Estates Gazette

17/11/2007

Ahead of the pack Urban Splash is not going mainstream. On the contrary, the rest of the property industry is catching up. David Quinn reports.

Urban Splash has never been a classic property company. Renowned for unusual conversions andcutting-edge architecture – and setup by a man who made his name selling posters to students in Manchester’s Affleck’s Palace – the company appears outside the norm.

But Urban Splash is colliding with the mainstream. Not because of an abandonment of its principles, but because the rest of the property industry is beginning to catch up.

“I never think of Urban Splash as a maverick company,” says co-founder, chairman and erstwhile poster retailer Tom Bloxham, glugging on a Diet Coke in his minimalist Castlefield office. “The world is conspiring to come towards us. Big commercial developers are looking at what we’re doing. We’re not a maverick at the edge. We’re the direction the property industry is travelling in.”

The point is illustrated by the answer Bloxham gives when asked what characterises Urban Splash as a company. Ten years ago, his reply – “good design and architecture, a mix of uses and tenures, regeneration” – might have sounded a little left field. Today, it doesn’t.

Deputy chief executive Nick Johnson adds that “punk culture” has influenced Urban Splash’s work. “We encourage people to use their own personality to influence the decisions they make,” he says.

The environmental agenda is also a key concern, but Johnson says he has no time for “gling” – meaning “green bling”. He reasons that, if you can see a green feature such as a wind turbine on a building “it isn’t doing anything”, and professes a preference for the “unsexy stuff”, such as combined heat and power systems.

Sizeable premium

The growth of the Urban Splash brand is such that Johnson readily admits the developer can charge a sizeable premium for its product – up to 15% at Chips, its 142-unit residential scheme in New Islington, Manchester, designed by Will Alsop.

It is difficult to imagine any developer other than Urban Splash delivering a scheme called Chips, which is so named because it looks like three chips lying on their side. Bloxham, however, rejects the idea that the company has become overly associated with outlandish developments during its 14-year history.

“You can’t define a typical Urban Splash scheme,” he says. “We get sent opportunities for Victorian-mill conversions, and people say, ‘This would be ideal for Urban Splash’. But there would have to be something really special about it for us to do something like that today.”

Instead, the developer has recently turned its attention to unloved concrete tower blocks, the product of outdated “cities in the sky” slum-clearance programmes of the 1960s.

How can Urban Splash create demand for this type of living accommodation when history seems to show that nobody wants it?

Bloxham believes a re-evaluation of such buildings is necessary.

“The reason these things failed is because of a lack of maintenance and poor management, rather than intrinsic problems with the buildings themselves,” he says.

Bloxham also believes it is “incredibly wasteful to knock down a building”, and would rather use what is there.

This preference for recycling was followed at Chimney Pot Park in Salford where, instead of demolishing the terraced houses on the site, Urban Splash elected to turn them “upside-down” by creating anopen-plan living space on the first floor, backing on to a raised outdoor space.

Despite its ingenuity, the English Partnerships-backed scheme is arguably Urban Splash’s only brush with bad publicity, after complaints from locals that they could not afford the £99,500 finished product.

“The issue revolved around a statement about homes for £50,000, which was made five years ago and got into the press,” says Johnson. “The market has obviously moved on since then. If we were to sell at that price, it would have required much more public funding.”

Grant funding

Within the property industry, those who do not know much about the company all say one thing: that, as in Salford, Urban Splash has a mastery of the process needed to secure grant funding. Bloxham says that while this could be true of some of its schemes, many others required no contribution from the public purse.

“In Manchester, there’s no public funding needed anymore in the city centre. All our recent schemes in Liverpool are happening without funding, whereas 15 years ago, when no one else was doing anything in the Ropewalks area, it was needed,” he says.

As the mainstream collides with Urban Splash’s way of thinking, some have ventured to suggest the company could make a compelling purchase for one of the giants of the industry. But Bloxham, who owns 70.9% of Urban Splash, shrugs the idea off.

