Q&A: Brendan Tutt, Managing Director of Tessa Group


Brendan Tutt is busy. During his interview with The Urban Developer, his mobile phone buzzes incessantly.

The reason is simple. In the 20 months since he left David Devine’s Metro Property Development, he has launched five separate but related businesses, in the process creating an integrated real estate empire.

Tessa Group which now employs over 100 people has grown and Tessa Advisory and Project Marketing has already put some major runs on the board selling over 1000 apartments during 2015 with a further pipeline of more than 1200 apartments and townhouses to sell over the next year worth approximately $500 million. This makes Tessa easily the biggest project marketer in the city.

Tessa’s project marketing clients are a Who’s Who of Brisbane developers and have included Pradella, QM Properties, JGL Properties, Goldestate, Stockwell, Partners In Property, Azure, DeMartini Properties and Marquette Properties.

Tessa’s development business, Tessa Developments, has over $150m worth of developments underway over six projects totalling 250 dwellings, a strategic partnership with Peter Sherrie's Excel Development Group and a long standing and close relationship with Hutchinson Builders' Scott Hutchinson who’s group has been appointed to build all Tessa Projects.

Tessa Residential, Tutt’s building management business, is also growing rapidly, and already operates three high rise buildings: two in Fortitude Valley and one in South Brisbane. The business has $240 million in assets under management encompassing more than 500 apartments. The group has also purchased the rights to two more buildings adding a further 300 apartments giving the group over 800 apartments in their high-rise pool.

Tessa Residential's agency arm now operates four general real estate agencies too, with offices in the Brisbane CBD, New Farm, Aspley and Oxley. This gives the group a sales outlet and a further 600 properties under management.

In partnership with long term friends and property identities Chris Vitale and Paul Gedoun of Pointcorp, Tutt formed Tessabuild -- a house building business 12 months ago and this year the group will build in excess of 200 houses specialising in the owner occupier market and buying infill sites.

Below, we pick Brendan’s brains about the state of the Brisbane market, what advice he has for agents entering the business today, and why he plans to keep so many balls in the air at the same time.

You’re a Developer, Builder, Project Marketer, Property Manager and operate Real Estate Agencies. What do they have in common?
Across the board in any property company you face the challenge of understanding the market. Understanding the market in all our different businesses is very important and I think that’s one thing we pride ourselves on. We spend a lot of time with researchers making sure we're well versed in understanding where the market is at. Timing is important and we make decisions quickly. One thing our group has in common across all business is that we have the best people working with us, not for us, with us! We also work with the best-in-class across the board.

Ascot Residences, Brisbane[/caption]

What do you think is the most undersupplied part of the Brisbane market?
I think that one of the strongest markets is the boutique apartment market - small scale developments. Brisbane is currently seeing a lot of high-rise high-density developments and that market place is getting very crowded.

There is a flight to quality happening in what buyers want and what agents want.

They aren't looking for projects where there's 1000 apartments. They're looking for apartment complexes where there's a point of difference and the day of the 1000-apartment project with 5, 6, or 7 stages is coming to an end for this cycle.

We've seen a lot of guys get very ambitious trying to capitalise and potentially not deliver quality and that is why this flight to quality is happening.

Small boutique projects with a point of difference are the key. Lifestyle projects where people are delivering more amenity. This along with the townhouse market are a big focus for us as a group.

What would you nominate as the top projects in Australia right now?
We speak to every major developer across Queensland - from regional areas through to Brisbane. I think the key thing is that to work on a project, it has to have a point of different for us. Everything we work on from our own projects to clients is quality. Premium is the normal in our opinion.

A project that we worked on and invested a lot of time in was the Newstead Series by JGL Properties.

On that site, the developer could have done 400-500 apartments. But they decided to do four boutique buildings range from 58-78 apartments instead. In the middle of that, which is almost the length of a football field, is 2000 sqm of amenity including a 25-metre pool, gym, and outdoor cinema. This is smart, smart, smart!Now that's a project where people want to live and that's a point of difference. It's not a high density tower that's just been created for the sake of trying to sell apartments. John Livingstone is a smart guy for doing this, an example of best-in-class.

It's very much a project where design and patience has come into it. There's another example at Zetland in Sydney by Payce Consolidated called East Village – they are creating precincts, which is very important.

