Location, location, location

British real estate magnet echoed location, location, location, but in the property sector, the second rule should be people.

Nottingham Skyline with Council House - Black Gate | PBSA News
Nottingham Skyline with Council House. Image credit: Mr Thinktank, CC BY 2.0 via Wikimedia Commons.

In 1926 Lord Harold Samuel, a British real estate magnet echoed the famous words: “There are three things that matter in property: location, location, location.” 

By Michelle de Havilland, CEO, Black Gate

In an increasingly competitive search for development sites within close proximity to top tier UK university campuses, it has never been more important to ensure that you have the right consultants and agents assisting with your land acquisitions. 

The reality is that once well-positioned sites come to the open market via the usual agents, developers are forced into highly competitive bids which leads to crushingly high land acquisition costs. This can often have a ripple effect on the quality of the development as costs are recuperated by squeezing more units into the development or compromised construction and fit out. In neither instance does the occupier benefit and often, neither does the developer. 

In increasingly challenging times for developers, it is always helpful to get an edge on your competitors by avoiding the bidding scrum altogether. This is where relationships with agents, brokers and consultants become vital. Beyond the realms of the obvious companies and agents who tend to offer premium sites to their preferred inner circle before you even get a look in – let alone get to make an offer – focus on nurturing relationships with consultants with unique relationships that stretch beyond the realms of the real estate world. The reality is that most sites that get developed for purpose-built student accommodation (PBSA) are rarely owned by Real Estate companies or people, but rather by individual small businesses, entrepreneurs or families. 

Some time ago, Black Gate had a client looking for a PBSA site in the well-trodden premium locations. It was going to be a challenge trying to compete with big developers who had deeper pockets and broader track records. Our client was a mid-sized developer with a limited track record in PBSA, backed by a new Singaporean fund that, at the time, was relatively unknown. Breaking into the market as a new player and trying to compete for good sites through the usual channels, via large or even local agents, would have been nearly impossible. 

Moreover, they wanted to purchase a site subject to planning – which is often very challenging as most vendors want to sell immediately with no protracted risk to the sale through the quagmire of the planning process. Nor do vendors wish to be in a chain, shackled to someone else’s schedule with no ability to move on. 

That said, we knew of an exceptionally located furniture store owned by an elderly gentleman who had been in business in Nottingham for decades, who was looking to downsize and upgrade his premises. Immediately, I knew it would be perfect!

We actively sought out the vendor, spent hours talking with him and his associates about his business goals and objectives – what did he want to do, where did he want to go, when did he want to move. After many cups of tea and months of negotiation, we convinced the proprietor to let us sell his store. He agreed on the basis that we did not advertise the sale of the property in the open market. He was terrified that he would lose his customers if they thought he was shutting down. We absolutely guaranteed him that would not happen – and we stuck to our word! 

Instead, we quietly introduced our development client directly to the shop owner. Without the noise and confusion of too many voices in the way, the developer and the shop owner came to an agreement that suited them both. We agreed to a subject to planning purchase with a reasonable non-refundable deposit to secure the site. We negotiated a superb land price that ensured the developer was able to develop an exemplar PBSA project. And the vendor was able to continue trading for a further couple of years on the site with no negative impact to his furniture trading business during the planning process.  

The project was a marvellous success for the developer and their financial partners, as well as proved to be an ideal solution for the vendor. The buyer did not have to fight aggressively against other developers in a bidding war. They managed to secure a highly desirable PBSA site between the two universities in Nottingham, and they managed to have an open and clear channel of communication with the vendor throughout the program. A win-win.

So whilst I absolutely agree with Lord Samuel that location is the most important real estate rule, perhaps the second rule should be people. The property sector is without doubt a people business. And those relationships have a tangible and economic result on developers ability to access, secure and develop sites efficiently and cost effectively. 

Over the years, Black Gate has discreetly and effectively helped many developers, operators and owners find the right PBSA solution – from portfolio acquisitions and land purchases to finding the right joint venture partners.

Visit http://www.black-gate.co.uk/ or email Black Gate’s CEO Michelle de Havilland on Michellevv@black-gate.co.uk