Cities are the crucial drivers of our national economy. The more vibrant, culturally rich and progressive they are, the more we all benefit. In this review we look back on a year of supporting our cities.
A force for good
by Chris Ogelsby
Here at Bruntwood we continue to create an environment for growth. Through every development, every innovation, every regeneration project we undertake, we’re driven by a commitment to improving the lives, prospects and communities of our 3,000 customers and the 50,000 people that work with them – and to making our great city regions greater.Read More
We believe that good business can be a force for good. Our cities can be important drivers of our national economy, attracting the people and talent that make them vibrant, culturally rich, progressive and diverse places to work. This means, we’re always restless; eager to develop new models that shape the market, always meeting the demands of the new growth sectors and new patterns of living and working, all of which are aligned to the strategiesof the cities themselves.
Our great cities and regions can be important drivers of our national economy, attracting the people and talent that make them vibrant, culturally rich, progressive and diverse places to work.
I was pleased to see the Chancellor reinforce the importance of the Northern Powerhouse and Midlands Engine in the 2017 autumn budget. The economic rationale that underpins these concepts is undeniable, and it’s the right one. It’s also good to see the value of further devolution recognised, something we see as critical for rebalancing our nation’s economic and lifestyle inequalities. We will continue to support these initiatives and play our own part in making them a reality.
In 2017, we invested more than £17m in building refurbishments and capital improvements and £93.2m in development schemes. Alderley Park, the UK’s largest single site life science campus, saw the launch of two pioneering national initiatives: the Medicines Discovery Catapult (MDC) and the Anti-Microbial Resistance Centre (AMRC). Circle Square on the Oxford Road Corridor in Manchester – a £750m joint venture with Select Property Group – is changing the face of the city, attracting interesting and innovative businesses that see the opportunities of co-locating with the incredible talent and skills along the Corridor.
Indeed, the Oxford Road Corridor is home to many of our important new developments. Pop-up retail incubator Hatch (in partnership with Afflecks) showcases our flexibility and approach in supporting entrepreneurs and small businesses; Manchester Science Partnerships’ (MSP) Citylabs 2.0 and 3.0 received planning permission in May and are due to begin construction late 2018; our planned delivery of 50,000 sq ft of retail for our partners, Alliance Manchester Business School and a new digital and tech incubator at the Manchester Technology Centre all exemplify this rapidly emerging neighbourhood of opportunity and innovation.
As ever it’s our customers who are at the heart of everything we do; their success is our success.
Elsewhere, the redevelopment of Union in Albert Square and the launch of Neo (both in Manchester), the unveiling of Cornerblock in Birmingham, the creation of three floors of tech incubator at Platform in Leeds, the acquisition of Innovation Birmingham and the announcement of our partnership with the Class of ‘92 for UA92 in Old Trafford, all signal an incredibly positive environment and our confidence in the future.
2017 also saw the opening of the 70,000 sq ft Bright Building at Manchester Science Park which launched in September 2017 along with Mi-IDEA, a co-innovation ecosystem delivered by MSP and Cisco. Our strategy of investing in long-term projects like this means we’re creating the environment to support knowledge-led sectors, an approach which contributes fully to the government’s Industrial Strategy and Life Sciences Sector Deal, both published in December 2017.
As ever it’s our customers who are at the heart of everything we do; their success is our success. From start-ups to corporates, to help them succeed we’re facilitating new types of business communities. These include larger customers locating close to smaller, dynamic businesses to foster innovation teams; and customers co-locating with academic and clinical institutions. There’s clear evidence that this customer-focused business model creates value through development and asset management, which in turn leads to an increase in building occupancy.
Over 100 of the Bruntwood team have been with the business for more than 10 years, and that continuity is something we’re very proud of...
Every year we support the communities in which we operate, and 2017 was no exception. Through the City of Trees project, we’ve now planted over 250,000 trees in Greater Manchester, which will be the cornerstone of the new Northern Forest. Our amazing colleagues also gave 336 Cares Days, supporting over 75 different charities. We now have 650 colleagues and we wouldn’t be where we are today without them. Over 100 of the Bruntwood team have been with the business for more than 10 years, and that continuity is something we’re very proud of; it also perfectly complements the new skills and talent we’re constantly bringing in at all levels. Thanks to all of you for making 2017 a successful year.