“I love doing what I do – taking blighted, ugly sites and creating objects of beauty,” he says. “If I did sell out, I’d probably put all my money into property, so there wouldn’t be much point.”

For now, Bloxham’s empire looks set to keep on growing. The rest of the property industry may be on Urban Splash’s tail, but he is keen to keep ahead of the pack.

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Splashing across the Mersey

Urban Splash is undertaking 12 projects in Liverpool from its offices on Fleet Street in the city centre.

Its biggest scheme in the city is the Great George Street development, where 700 homes are planned in what Bill Maynard, head of the firm’s Liverpool office, describes as “five big phases”.

It is a far cry from Urban Splash’s beginnings in the city. Maynard, a former Liverpool council planner, confesses that he “laughed” when Urban Splash founder Tom Bloxham purchased the Palace complex on Slater Street with proposals to turn it into “the Covent Garden of the north”.

But when Bloxham linked up with Urban Splash’s other co-founder, Jonathan Falkingham, to purchase several more buildings in the Concert Square area, Maynard became convinced of the growth potential and came on board.

The company is working up £60m plans for the conversion of the Littlewoods building off Edge Lane into 250 flats, a hotel and commercial space.

It was also recently selected to transform the disused ABC cinema on Lime Street into a hotel and restaurant.

“Lime Street is an interesting part of town,” says Maynard. “The local authority and English Partnerships are keen to see something happen because it’s the gateway intothe city.”

Other schemes in Liverpool include the Matchworks office scheme in Speke and the conversion of St Peter’s Church on Duke Street into the footballers’ wives-favoured Alma de Cuba bar.

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New Islington: ‘Poundbury on acid’

Perhaps Urban Splash’s most significant scheme, and the one that has defined its ethos, is New Islington in east Manchester, where the company was selected as lead developer in 2000.

New Islington is designed to be mixed-use, sustainable and architecturally innovative. Once completed, it will include 1,700 homes, retail and leisure facilities, 1m sq ft of public open space and a raft of community facilities, including a school.

The company’s deputy chief executive Nick Johnson describes New Islington as “tradition with a twist”, and emphasises its credentials as a sustainable community.

“The constituent parts are parks, canals, a surgery, a primary school, a row of shops – there’s nothing new in that,” he says.

Perhaps surprisingly, Johnson compares Islington with the Prince Charles-backed and critically panned Poundbury development in Dorset.

“It’s Poundbury on acid,” he says, half-jokingly. “The essence of a sustainable community is the same the world over. We all have human needs that need to be satisfied. But we give it a devilish twist. We add a bit of adventure.”

Estates Gazette (subsequently translated into Dutch as “Sprong naar groene winkelcentra” for the magazine Building Innovation)

14/07/2007

Wigan doesn’t have many claims to fame. Apart from its pier and its Premiership football team’s recent narrow escape from relegation, the town has generally done little to stimulate the interest of the news media.

In years to come, Wigan may be remembered for something else. Manchester developer Modus is creating Britain’s – possibly the world’s – first carbon-neutral shopping centre in the Greater Manchester town.

By offsetting the CO² produced during the construction of the Grand Arcade scheme with investment in wind farms in India and Inner Mongolia, the developer is claiming a genuine watershed moment.

Modus – specifically, its subsidiary Modus Urban Regeneration – is working on a host of retail schemes around the UK, and as far afield as Romania.

Its two young directors – Tim Heatley, 27, and Anthony Kilbride, 34 – are among a new breed of developers bringing sustainable initiatives to mainstream retail development projects. As they explain, the idea is not a short-term fad aimed at creating good PR. It can have long-term benefits that add significantly to the company’s bottom line.

“One of the main drivers for us is that green property will become an investment class in its own right,” says Heatley. “In 20 years, we expect that a green development will sell more easily because of its green credentials and may attract a premium.”

MUR’s key aims include minimising the carbon footprint of all its developments, both during construction and through each scheme’s life cycle. It is committed to reducing energy consumption in its developments by 50%, compared with its rivals, and to use renewable energy sources where possible. A BREEAM “very good” rating is considered a minimum standard.

