My next subject for our “Questions With” slot is Tony Galetti. Galetti has a national footprint with offices in Cape Town, Johannesburg, Port Elizabeth and Durban. Galetti Commercial and Industrial was Started by Tony Galetti and Francois Staples and since their start up they have just been growing from strength to strength. Galetti Commercial and Industrial specializes in the sale, leasing and management of commercial, Industrial and retail property in the South African market.
As with most of these interviews, I didn’t quite know what to expect. Tony mentioned a lot of well known company names including Jones Lang LaSalle. Jones Lang LaSalle was formed by the merger of Jones Lang Wootton, a British firm with origins dating back to 1783, and LaSalle Partners, an American company formed from a predecessor launched in 1968.
Having come from a brokerage myself I certainly found it very hard not to talk about tactics etc and just stick to the questions I had at hand. For me it is always interesting to chat to other brokers, not necessarily as a competitor but as a peer.
On with the Interview. The Questions with slot is a series of questions aimed at crucial industry role players in the commercial property market in South Africa.
MK: You and Francois started the business; before this what did you do? Were you also a broker?
TG: I was overseas for a long time, I lived in America for 5 years and I lived in Europe for 7 years and in that time I was always involved in property or construction. I came back here and started working for a local brokerage in Cape Town and just had an idea, we had certain ideas on how to run systems and how to manage people and how to create leads and generate business. We didn’t feel it was happening where we were so we did it on our own.
MK: What do you see as the next big change in the South African Commercial Property broking arena, and/or is it already happening?
TG: I think it’s going to take more of an international direction, where in the UK and in America specifically you’ve got tenant side brokers and landlord side brokers. In South Africa the broker represents the landlord and the tenant. With Jones Lang Lasalle coming to Johannesburg it’s going to increase the competition on a tenant mandate side. It should be quite interesting. The bigger players like Broll, Jones Lang LaSalle , ourselves and a couple of other guys are probably better suited to deal with the tenant side, more than the landlord side and I think possibly the smaller guys will still deal with the smaller deals. I think there will be more competition to do the bigger deals with more of a corporate flair as opposed to the way things are done now.
MK: As a broker you build a relationship with your landlords, they know your name and they know you are going to bring a good tenant to their property. Do you think landlords deal with brokers in good faith?
TG: There has been a dramatic shift. If you look at 2006, 2007 and 2008 a lot of landlords treated brokers like dirt. Literally like dirt. They put the phone down on them; they wouldn’t return calls, they wouldn’t do anything because there was no vacancy in the market. It can be quite cruel sometimes because it’s almost on a full term. The landlords now rely heavily on the brokers to tenant their building and without brokers you’ve got nothing. So it’s gone now from the landlord saying I’ll pay you 50% of tariff, take it or leave it, to guys who will pay you 200% to get them a tenant so it’s actually better from a brokers side now from the way they are being treated now. Landlords, as they should, understand the value of brokers in the market.
MK: How important do you think the internet is as a marketing tool and do you think it challenges the place traditional signage has in your marketing efforts?
TG: I don’t think on signage but on everything else. I’ll give you an example; I think the Internet is probably the most important marketing tool going forward. We stopped doing traditional print advertising about 2 and a half years ago, we found it wasn’t cost effective. We couldn’t monitor it. With the Internet we are able to monitor exactly how much we spend, what our different strategies are and how many leads we get but the boards, in my opinion, are key for getting exposure in your area and for getting calls on specific buildings. I think the two work hand in hand, we wouldn’t do away with boards but the Internet is probably the most important thing going forward.
The only thing that would make us do away with boards is the council. Cape Town City Council has now got a completely unfathomable process for applying for boards. I actually wrote an article on the By Law. What they don’t understand is that brokers pay to put their boards up; we pay on risk to put a board up on the landlord’s behalf. Now they want us to go through a 4 week process, they want you to pay R1000 application fee and you might not even get the application approved and that is ridiculous.
MK: Green Technology, What is your angle on the subject?
TG: I know a lot about it. Green is definitely part of the future. South Africa isn’t anywhere near where the rest of the world is when it comes to green technology. It comes down to costs. People don’t appreciate immediately that they have to pay a little bit more to ultimately save the environment in the long run, but it’s picking momentum. We are actually involved in a couple of solar companies on the property side; it’s mostly larger solar installations. Green is definitely the way forward. Although the South African property market is developed in certain instances, it’s a little bit slow to pick up on some of the trends.
MK: Do you think our government does enough to promote Green Technology?
TG: I think they are now through NERSA (National Energy Regulator of South Africa). NERSA promoted green power through ESKOM which is the biggest problem in South Africa. Green technology on a building; if you build a normal building it will have a certain effect, it will have a certain carbon foot print, but we produce most of our power from coal and that is a huge problem in South Africa. What NERSA are doing now is they’ve stipulated that a certain amount of power has to come from wind, from solar, there are various different forms of renewable energy of generating power and they’ve actually come to fruition from just talking about it. So I think the government is starting to do the same, we must understand that green building is very much a private sector thing. Many of the building are owned by the private sector. The government can’t force people to build in a certain way especially if cost comes into it.
MK: Are there any developments you are working on that you would like to highlight?
TG: There is a lot going on. There are some things that are about to come to market that I unfortunately cannot let on. The lease still has to be signed. I think in general its busy and important to understand that two years ago you didn’t have any construction and there was no movement in land, and recently now we’ve sold two pieces of land, some of the guys are building on spec again, which people just wouldn’t do two years ago. I am quite optimistic even though I do acknowledge that it’s been very difficult.
MK: Where to next for Galetti?
TG: I can’t tell you all of our trade secrets; we are developing some very new and exciting things. We’ve just completed a new package that we were working on, Galetti is certainly one of the bigger players in the Industry but we are no where near the size of Broll or Jones Lang Lasalle, but we do have a national presence. A lot of the bigger companies in Johannesburg don’t operate in Cape Town and the Cape Town guys are not up in Johannesburg.
MK: Is there anything else you would like to highlight or that you would like me to publish?
TG: I’ve written a blog on the signage thing and I’ve had 15 or 20 responses, I know a couple of guys have approached SAPOA with the problem. We need to get together with the brokers and it’s important to highlight the situation from a broker’s point of view.
MK: We’re all human (unless you’d like to tell us otherwise) and we all have hobbies. Having your own business is quite stressful. How do you alleviate stress?
TG: I play golf, although it adds to stress. I do yoga, I gym, I still play rugby when time allows, go out with my mates and go cruising on the Harley, that kind of thing.
So we know the man can gym and we know that he knows how to run a business and he certainly does have the right ideas to ensure future success. But what of the By Law on signage in Cape Town? How would you as a broker deal with this? If your sign isn’t out there where will you get your lead from? The City Of Cape Town brought this process in to tackle illegal signage. You can read about my view here and you can follow Tony’s blog here.