Looking forward to 2018, the Group is in a great place, with a strong balance sheet, a successful business model, an evolving product mix aligned to the needs of our customers and a portfolio which is both geographically strong and increasingly focused on the growth sectors of tomorrow. We have a good pipeline of acquisitions and partnerships across our four core city regions and see 2018 as another year of strong growth. I’m looking forward to spending more time in 2018 out on the ground, making sure our purpose is alive and well: that is, making our great city regions greater.
On behalf of everyone in the business, it’s our pleasure to welcome readers to the Bruntwood annual review for 2017.
With another remarkable year to look back on, this edition of our review has been more challenging than ever to compile; there simply isn’t enough room to include everything. So the publication you now read is, of necessity, just a selection of our recent highlights.
We hope that you find the projects here as enjoyable to read about as we found them to work on, and if you’d like to know more about anything in this review, you’re welcome to get in touch.
Although numbers never tell the whole story, they do provide context. As of the end of 2017 we own and manage over 140 properties across Greater Manchester, Birmingham, Liverpool and Leeds.
The scale of our commitment to our portfolio is demonstrated by the £100m we invested in property upgrades over the year. We leased 390,000 sq ft of space to new customers in 265 deals in 2017, and across the portfolio, our properties are home to 3,000 businesses, employing more than 50,000 people.
We’re famously passionate about our support for the arts. A thriving cultural life is a reflection of a thriving community; and when these things thrive, we all prosper.
2017 was our twelfth year as sponsors of the celebrated Manchester International Festival; elsewhere, The Bruntwood Prize for Playwriting is now firmly established as Europe’s leading prize for stage writing talent.
Athena Rising by Nomad Clan is now officially the tallest mural in the UK andit adorns the side of Platform in Leeds. Overlooking Leeds station approach is Andrew Small’s Blockout, a magical light installation commissioned by Bruntwood.
For the RHS Flower Show at Tatton Park we created the Bruntwood Experiment, a show garden celebrating the unsung plants that thrive in our urban environments.
In 2017 10% of our profits were donated to good causes. We partner with the Oglesby Charitable Trust to direct funds towards community projects that make a real difference to the lives of people in the places we work.
A great example of this includes our collaboration with Street Support, to help those experiencing homelessness get the help they need.
This may be a review of the year which has passed, but we always keep one eye on the future too. There are plenty of exciting developments currently in progress that we will be updating you on this time next year. In the meantime, Manchester Technology Centre (MTC) will be refurbished and reopened in early 2018 as part of the wider Circle Square development, including the introduction of a tech incubator. Its neighbour Hatch will also launch phase two around the same time and Union at Albert Square, Manchester, is due to complete in April 2018.
Our number one priority is always our customers, of course. As you will see in the pages that follow, our absolute commitment is to making sure that every step of their journey with us is not just a pleasure, but of benefit to their business. We take care of a host of day-to-day matters for our customers; it’s what leaves them free to concentrate on doing what they do best. But it’s the value that we can add, to actually drive their growth, that they tell us they appreciate most.
Because we work with so many different kinds of company we’re perfectly placed to see how businesses can complement one another and maximise opportunities. Actively helping to make it happen for our customers is just one of the things that sets Bruntwood apart.
Just some of our customers achieving great things include Blueberry Therapeutics at Alderley Park, who reached a major milestone in 2017 by getting its first drug candidate into clinical trials; Zilico at Manchester Science Park who is developing a handheld scanner that detects cancers; and Rradar at Platform in Leeds, continues to roll out Grace, its world-leading app offering legal guidance, tools and templates for its customers.
Enormous thanks for another amazing year go to each and every one of the inspiring people that make up the Bruntwood team. Everything we achieve as a business is due to the hard work and dedication of our amazing colleagues. Many of us are active outside our day jobs too, and some of us have particularly impressive achievements under our belts.
Special mention goes to Zoe Symons, who represented Team GB at World’s Strongest Woman in the USA in 2017.
Manchester is one of the top 20 European cities for digital innovation. A major driver for this is the access to fantastic talent which the city provides, much of which flows from the outstanding universities.
The Oxford Road Corridor is home to world leading institutions in arts, science, technology and healthcare. No wonder it's becoming known as Manchester's innovation district.
