Thomas Cook-style chaos looms for high street estate agents - David Alexander

Given several major financial scares over the past decade the collapse of the travel company Thomas Cook hardly came as a surprise, yet it received wall to wall media coverage.

The collapse of 'much-loved' Thomas Cook could be a sign of things to come for the property sector, says Alexander. Picture: Tolga Akmen/AFP/Getty Images

One assumes that this was partly on the basis that “the bigger they are the harder they fall” coupled with the fact that Thomas Cook was the oldest travel company in the world and synonymous with the foreign package holiday revolution that began in the 1960s. So there was a lot of sentiment in the air, with several references to the “much-loved” Thomas Cook both in print and over the airwaves.

It is difficult to recall a national chain of estate agencies being described as “much loved”. Based on surveys, our profession – somewhat unfairly I have to point out – tends to be described as the least-liked by consumers, along with lawyers and, ahem, .journalists.

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However I do perceive one similarity with the travel industry – and that is the growing danger that estate agencies might soon be hit by a Thomas Cook-type situation. As with the retail industry, there are just too many estate agency chains with a high street or shopping mall presence when everything points to house sales (and lettings) being far down the road to becoming overwhelmingly internet-based.

There are just too many estate agency chains in high streets or shopping malls, says Alexander. Picture: Laurence Winram

'Serious drain on resources'

I am as distressed as any citizen by our ailing high streets but the fact is that, as with fashion outlets, there are too many estate agency branches becoming a serious drain on resources for their respective parent companies. I suspect, too, that many are locked into leases agreed shortly before the internet became the “way to go” for purchasing anything from a model car to a mansion and there is, therefore, no easy way out. The situation is further compounded by the fact that business rates are based on historic property values rather than profit.

In fact, the analogy with the fashion industry is only partly relevant because despite the popularity of online sales, “destination shopping” – ie using high street stores not only for purchasing goods but as a “day out” – will continue to appeal to a large section of the population.

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However, when it comes to buying a house the vast majority of people no longer see the point of going to the trouble of travelling to a showroom and mulling over tens (perhaps hundreds) of photographs and paper schedules when they can have even greater access via a computer screen in the comfort of their own homes – or on the bus or train home via their smartphones.

Increased competition benefits public

Our own experience exemplifies what has changed. When DJ Alexander launched its online portal under the Apropos brand, we believed it to be good business sense to retain a single showroom in Edinburgh city centre given our historical connection with the capital. We have since found that most members of the public who come through the door are either seeking directions or asking for change for parking meters. Consequently our plan is to close the showroom next year and become an exclusively back-office, online operation.

Apropos has enabled us to expand to various parts of the UK by signing up with business partners in London and other major cities – something that would have been impossible had we continued as a showroom-based organisation. Of course, this works both ways and companies from across the Border have the capacity to extend into our own patch – thus keeping us and other Scottish agencies on our toes. Either way the public wins.

While eventual closure of the vast majority of estate agency showrooms seems inevitable, an optimist could see this not as another nail in the High Street coffin but natural evolution. For example, falling retail rents might encourage the return of independent stores – priced out by the giants from the 1970s onwards – to city centres, with the bonus of surplus space given over to residential use.

Our own experience has proven that as one door closes another opens.

- David Alexander, MD of DJ Alexander