East Village had on Level 6 a couple of thousand square metres of open grass area which is very rare. The Eastern Distributor was on one side and you wouldn't even know you were there.

They are setting the benchmark. If I had to name the top developers here: JGL Properties, Pradella, Pointcorp, Cavcorp and Aria Property Group also do great work. They have great projects and they're sophisticated projects in the Brisbane market place.

If you go down south Tim Gurner and Paul Fridman do a great job and they are bringing a bit more of that flair to Brisbane.

Those people are setting the benchmark across Brisbane for what should be delivered.

Tessa Group and Excel Development Group have commenced construction of their $22 million Parkside On Folkestone residential development at Bowen Hills.[/caption]

How would you compare the market today with five years ago?
Just go back 3-4 years when there wasn't a lot of stock in the market place. We were selling high volume investment product and there was a lack of supply. Because of funding and other reasons, the market place was starved for stock. It was a lot easier to sell product back then because you didn't have the competition. Right now there is stronger competition which means developers need to lift their game and provide a much better quality of project.

What is the biggest challenge facing the market?
The biggest impediment in the market place is developers not delivering quality. The same style of property and project that was delivered five years ago is not acceptable any more.

People who were doing stuff 5-6 years ago are now having to compete with people who are really delivering some absolutely fantastic projects. You're seeing a lot of positive influence from different architects, like Elenberg Fraser who have come to Brisbane recently. Callum Fraser has been a sensational addition to this market - a guy that understands markets and delivers. Local talents like Peter Willis from Red Door Architecture are changing the apartment space too. They just think differently and are really good guys to work with.

What is quality?
Quality is resident amenity. It's not just about “build ‘em cheap and stack ‘em high”, which I think a lot of people have done over the last few years.

It’s about building quality, the sizing of apartments, the floorplan design. Over the last 3-5 years people have seen these stack-and-rack type apartments but quality is showing a well thought out floorplan design and good-sized apartments.

Guys like PointCorp are delivering quality and they're achieving high prices – and they are warranted, quality costs. That “build ‘em cheap and stack ‘em high” product is not moving like it used to.

The fundamental thing for any developer right now is spending the upfront time on design. It's the most important thing both internally and externally. But form must follow function. That's my biggest thing. You can have a sexy building that looks great but the internal units don't function. It just doesn't work. The internal function of a unit must be great and then build around it.

Don't try and squeeze as many units in as possible. The market will pay more for quality so don't push density over design.

Could you nominate a project that isn’t quality?
I won’t do that because any project that gets off the ground deserves accolades. This is a hard business but there are a number of inner city projects in Brisbane where the outcomes have been driven by density - not by design. There's a project in Fortitude Valley of over 500 apartments where it was just designed for yield at the time and it now sits on one of Brisbane's best inner city sites.

What is your top piece of advice for agents?
This business is built on long-term relationships and reputation. You need to provide strong advice and ensure that you have a long-term approach to how you carry yourself in the marketplace. The advice that you deliver must always be strong and accurate. Providing good advice from day one is the foundation for a good career in property.

What is your top piece of advice for sales managers?
The key to success for managers is working with your staff. The way to build long-term staff relationships is to work with them day in, day out. Lead from the front!It’s about managing staff and working with people and growing them into positions that they're appropriate for.

Create a good strong culture for your business and you'll keep staff. In our business right now the most important thing is our culture. We want a positive, active, upbeat, energetic, motivated environment. We talk about motivation. We talk about focus. These are the key things that we work on. We have a focussed environment that is outcome driven and any property business like ours needs to be that way inclined.

What sets Tessa Group apart?
Number one is our people and number two is our culture!Another aspect of our business that sets us apart is that we have an integrated approach with all our companies.

There are five companies rolled into one with strong leadership. Guys like Andrew Coulter, Kurt Swenson and Dan Hillier who I work with are just smart guys.

We feel that having all these different businesses in the property market gives us a great opportunity to understand the market much better. We understand the rental market, sales market, housing market and general agency – it helps us immensely.

Because we are developers we understand our clients more than most project marketers would. We go through the same process that they do with each development ourselves. What's important is that you understand the market place across the board and we do understand. There wouldn't be another project marketer with as much development exposure out there as we have, so we understand the importance of every aspect of these projects.

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