Q+A: Knight Frank and Cresa talk transatlantic tie-up and shaking up occupier advisory
This article appeared originally on React News.
One day after its partnership with Newmark Group ended, Knight Frank announced it had formed a new alliance with has Washington-based, tenant-focused brokerage firm Cresa.
The move will expand the two firm’s reach and fast-track their expansion plans on either side of the Atlantic.
React News sat down with Knight Frank’s senior partner and group chairman, Alistair Elliott, the firm’s global head of occupier services, William Beardmore-Gray and Cresa CEO, Tod Lickerman, who explained how the tie-up will offer an alternative approach to occupier advisory at a time when corporates have never been more in need of guidance.
What will the partnership with Cresa bring to both firms that they couldn’t offer previously?
Alistair Elliott: At the heart of this partnership is a properly structured understanding between both firms’ management as to how we are going to truly work together to create the best global occupier solutions platform in the business in a way that both parties’ interests are aligned.
There is an understanding that the focus is on our clients, so the structures we put in place are joined up from the top at management level. I don’t want to cast any aspersions on any of our previous relationships but we’ve never had that structure before, so I think we’re starting off in a much stronger position.
Tod Lickerman: The two companies are very compatible culturally and structurally and there’s real alignment at the top, which is everything. Knight Frank and Cresa advise some of the largest multinationals which have needs around the world. If you add value in your home territories, you are then asked to do that same across their international network, which regularly takes us to places where we don’t have an representation.
We’re doing this to serve our clients better and to continue to add value so this is really all about client service and behaving in a very coordinated joined up way.
The tie-up with Cresa was announced a day after Knight Frank’s alliance with Newmark officially ended. Was it designed to dovetail like that?
AE: We made a decision about 12 months ago that we probably needed to work on a new plan A. As a consequence, we decided to develop discussions which led us to serve notice. That notice expired on 5 October which of course we planned to be simultaneous with the start of our new partnership with Cresa.
How important is occupier advice now at a time when corporates are considering their office needs in the wake of the pandemic?
William Beardmore-Gray: Corporate occupiers have never been more in need of advice and guidance than they are today. Trends that were already in train before the pandemic have been accelerated and every occupier is now looking at themselves through a lens of ESG and how they are going to promote their brand in that light.
They are also trying to work out how they can have the flexibility in the workplace that they occupy to attract and retain the best people.
TL: “There are a couple of things that happened during the pandemic that are coming to fore now. There has been a real boost to productivity and a transformational adoption of technology, meaning the most successful companies are now doing more with less.
Companies want to preserve that productivity but there’s a real pent-up demand to reconvene the workforce. When you look at big occupiers, flex office space will be a portion of the solution but very few companies can go all flex. These occupiers were on the side-lines for much of last year. Now they’re not and they know space is an advantage for winning the talent war. Space is now an enabler, not just a necessary cost as it was a few years ago.
What can both firms learn from each other?
WB-G: The North American market drives so much of the occupier demand around the world and we’re keen to learn what Cresa are seeing first hand as that influences so much of the occupier activity in London and elsewhere. Equally, our experience as a business over the last 125 years, specifically building a network across the world, is something we’ll bring to the table. There are some areas where we’ll be stronger than Cresa and others where they will be stronger than us.
TL: We are shareholder owned and excited to partner with a firm that has had such success with this model long term. 98% of our shareholders are active in the company and we want to keep it that way. We want to continue to create value for many generations without having to worry about third party shareholders.
Why is it important for brokerage firms to have international alliances such as this?
WB-G: We come into work every day thinking about how we can do a better job for our clients. We have a culture of creating long term relationships and providing the services that they require in all the geographies in which they operate.
TL: As we talk to clients, it’s clear that there’s a demand for more choice. Those that regularly work across borders will tell you that they wish they had a broader choice. Providers often talk about the features of their local offices, and then their efforts to stitch things together. We think that misses the point. We spend our time on understanding business strategy and where the business is going, and then wrap the real estate solutions around it.
What are Knight Frank and Cresa’s “complementary capabilities” and “shared values”?
AE: I want to reinforce the point about partnership in every sense of the word. Our respective businesses have already got a number of big global names on our books but there is something very different about our shared culture as a partner-owned business compared to many other businesses out there.
Our clients will therefore have a choice and it’s our challenge to make those differences prove attractive to the occupier market. But I think there is a huge opportunity out there for us to grow our market share in all aspects of occupier consultancy by presenting a very viable and alternative approach to looking after occupiers.
Is Knight frank looking to form other similar alliances – perhaps in the developer/landlord space to replace the partnership with Newmark?
AE: We have always been very open to the prospect of our expansion around the world and to adapt our model to suit best-in-class local businesses.
Our ambition is to continue to own our overseas businesses, particularly where they are in a strategic hub around the world. America is too big a market for us to go in with a cheque book and try to take over, so working in partnership with a business that has shared values and a similar vision works perfectly for us. And we’ve got a very long-term vision in that regard.
Be it in South America or parts of Asia or Europe, we want best-in-class partners, and if they come as associates and affiliates, as long as they share our values and add value to our clients, we’re very open minded.
In only the last few months we’ve opened in Lyon, Serbia, Greece, Bulgaria with new partners and probably have half a dozen additional new territory opportunities where established businesses are attracted by the brands that Cresa and Knight Frank bring to the table.
What “bespoke technology” will the two firm leverage to maximise the partnership?
WB-G: We have a portfolio workspace analytics tool which provides our clients with insight and opportunities and Cresa has similar tools which they are using. Knight Frank and Cresa have a great opportunity to learn from each other to develop best practice and to really think about how we can provide alternative solutions to corporates around the world that our competition can’t.
TL: We’ve got three areas of focus here. At the core is data analytics. There’s a section that’s in workflow management; and by that I mean making a transaction easier and communication better and more transparent. The third area is around the workplace and how we determine the nature of the occupancy demand, understanding the client’s core needs and translate those into solutions.