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Agent to face inquiry

COMMERCIAL agent Knight Frank will be asked by the Real Estate Institute of Western Australia to explain its controversial actions relating to a call for expressions of interest to house tenant client BHP-Billiton’s operations.

A senior REIWA source confirmed that the institute would be investigating complaints it had received about Knight Frank’s conduct.

The complaints are understood to relate to Knight Frank directly approaching building owners and developers for an exclusive leasing authority for 24 months over any office space leased by tenant client BHP-Billiton.

Similar arrangements are not unknown in other States but local agents appear keen to curtail their use in WA.

WA Business News has been told that Knight Frank sought to bypass incumbent leasing agents by sending letters directly to property developers and building  owners, outlining the leasing arrangement and fees should the building successfully secure BHP-Billiton as a tenant.

With the mining group looking for 7,000 to 10,000 square metres of A-grade office space, a leasing fee for BHP-Billiton could be worth hundreds of thousands of dollars.

It is understood that REIWA will ask Knight Frank to explain a number of issues to have arisen from the complaints received, including questions about whether the agency may have breached the REIWA code of conduct by directly soliciting leasing authority.

Knight Frank’s actions have been labelled as unfair and aggressive by some CBD commercial real estate industry representatives spoken to by WA Business News.

Sources also suggested building owners may seek legal advice about the matter.

Knight Frank director of assets Ian Edwards denied bypassing leasing agents and said that letters had been sent to all incumbent leasing agents, as well as building owners and developers.

Mr Edwards said the agency was not acting as a tenant representative or consultant for BHP-Billiton, so there was no conflict of interest.

“We are coordinating BHP-B’s accommodation requirements and are not involved in negotiations or selecting a building. We are doing what we do every other day,” he said.

Burgess Rawson leasing negotiator Judd Otley said it was unusual to bypass leasing agents and approach property owners directly.

“Knight Frank is trying to play games – it doesn’t make any friends around town,” he said.

Hawaiian Management Group development manager Stuart Duplock said that actions similar to those that Knight Frank was accused of conducting were not uncommon on the east coast.

“They are basically managing BHP-Billiton’s requirements and getting the landlord to pay the fee,” he said.

There is much industry speculation over whether Knight Frank’s actions could be breaching the Trade Practices Act and the Real Estate and Business Act codes of conduct.

Department of Consumer and Employment Protection Real Estate and Business Act supervisory board registrar Bob Rossi said making the provision of one service dependent on the delivery of another service came close to third-line forcing.

“We would take a serious view of any agent breaching that ACCC law,” he said.

Australian Competition and Consumer Commission regional director Sam Di Scerni said it was impossible to tell if the Trade Practices Act had been breached without examining contracts.

“You can have conflicts of interests and not breach the law depending on the circum-stances,” he said. 

Grant Samuel head of tenant representation and associate director, Matthew McNeilly, said such aggressive actions were new to the Perth market.

Mr McNeilly said if the building already had a leasing agent the landlord could end up having to pay a double leasing fee.

In turn, he said that could be reflected in the tenant’s lease.

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