Kilbride admits that the company is still on a “learning curve” in terms of delivering its sustainability objectives. He says that the rationale behind creating sustainable schemes is obvious.

“We think there is an increasing awareness among consumers about personal carbon footprints, and consumers will begin to pick green schemes over others. Our retailer partners have their own green agendas, and landlords need to offer schemes that reflect that,” he says.

“If you deal with them early enough, sustainable measures don’t have to cost the earth,” Kilbride adds, acknowledging the pun.

Modus retains its developments among its growing stockpile of investments, reasoning that it is in its best interests to hold on to new schemes for between two and 20 years before selling them. This enables the company to try different sustainable measures.

“Because we keep hold of our schemes, we can continue to reduce the carbon footprint during the life of the scheme – for example, by creating incentives for retailers to recycle waste,” says Heatley. “We know that retailers have tight margins, so asking them to think about the environment as well can be a lot to ask. By partnering with them, we can take some of the pressure off.”

Heatley admits that the design of Wigan’s Grand Arcade, which predated the creation of MUR, did not tie in with the company’s green objectives.

Without delaying the build programme, the scheme had to be brought “back on track”.

Heatley says: “It’s experimental in many ways – we’re seeing how the green measures function.”

Grand Arcade opened in March this year. Kilbride says that its sustainable features range from photovoltaic tiles and a green roof with “natural habitat vegetation” to more mundane elements, such as energy-efficient light bulbs. Rather than using energy-hungry air-conditioning, the scheme is naturally ventilated – still a relative rarity in modern retail schemes.

Kilbride is adamant that a sustainable path, if followed from the beginning, does not necessarily create excessive trouble or expense for developers.

“There are many things, down to the orientation of the scheme towards the sun, that come for free if you consider them early enough. You need to keep testing yourself all the way through the development process,” he says.

Such an approach will be wheeled out in the company’s many other developments around the UK, including Friars Walk in Newport, Delamere Place in Crewe, and Hounds Hill in Blackpool. MUR aims to apply the same green strictures to its debut European scheme in the Romanian capital of Bucharest.

The 1.9m sq ft development, Bucharest Colosseum Centre, will be bigger than Bluewater in Kent and anchored by Carrefour. It has a £260m build cost. The site is being developed in partnership with Bolton-based private investor Panico Panayi, the owner of Cambos Leisure, which sold its Buckingham Bingo operation to venture capitalist Alchemy Partners for £90m in 2005.

Modus has been working on the concept for the scheme for the past two years and has planning approval. While acknowledging the various hurdles that must still be negotiated as part of the company’s first foreign development, Kilbride is confident that the scheme can be delivered.

“We shouldn’t be scared of the red tape, because it involves exactly the same processes as in the UK,” he says. “We just need to be more careful because the systems perhaps aren’t as refined and things take longer.”

Heatley says that the aim is to capitalise on growing demand from retailers for space in new EU states.

“We’re doing what retailers are doing,” he explains. “There’s more activity over there from retailers such as Debenhams and a few other UK faces.”

Sustainable features will be pursued, where possible, in Romania as in the UK.

“As a principle, it should be applied to Europe as well,” says Kilbride. “Bucharest is part of the EU and we need to future-proof the investment.”

From Wigan to Romania may seem like a long journey, but Modus seems confident it can stamp its sustainable vision on the whole of Europe.

Its approach to green shopping centres could pay dividends. Rival developers and investors will be watching closely to see if it does.

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Setting sights on europe

Manchester-based Modus Ventures is a holding company with four branches.

One is Modus Urban Regeneration, set up three years ago, and co-owned by Modus founder Brendan Flood plus Mike Riddell, Tim Heatley and Anthony Kilbride.

It undertakes town-centre developments in UK towns such as Wigan, Crewe and Blackpool, and is expanding into Europe.

Its current development pipeline is valued at £2.2bn and growing.

Other companies under the Modus umbrella include Modus Properties, which focuses on smaller out-of-town schemes anchored by food stores.

Modus also has an investment arm, which retains the company’s developments, as well as a private equity business.