In Conversation With…Ashley Hudson

THERE was a collective thud across the property sector in March as chins dropped at the news that Mark Swallow, head of Knight Frank in Birmingham, suddenly announced he was resigning after 16 years with the company. Stepping into the breach is Ashley Hudson, who talks to TheBusinessDesk.com about “clever agents” and the new relationship between landlords and tenants.

“They are very big shoes to step into – he’s a very big personality in the market. The only reason I came to Knight Frank in the first place was because Mark and I hit it off,” Mr Hudson tells TheBusinessDesk.com over coffee at Knight Frank’s office in Colmore Row (below).

“I met him once or twice and it was clear we were on the same page in terms of business and personality. He was, is and always will be a very good friend of mine.”

It’s a glowing tribute to a popular man but the new incumbent is keen to put his own stamp on proceedings.

“I shall have my own style – I want to bring the group of partners we have got more to the fore,” he says.

“They are extremely capable guys who are happy with client exposure. The plan now is to hunt a little bit more in packs by going to pitches and seeing clients together as we try to do the cradle to grave service. I definitely consider myself to be hands on. You could spend all day long managing the office if you wanted to but I am dealer, always will be a dealer, and I love talking to and dealing with clients.”

A Staffordshire native, Mr Hudson, 41, joined Knight Frank eight years ago as an associate from Jones Lang LaSalle before being promoted to partner and then into his current role.

He admits taking on the top job in Birmingham is not only a challenge, but also a massive learning curve as he gets to grips with all aspects of the business and not just his specialist field of investment.

Casting his eye over the city centre office market, he warns against the perception that central Birmingham is flooded with available office stock.

This has meant there has been a shift in bargaining positioning for both tenants and landlords as the latter no longer holds all the cards when it comes to negotiating leases.

“We have a lot of what I call ‘churn stock’ – between 3,000 and 7,500 sq ft – and our office agents are busier than they’ve ever been in that size band, doing more deals now than they’ve done in the last four or five years,” he said.

“There is definitely more demand and more confidence among that size of company to move or consolidate three of four offices into one.

“The other reason these deals are happening is landlords are becoming more reasonable and flexible with their terms. There’s a realisation among them the market won’t return very quickly to the pre-credit crunch rental levels – some landlords were tempted to keep quoting rents high.”

This is tempered, he says, with tenants realising they no longer hold all the cards so cannot demand the Earth in exchange for a signature on a lease.

“We are seeing incentives hardening, such as rent-free periods getting shorter,” Mr Hudson believes.

“There is only so much space that suits these occupiers in the small to medium range. If you want to be in the city centre, in a certain size bracket, in decent offices, there aren’t actually that many options. This means there is a little bit more power to the landlord’s elbow than there was three years ago.”

Looking ahead, Mr Hudson is predicting a change in the way developers, occupiers and agents go about acquiring land and building new offices, with speculative development becoming increasingly rare.

He says there is a lot of work going on behind the scenes with developers and occupiers working together on projects and buying up land for schemes which will be realised in a few years’ time.

“We are working with developers now, putting the building blocks in place for the next phase of development in the city centre. That isn’t looking for the dilapidated buildings that we can knock down and rebuild but working with future occupiers instead,” he said.

“We are currently working with occupiers in the city who, in two to three years’ time, will be announcing new buildings, new headquarters, and then development will follow on after that.

“The clever developers, and hopefully the clever agents, are working with the occupiers to put the deals together now which will then be announced down the line.

“On the face of it, there aren’t a huge amount of deals being announced but it’s the work that’s going on under the radar which is going to lead to development. And it will come.”