EYE contributor, Russell Quirk, asks the question – how do the economics of a branch office really stack up? We hope that EYE readers will help to provide some answers. As Russell suggests – please play the ball, not the man, if you are commenting on this piece. We really don’t want to have to take down comments.

Depending on which data-source you choose to believe there are between 15,000 and 20,000 high street estate agency branches in the UK and it was only the financial crisis of 2008 that ever really saw any significant industry blood on the streets with 25% or so closing, according to analysis by Ordnance Survey. Since then though, there’s been a steady climb back to ‘normality’ levels and the likes of Hoe Street, Walthamstow, the mecca of our industry with over 20 agencies crammed within 300 metres of each other, continue to epitomise public belief that our town centres are ‘full of ****** estate agents’.

Some idiot, me I think, once said that most high street estate agency offices would eventually close. This was the consequence of applying commercial logic to a sector bound to follow in the footsteps of others which had all ultimately consolidated from bricks to clicks. Yet some years later modern town centres remain propped up by Costa, Starbucks, Oxfam, an occasional bank, the inexplicable resilience of the Edinburgh Woollen Mill and, yes, loads of estate agencies super-glued in situ.

What is it about our industry in particular that facilitates this Teflon coating? How do the economics of a branch office really stack up?

Well, let’s delve – because I think this is one of the most important unanswered questions for our industry to solve.

High Street Offices – Expensive and Pointless?

It’s impossible to put an exact number on what a high street agency office costs to run each month because there are so many variables depending upon location etc. Mount Street, Mayfair? You can expect rent and rates of about £30,000 per month. Uttoxeter town centre – around £2,000. Much the same differential applies to people costs too. So, let’s just take a sensible midrange number for the purposes of some fag-packet maths and plump for a typical rent and rates cost of £3000 per month and an average staff expenditure of £2500 per month per person at, say, two people per branch in addition to you. Some will of course argue that their particular town/city/village is different to this – but they’d be overlooking what the term average means.

Anyhow, I think it’s pretty reasonable to say that an estate agency office on Average Street consumes about £8,000 per month in rent and rates and staff – plus you. Then add in utilities, portal subscriptions, insurances and the like and it’s more like £10,000 and then you’ve got maintenance, fixtures, refurbs and miscellaneous stuff at, say, £1000 – call it £11,000 all told.

The question is therefore, does your business achieve £132,000 more in fees than it otherwise would each year by operating from a high street branch? At this point I’d be genuinely fascinated to know how many of you think ‘yes’ and how many say ‘no’?

How many sellers actually visit your office to book a valuation? How many buyers come in to see you to talk about what they want to buy? How many applicants, sat in front of you in your expensive shop, do you convert from applicant to a valuation as a potential seller?

I’d wager that the answer to these questions is ‘not many’. And so why on earth do you have an office at all?

High Street Office Costs. Perhaps Justified?

Hold your horses. Obviously it’s not quite this simple because most of us would agree that you need somewhere to sit. And even if you’d need fewer people in perhaps a first-floor serviced office to cope with lower numbers of walk-ins, you’d still need some staff. But in reality you are probably paying double what you otherwise would by being in the high street – but then that’s only £5,500 a month more based on the numbers above. Hmmm, there are indeed many competing considerations to contemplate…

To me, the burning question is this though: How many homes do you list, sell and complete upon purely because your high street office was noticed by those selling clients? How much of its existence is as an ‘advertising hoarding’ and not just as four walls and a ceiling? And how many vendors sign up with you not just because they see your shop sign every day as they drive past but because they value the security of knowing that you are visible? In other words, is an office front not only an important advert in itself but also a conversion tool based upon it demonstrating reassurance, trust and accountability? If your response is a resounding ‘yes’ then I guess that it does have additional value over and above pure shelter.

But, let me ask you to ponder this too… What if you were able to build awareness of your brand together with total trust and credibility without that expensive office commitment? I wonder if that right there is the future of UK estate agency, the best of both worlds in the form of maximum revenue yet minimal overheads?

Can that utopia actually be achieved? Well, more and more independently minded agents would say ‘yes’ to that these days.

I don’t hold my usual cast iron, somewhat controversial, one-sided opinion here. I’m not forcing a view that your ‘enviable high street position’ is futile and that you should burn it to the ground and move to an industrial estate five miles out of town. Because I genuinely continue to ponder the positives of high street offices.

I really am 50/50 on the subject and think that the answer to the question ‘Are high street offices justified?’ is, I’m afraid, ‘It all depends’.

So, novel as it may be, perhaps resist the usual temptation to play the man not the ball as generally happens when I pen these thought inspiring missives of genius – and instead, sensibly comment below on the pros and cons and see what constructive gems shake out.

Russell Quirk is co-founder of PropergandaPR and Investor Director at Keller Williams Essex.