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Lettings from America: Tom Atchison Interview
Tom Atchison greets Property Week with a firm handshake and a broad grin that reveals a set of perfect teeth.
The founder and chief executive of US corporate housing firm National Corporate Housing has just launched an office in London - its first permanent base outside the US - and is on a charm offensive to promote his business model to property owners and developers in the UK.
So how does he think the model will weather the transatlantic crossing - and why now?
National Corporate Housing was founded back in 1999 when Atchison “rented an unfurnished apartment in Washington DC, sat down on the floor and started making calls”.
From there, he grew the business rapidly, expanding via organic growth and acquisition to the point that the company today boasts 27 offices in the US and is one of the biggest providers of short- to medium-term rental accommodation to US corporates in the country.
Atchison explains that corporate housing has similarities to the serviced apartment market in the UK, but adds that there are also important differences. “Corporate housing is a bit like serviced apartments, but the way we do business in the US is actually very different,” he says.
“We can get shorter-term leases from landlords. We rent unfurnished apartments from landlords and then furnish them and let them to our customers. It’s almost 100% B2B - we do very little leisure - and our length of stay is generally 30 days or longer.”
The company will do shorter lettings, but it is uncommon. The main reason the National Corporate Housing business model focuses on longer stays is that it does not want to take on the hotel sector. “We really prefer not to compete with hotels because they have some operational efficiencies that we don’t have, so why should I try to compete with them when they have those cost efficiencies?” asks Atchison.
“I’m going to squeeze my margins if I do that. We have found a niche working with relocation management companies and directly with corporate clients or government agencies, and it just seems to work better.”
Snapshot: Tom Atchison
- After graduating from Oregon State and the University of Denver, Atchison started his career in property and hotel management
- In 1985, Atchison entered the apartment management industry. He held the positions of leasing manager, property manager and regional property manager with industry leaders R&B Realty, Trammell Crow Residential and Summit Properties
- In 1995, he became senior vice-president at ExecuStay, where he was responsible for the operations of 18 regional offices
- In June 1999, Atchison opened the first National Corporate Housing office in Reston, Virginia
Another way National Corporate Housing differs from the serviced apartment model - and the hotels market too - is that it achieves extraordinary occupancy rates. According to Atchison, his company’s occupancy rate hovers around the 94% to 96% mark.
“We don’t worry too much about our occupancy,” he says. “The rates are extremely high for the UK and it’s high for the US as well. Our industry in the US is generally running at around 89% to 91% and the average length of stay in the US is about 72 days. Ours is typically 104 to 105 days. It’s to do with the kind of clientele we go for in contrast to some of our competition.”
In the US, because of relationships we’ve fostered over a long period of time, we can sometimes get a six-month lease or a 30-day lease
One reason the company’s occupancy rates are so impressive is that in the US it is able to take advantage of very flexible leases. In part, that’s down to a different business environment, but it’s also due to long-standing relationships. Atchison is aware that neither will necessarily apply in the UK, although he is doing his best to build contacts, not least by attending this year’s Mipim with his wife.
“Typically here you are taking multi-year leases,” he says. “In the US, because of our relationships that we have fostered over a long period of time, we can sometimes get a six-month lease, a three-month lease, a 30-day lease. We can extend or break leases in certain circumstances.
“We have a lot more flexibility there. I imagine we will be taking five-year or longer leases here, although I’ve spoken to some property owners who have said that if I need a six-month lease they would try to make that happen.”
While the new London office is National Corporate Housing’s first permanent base outside America, it has provided accommodation for its clients in more than 30 countries around the world through partner companies, which begs the question: why the need for a permanent base in the UK?
“For several years some of our customers have asked us to consider opening in the UK, but we just weren’t ready,” he says. “We had certain things we wanted to accomplish in the US, plus we wanted to find the right person. We found the right person last year and said: ‘OK, we are ready to move forward.’”
Atchison says he is not fazed by the prospect of Brexit. “Brexit to me… certainly it creates some indecision and puts a pause on some decision-making, but I think that’s a short-term thing,” he explains.
“In the long term, in or out, Britain is going to do just fine. I think there is a lot of commonality between the US and the UK. We are both very resilient countries. People find a way to be successful. And we watch what’s going on and I think people are distracted by Brexit. It doesn’t worry me.”
In fact, Atchison thinks that Brexit could be beneficial. “There’s a strong possibility that Brexit will increase trade between the US and the UK,” he asserts. “The UK is in a very good position to strengthen its relationship with the US. President Trump has already indicated he wants that. The US will be there to support the UK through this.”
I think there is a lot of commonality between the US and the UK. We are both very resilient countries
Provided the London venture works out, Atchison is keen to explore other markets in the UK, although he stresses that his is a “slow, methodical” company.
“We hired our first UK person because she really knows the London market,” he says. “But she’s identified some other business areas that she feels we should be looking at. So initially London, but there are other areas where we want to be. London is a pricey area. Some of our clients will be more price conscious, so we want to be able to provide them with the right location in terms of price point.”
For the moment, the UK office will be focused on servicing National Corporate Housing’s existing client base in the US, providing accommodation in and around London for employees of American firms who need a temporary UK base. However, the plan is to start going after UK firms at some point.
“Eventually we are going to be marketing to UK businesses, but the reason we are here is for our US customers and we are going to make sure we are servicing them well before we take on more,” says Atchison.
It’s early days, but given Atchison’s success in building his business stateside, UK serviced apartment companies can assume there is new competition in town.