From the spectacular St James’ building at the northern end of Manchester’s Oxford Road Corridor, to MSP’s Manchester Science Park campus in the south; from the creation of a whole new city centre neighbourhood at Circle Square, to the creators of tomorrow’s technology in Bright Building; we’re working with our partners across a neighbourhood brimming with world-class science and technology, healthcare, learning, research and development.
Use the map below to find out more about some of the projects we're involved in.
1. Circle Square
An inspiring new city centre neighbourhood at the heart of Oxford Road Corridor, offering over 1 million sq ft of workspace, 1,700 new homes and 100,000 sq ft of ground floor retail and leisure space for shops, studios, bars and restaurants. A multi-storey car park and two hotels will provide additional amenity to the site and the 250,000 sq ft of beautifully designed public realm will bring much needed green space to the city.visit website
2. Manchester Technology Centre (MTC)
The technology incubator at MTC, which will focus on data science and technology innovation, cements MSP’s presence at the upper end of the Corridor. Designed to be a dynamic platform for the next generation of tech entrepreneurs to connect, collaborate and grow their businesses, supported by MSP’s specialist business growth programme, partners and networks.
Hatch on Oxford Road is the most striking new addition to Manchester’s thriving cultural scene. Hunkered down under the city’s iconic Mancunian Way flyover, it’s home to some of the most exciting and creative independent businesses in the city.visit website
To see Toby Sproll talking about Hatch click belowWatch Video
4. Alliance Manchester Business School
Alliance Manchester Business School, part of The University of Manchester, is the largest campus-based business and management school in the UK. A multi-million pound, ten-year redevelopment will ensure the school remains at the forefront of business education, offering world-class new learning spaces, and 50,000 sq ft of high quality retail.
5. Citylabs campus
The Citylabs health innovation campus on the hospital site includes the very successful Citylabs 1.0. Citylabs is developed in partnership between MSP, Manchester University NHS Foundation Trust and Manchester City Council. Citylabs 1.0 is a pioneering development, forging a strong relationship between the NHS, the scientific and academic community, and industry. The Citylabs campus is undergoing a £60m, 220,000 sq ft expansion to create Citylabs 2.0 and 3.0 and a national hub for precision medicine and data analytics.
6. Manchester Science Park
The original MSP location, Manchester Science Park, is situated at the heart of the Oxford Road Corridor. Already home to more than 120 innovative businesses, it is set to grow in popularity with Bright Building, MSP’s first new development in 15 years.
The opening of Bright Building has enhanced facilities for all Manchester Science Park customers as the new ‘heart of the Park’ for the campus
by Kate Vokes,
Director of Culture
The long term sustainable health of our business rests on the success and wellbeing of the communities in which we’re living and working. Here, we believe that it’s really important that we play our part in supporting those communities.
Our key cities are booming
By Kevin Crotty,
Chief Financial Officer
2017 has yielded a strong set of results for the Bruntwood Group of Companies. Pre-tax profits increased by 5% to £71.6m and net worth increased 14% to £539m.
This is the first time in the history of the business that the equity base has exceeded half-a-billion pounds.
In each of the last five years we have delivered a 15% return on equity; a fantastic achievement, especially as the latter year’s returns were delivered in an environment of largely flat valuation yields, meaning that the returns resulted predominantly from our own endeavours, rather than through a market valuation kicker.
Analysis of P&L Accounts
Profit before tax turnover 54.5%
Ratio of rental & related income to interest
Rental & related income £109.3m (401%)
Interest paid £27.2m
Ratio of borrowing to fixed assets
Fixed assets £1,098m 49.8%
Net debt £547m
This is the first time in the history of the business that the equity base has exceeded half-a-billion pounds.
Many years of investing in partnerships with city councils, health trusts, scientific and academic institutions has ensured a strong pipeline of future development opportunities. We are, however, mindful of the fact that our 50% loan-to-value ratio (the quantum of our debt as a proportion of our property valuations) – although conservative compared to many of our peers – is still above the level that we would like it to be in an increasingly uncertain world. Whereas the realisation of our existing pipeline will bring this down over time, the strong pipeline of further development overlay leads us to the conclusion that we must actively explore options to increase our capital base, and therefore grow the group further while at the same time deleveraging. This will be a major focus for 2018.
