds look good that the fraught marriage between Britain’s business centre operators and their agents will not just survive but flourish. Things didn’t go well at first. A list of peace proposals turned into a declaration of war over one suggestion about cutting housekeeping costs in half. ‘That was a misunderstanding,’ says Julie. ‘It happened on a Friday and was settled by Monday.’
Calder realised something needed to be done quickly when she became head of the family earlier this year. As chair of the Business Centres Association she is the voice for a sprawling sector made up mainly of small operators and even smaller tenants who feel overshadowed by a few giant siblings and oppressed by the agents meant to be business partners. The festering relationship regularly emerged when the hyper-extended family gathered at BCA annual conferences. Any agent brave enough to take the stage faced a barrage of accusations from the floor of favouritism and dodgy dealings.
But it was hard cash that threatened to finally shatter the partnership. Calder aimed to defuse conflict by clarifying the terms under which they work together. ‘A lot has changed in the last few years,’ she says. ‘We needed a consumers’ charter which clarified where responsibilities lie.’
Unfortunately, agents picked up on one proposal to halve their fees to 5% and went ballistic. They pointed out this was not economically feasible – which was interpreted as a threat to boycott BCA members signing up to such terms. That response was also unfeasible, however. No agent could survive if it rebuffed the vast majority of the UK’s business centre operators. But friction disappeared over the weekend as agents came back with their own proposals.
Calder tries to play down the confrontation which sent shivers around the sector, pointing out that the fee cut was ‘one discussion point among many others’. The spat has had startlingly positive consequences, however. Agents’ counter-proposals for a new code of conduct were far better than expected. They include undertakings not to favour large operators, a ban on personal incentives and poaching of tenants. The BCA was asked to act as arbiter in disputes.
This covers most of the key problems that have poisoned relationships over the years. Incentives to agents for ‘leads’ to potential tenants is a remnant of the conventional property industry from which managed space was born. Snuffing them out could finally give the sector the independent identity for which it has been striving. The new code will also move the focus to ‘consumers’ of property and gives the BCA extra weight for a body many saw as a talking shop. It has already stepped up by wresting concessions from the government over empty rates. A powerful new board appointed under Calder this year aims to build on this progress to strengthen the sector’s voice.
Veterans are meant to be grizzled, grey-haired, surly and convinced that old ways are best. Abbey’s managing director Julie Calder couldn’t be further from the stereotype. Despite more than a dozen years in the most exhausting of businesses, an undimmed enthusiasm made her a natural choice to take on take the chair of the Business Centres Association this year. She will need that energy. The slump has hit many operators hard, and they will be looking for leadership and new ideas to get through some tough years. She can lead by example after guiding Abbey Business Centres to a 40% increase in turnover to almost £20m last year. She expects 2009 to be profitable but Abbey will face similar pain to her charges.
In the long term some may not survive as larger operators take over those less able to withstand the downturn. But those with well-located and specified centres or well constructed management contracts should receive a good pay-off. Reduction in numbers may even be a good thing. ‘Consolidation could benefit the sector, which is still very diffuse, says Calder. And she is confident for the future of survivors as tenants increasingly accept the benefits of managed space compared with conventional leasing.
Among her priorities this year will be Abbey’s new centre at Canary Wharf, which she admits was not opened at the best time, as rents have fallen by as much as 40% this year. But her other new centre in London’s Victoria will help ease any pain after filling well before the target date. And it will not prevent the Scottish-based firm from looking for more space in the London area to add to its existing tally of 13 across the UK.