Changing market conditions across various markets in Australia have seen a marked increase in the number of agencies assessing their opportunities to either merge or exit the industry.

With some markets in a significant downturn and other markets at their peak or plateauing, the enquiries to both exist the industry or merge with a like-minded commercial competitor are on the up and up.

There are a number of contributing factors driving this increase:
• Agents are seeing their rent rolls are at their peak return in the current climate.
• Other agents are seeing their rent rolls plateauing or in fact receding by both numbers of managements and financial return for the portfolio.
• Sustainability and ROI from the sales department.
• In several markets, not all, agencies with less than 150 managements struggle to make a solid return.
• Aging Principals whose enthusiasm, drive and energy are transitioning from agency ownership as the stress levels are not diminishing.
• Lower success rates in attracting numbers of quality new staff.

More agency owners and principals are reviewing how to shore up their futures. Those who understand that by merging their businesses will halve their running costs by having one office, increase the return and capital value of one larger rent roll, having a more profitable sales department and in many cases reduce the number and associated costs of administration staff. Not only does this provide the benefit of economies of scale it future proofs the sustainability, profitability and work life of agency owners.

As a consequence of this there is a marked increase in the number of agencies who are either assessing/reviewing their agency in order to sell as a going concern or possibly selling the rent roll. The upside of this the demand for quality rent rolls remains robust across all markets and rent roll multiples are staying true for better rent rolls.

A natural legacy of these consolidations is the number of agencies has the potential to fall, allowing greater market share for the better performing and business-oriented agency.

See also:

Real estate most profitable industry in the country

The real estate agent does not have an automatic right to exist

How the real estate agent has changed for the better