In 2017 we spent over £110m on our portfolio. We delivered 410,000 sq ft of Grade A space in our new developments at Bright Building at Manchester Science Park, Platform in Leeds, Cornerblock in Birmingham, and Union and Neo in Manchester. The vast majority of this is now either let or in solicitors’ hands. In addition to this we spent £15m further purposing Alderley Park and £4.2m delivering infrastructure and public realm works at Circle Square in Manchester.
2018 will be another record year for spend as we commence works at Circle Square blocks 2, 3 and 4; Citylabs 2.0 and Didsbury Technology Park; and look to complete the Alliance Manchester Business School.
We will spend c.£30m further at Alderley Park, including the delivery of 150,000 sq ft of new commercial workspace for tech businesses. In addition, we are excited to have agreed the acquisition of Innovation Birmingham, where we will seek to emulate the success of Manchester Science Partnerships, working in conjunction with the city council and the local universities.
Last year we reported that, despite the uncertainty of Brexit and falling real incomes, we expected a year of economic growth, albeit slow and unspectacular. That assessment remains our expectation for the year ahead. As unemployment reaches near-record low levels and the inflationary effects of sterling depreciation subside, we hope that the pressure on real incomes will begin to ease.
The uncertainty over any eventual Brexit deal continues to hold the economy back as investment decisions are put on hold, meaning that UK growth is the lowest of the G7 nations. Fortunately, this uncertainty takes place against a backdrop of the strongest global growth in seven years and the strongest European growth in a decade. Whereas our economy would normally be flying at this stage, this at least insulates us from recession while we sort out our future EU trading relationship.
Despite subdued domestic economic growth, our key cities are booming as we see the beginning of a reversal in the north-south divide. Manchester’s economy in particular is delivering growth 0.5% higher than the national average, visible on the ground in low vacancy rates, rising rents and record enquiry levels. Near-full employment has also prompted a fl ow of companies into the core centres where they can best compete for talent. This is a trend which we are certainly benefitting from, and just one of many reasons we look forward to 2018 with optimism.
by Michael Oglesby CBE DL
When I look back at the early annual reports we produced 40 years ago they are unrecognisable in style and content from today’s document. Although much has changed, nevertheless, I can still recognise the family’s basic core values which have remained at the heart of the company throughout. There has always been a basic hunger to create and grow, alongside a desire to serve our customers and the larger community.Read more
Our people have always been key, and working with those core values, they have been at the heart of our journey which has taken us from a modest beginning both to where we are today and our planned tomorrow. On that journey there have been bumps in the road caused, in the main, by external factors and it has been our values, coupled with tight financial controls, which have allowed us to withstand those difficult times.
We should all be proud of the size and potential of the company today. Chris, and everyone involved, have achieved much and have transformed the company over recent times, built on the foundations laid in early years.
Since its inception Bruntwood has made a major contribution to the well-being of the regional cities and I am proud to see just how significant this role remains today. Although the heart of the company, in its early years, was certainly in Manchester, the city which is leading regional growth and the call for further governance, we have worked to play our part in achieving similar strengths in Birmingham, Leeds and Liverpool, where our influence continues to grow and thrive. Unless as a nation we grasp the importance of our regional cities, and give them the real power and the resource to develop their potential, UK plc will never establish its true strength as an international nation and its communities will continue to not realise their true worth. Life after Brexit will be challenging enough and all our regions will need to perform to their true capability.
Now that I have withdrawn from the day-to-day operation of the company and spend the majority of my time working in the community with charitable and philanthropic activities, it has become clear just how much remains to be done in our society. The challenges are great and arguably getting more difficult and, certainly, more complex. The real issue is, however, how to get us all to take responsibility not only for our own lives but for the lives of others rather than relying on Government and the public sector to cure society’s ills. We, at Bruntwood, firmly believe that a company such as ours has a very real and important role to play within the community with its people, their wellbeing and its infrastructure.
There are times when I talk about these issues to others and I receive the response “that issue is too big and you really can’t make a difference” to which I answer “if we don’t try and believe we can make a difference, then who else will?” Making a difference is, and always has been, a key part of the “Bruntwood Way.”