Merger will create little regional overlap, say King Sturge and JLL chiefs

THE regional heads of property agencies Jones Lang LaSalle (JLL) and King Sturge have said that the proposed £197m merger between the two organisations creates “a lot of synergies”.

Despite the significant presence that both enjoy as full service agencies within the North West marketplace, JLL’s director in charge of the Manchester office Peter Lees said; “The overlap between us in my view isn’t huge”.

The deal, which was announced last Friday, is essentially an acquisition by JLL – the world’s second-biggest publicly-traded property agency. If approved by both sets of partners, it will see JLL paying King Sturge’s partners an upfront cash payment of £98m, with the remainder being settled over a five-year period.

Lees said that one of JLL’s long-standing issues was that although strong internationally, it had never punched its weight in the regions. This deal not only gives it a stronger presence in key regional markets where both firms already have a presence – such as Manchester, Leeds, and Birmingham – it also adds several locations to JLL’s network where it didn’t have a presence.

In the North West, however, King Sturge is the more established of the two operations, with its offices in Manchester and Liverpool employing around 100 people compared with the 50 at JLL’s base in Manchester.

David Lathwood, King Sturge’s current UK head of regions, said that his practice had acknowledged strengths in areas such as industrial and residential markets, whereas the tie-up with JLL would give its clients access to JLL’s much broader international network.

“It’s a deal with a hell of a lot of positives and very few negatives,” he said. “We were briefing the troops earlier and they’re all really excited.

“We also think the timing is perfect vis a vis the restructuring that has been taking place in the property market,” he added.

The pair would not comment on where the combined team will eventually be based, but Lees said that there was a desire to integrate the two teams as quickly as the situation would allow.

“There’s quite a bit to do before then, but we have an idea of where we want to go,” he said.

The deal will eventually create a practice 5,300 people – 2,700 of whom will be based in the UK.

Lathwood added that the deal “was not about size, although we will be the biggest in the North West by a mile.

He said: “Its about bringing together two teams of real quality.”

Conrad O’Neill, partner in Manchester-based chartered surveyors Canning O’Neill, said the deal was further example of a trend which had seen the market for office agency services in the region fragmenting, with strong mid-sized firms such as Dunlop Heywood, WH Robinson, Guest Shaw and The Elliot Partnership all being swallowed up by global players or accountancy practices.

“The market is now made up of the large global giants and the smaller niche operators. The question for clients is who is best placed to advise them and market their office accommodation?

“The big firms appear to be obsessed with size and are continually competing to be the biggest in the UK or the biggest in the world, but who does this benefit most -the client or the advisor?”

He added that a decade ago, such firms entering into a deal on behalf of a client would be fearful of a potential conflict of interest, but for some of the larger firms it is now seen as a sign of their strength – “a badge of honour!”

He added: “King Sturge had a strong and well deserved reputation in the Manchester commercial property market and seemed to strike the right balance between size and personal service. This was synonymous with their brand.

“It seems a shame that such a well-established and respected name will no longer be with us and it is sure to be a big challenge to retain this reputation whilst integrating into the Jones Lang LaSalle set-up.”