Recent upheavals in the Hong Kong retail sector have had a profound impact on the retail property industry. This has prompted real estate professionals to be innovative and employers to be more cautious in hiring. Cynthia Ng, Hong Kong director of retail services at Colliers, explains that a sector which is generally subject to market fluctuations faces fresh challenges.
What affect have changes to the commercial real estate landscape had on retail professionals in the industry?
The real estate landscape has shaped the retail market over the last few years. The retail landscape itself has transformed dramatically since the start of 2014. While we have seen the luxury sector continue to drop, the market has also created expansion opportunities for other types of operators. Consumers are moving towards affordable premium, creative lifestyle concepts, such as fitness, modern beauty, and F&B operators who have interesting concepts.
Retailers in these areas are growing by leveraging current demand against prevailing rental trends in Hong Kong. Shopping-mall and high-street landlords are responding in various ways to cater to this new consumer interest. Grade A malls are revamping tenancy mix and structuring flexible lease terms to brands which can enhance the shopping experience, particularly with niche fitness concepts and innovative gimmick operators that involve a tech-savvy element and engaging consumer interest.
On the other hand, high-street landlords have become more and more amenable to negotiating rental terms and are very receptive to pop-up stores, as this ensures a respectable brand occupies the shop rather than leaving it empty. Landlords, retail brokers and related professionals in the property industry have by necessity become more patient with the longer amount of time required to close deals.
We realise it may sometimes take months to get near to signing a deal when during peak periods you can close one within five days. Everyone has reduced their ego (not by choice) and they are accommodating themselves to the trend. The motto we are all adapting is “dance along with the market direction”.
How are businesses responding to these changes in terms of recruitment?
Employers are currently hesitant to grow their teams as retail business has dropped during the market downturn. Some retailers, especially in the luxury sector, have reduced staff and are consolidating their offices. Retail property consultancies may not necessarily cut staff, but their team structure remains stable and they are very cautious regarding team expansion.
As property consultancies, we would be more thorough, stricter and more careful in bringing new people on board to ensure a hire is beneficial and not a cost. That said, we are still hiring so long as it’s strategic and well thought through.
What path did your career take in this industry and is this a typical career path?
I have over 10 years’ real estate experience, the initial part of which was with major developers in Australia, followed by six years in Hong Kong. During my time in Australia I was working for key developers involved in retail leasing, portfolio management, project marketing and tenancy agreement administration. Before joining Colliers, I worked for CBRE as director of its Hong Kong retail team focusing on retail brokerage for international brands expanding in Hong Kong, as well as bringing first time entrants to the city. I was promoted to director in 2015 after being named top biller of 2014 at CBRE.
What separates a great leasing agent from an average one? What other skills are needed to succeed in the industry?
A great leasing agent will have happy clients. Succeeding in the industry involves a number of skills. It is absolutely essential that a broker understand the client’s business requirements and key objective(s) before giving a professional opinion.
A great leasing broker must stay on top of market trends, news and activities, and also be able to share their own insights. Sharing the most relevant pieces with the specific recipient, be they a retailer or landlord, is also important. A great leasing agent has to be confident and at the same time be a good reader of minds and of body language to be able to dance along with clients’ expectations.
What sets a successful broker apart is their clients trust them and are happy with them. It feels extraordinary when a client trusts you with their business that involves millions of dollars and takes your advice on board, because they know you are professional and trustworthy. It’s almost like their P&L is resting on your choice of property.
In terms of career progression and salary, is it better to specialise in a single area of the property market, e.g. luxury property, or spread yourself across multiple types?
Given the market diversifies over time it’s never a good idea to stay focused only in one sector. While a broker might be more experienced in a particular sector they should never be foolish to specialise in a single area alone. The market often changes and sometimes dramatically; consumer interest can shift at any time so a successful broker will cover all major sectors and be adaptive to evolving market trends. It’s more advantageous to open yourself to all sectors while providing each client with professional knowledge and expertise.
In retail leasing, you don’t need to stay in one area to “look” specialised. Specialised expertise comes from the knowledge and professional advice you give to each transaction/requirement.
From both a long-term career perspective and a salary perspective, how does retail leasing differ from similar environments, e.g. banking property?
Regarding salary and long-term career perspectives, retail leasing fluctuates from year to year while banking property might be more stable with a longer-term career path. The fluctuation in retail leasing can range from earning HK$10 million in a good year to making HK$600,000 in a quiet one. Both the fluctuation and the earning potential in retail leasing are so big that sometimes it’s unmeasurable, though it has its own challenges in achieving so. Banking property is very stable with an average annual salary without many peaks and troughs, thus far more stable than retail leasing.
How does working at a firm like Colliers differ from a residential real estate environment? Are people suited to one or the other, or can a good leasing agent work in both?
Working at Colliers or any of the big five global property firms is very different to working in a residential boutique local real estate environment. The size, nature and finance capability of our clientele are completely different, as is the working culture. We are academically qualified professionals who demonstrate high-level market knowledge, economic intelligence and professional opinion backed up by legitimate facts and figures on a much greater scale than a residential real estate environment.
The clients and transactions we deal with sometimes affect the economy or vice versa. Our clientele includes multinational companies, international brands, global investors and professional industries, as well as local but well-known developers or operators.
On the other hand, a residential real estate environment involves much smaller-scale clients and work that can be done without so much detailed research or knowledge. A good agent can work in either environment but we usually see top agents working only in the big five.
Are there qualifications that hirers look for or do they just focus on past performance?
Past performance is crucial. While we do judge whose experience looks the most dazzling on paper, when conducting interviews, whether or not a candidate illustrates that critical “sense of retail” is also very important. I would sooner hire a person with less experience but a greater sense of retail than vice versa, especially in the current retail market in Hong Kong.
This article appeared in the Classified Post print edition as Weathering the storm.
