As Savills works to complete the blockbuster deal to acquire a major real estate finance shop, the London-based brokerage is making moves to aggressively grow its United States retail business despite headwinds from rising inflation and concerns about the world's oil supply chain.
Savills says it's quickly building its nascent U.S. retail group as demand for locations in the country increases and the popularity of American retailers grows in Europe, said Sam Foyle, co-head of prime global retail at the firm.
"This has been an eight-year strategy, in terms of planning to build out the U.S. platform and our global platform," Foyle said in an interview at The Venetian Las Vegas during the ICSC Las Vegas show. "And any little turbulence or movement of the market just doesn't affect that whatsoever."
'This has been an eight-year strategy.'
Savills, known for its occupier-services business across several property types in the U.S., did not have a national retail group in the country. That started to change in November, when the firm hired Todd Siegel as president of U.S. retail. The industry veteran spent more than 20 years at rival CBRE doing major deals in his base city of Chicago and beyond.
Siegel has been spending his first six months on the job scouting major U.S. markets for talent. He's doing so as Savills marches forward to close its pending acquisition of Eastdil, a well-established capital markets group known for selling and financing high-profile deals across the country and globe.
Siegel is building his team during a time of global uncertainty. The U.S. war with Iran remains at a stalemate, and gas prices have increased as the global supply of oil has been crimped as a result.
"There's going to be ebbs and flows in the geopolitical world," Siegel said.
Along with business partners Foyle and Anthony Selwyn, co-head of the prime global retail team, as well as "leadership in the U.K., going all the way up to the board," the firm is "keenly aware of our commitment to build this out, and what we had cemented before I even started," Siegel said in the joint interview with Foyle. "We're going to make sure that we do this right, and we attract the right people. This isn't just about trying to capture market share from a Wall Street-recording-type segmentation."
US retailers invade Europe
The geopolitical situation aside, Foyle said the time is right to establish a major foothold in the U.S. retail market as American and European brands seek stores in each other's major markets.
"For example, 25% of new store openings over the last 12 months in Europe have been U.S. brands," Foyle said. "So, there's big numbers right there. And then when you look at the money and the weight that's going into retail, $309 billion has been invested in retail and [food and beverage] over the last 12 months, through [mergers and acquisitions], venture capital money coming in, listings, all that sort of thing. When you look at that, a huge chunk of that is in the U.S."
As for merging Eastdil's brokers and capital markets into the Savills team, Foyle said he expects that to go smoothly because they won't come in and compete with Savills' existing talent.
'We're going to make sure that we do this right, and we attract the right people.'
"You would normally, with these sorts of mergers and big groups and purchases, see challenges on integration, and there's going to be issues," he said. "When you see something like this [melding of two companies], and there aren't any integration issues, it’s because Savills didn't have a capital markets platform in the U.S., and they [Eastdil] have one that is not on the same market scale as ours in Europe or in the U.K., where we've got a huge capital markets team."
Being able to leverage Savills' soon-to-be expanded capital markets team and client base in the U.S. will play a key part in growing its American retail business, Siegel said.
"I've spent 20 years of my career having access to the capital markets at CBRE," Siegel said. "So, I'll tell you that having that advisory capability at your fingertips is a massive, massive advantage, especially in understanding and having a real keen predictability around where the capital markets are going. Because at the end of the day, our clients, whether you're on the agency side or you're the tenant — businesses rely upon the flow of capital. Having access to firms like that better equip us with the tools to advise."