The brunt offering
Four weeks ago the Oglesby family’s private property empire snapped up two more Manchester city centre office buildings. Bruntwood Estates – created by Mike Oglesby and now run by son Chris – paid £10m for 1 Portland Street and for the National Computing Centre in Oxford Road.
Buying 1 Portland Street, which covers 4,830 sq m (52,000 sq ft) on six floors, means Bruntwood owns practically everything on the road. It has five properties – including Portland Tower – totalling 27,870 sq m (300,000 sq ft). It’s as if Bruntwood is playing its own Manchester Monopoly.
A city slicker
It already owns the former Bank of England building on Charlotte Street, and is one of the largest landlords in the city. The company estimates – and no one disagrees – that it owns 8% of Manchester city centre’s office stock and controls around 20% of the deals. Both figures have been rising steadily for the last four years, and show no sign of abating.
The deals came as the Manchester-based property business attempted to digest a wave of new purchases – 19,135 sq m (206,000 sq ft) in the space of six weeks – including the Stockport Infirmary site, acquired in February this year.
Bruntwood paid Raven Group around £1m for the former hospital site in central Stockport and plans a new £4.5m office development behind the building’s classical façade. In one of its rare sallies into development, rather than investment and management, it will create around 4,090 sq m (44,000 sq ft) of new office space.
Bruntwood is a legend in Manchester although, judged by London standards, it scarcely counts. The portfolio is valued at around £150m; group turnover is around £16m, and the group’s net worth is £70m. But in the world of Manchester offices, its influence is disproportionately large.
Its 600-odd tenant ‘customers’, spread over 45 buildings totalling 18,600 sq m (200,000 sq ft), make Manchester what it is.
The business was founded in the mid-1970s by Cheshire businessman Michael Oglesby. It began – as so many property companies do – with the letting of old mills, warehouses and sheds. By the mid-1980s it had diversified into secondary office space in south Manchester and the centre.
Bruntwood offers respectable, refurbished office space to the many northern office occupiers trapped between paying top rents for marble entrance halls and putting up with grubby suites in soot-blackened warehouses. Homely value, neat clean buildings, flexible lease terms, a respectable entrance hall and a businesslike approach. That’s what office occupiers want, and that’s what Bruntwood gives them.
It’s a family concern, so it was natural that son Chris should join the firm in 1991, fresh out of college as a graduate surveyor. A year later he created a new in-house sales department.
It was in this period that Bruntwood became known for its unorthodox approach to property.
It was slick, efficient and adopted a US style.
The word ‘tenant’ was banned, replaced by ‘customer’. Bruntwood provided a service, which just happened to be property.
It’s an approach the staff call – with the kind of straight face only Americans can usually manage – the ‘Bruntwood Way’. And the customers love it. By 1995 the firm was responsible for one in five of all Manchester city centre office deals, a proportion it has maintained ever since. Promotion to sales director followed and by 1998, Oglesby Jr was managing director.
Oglesby, 32, is firmly in charge of a young and energetic team including property directors Ian Grant and Rob Yates and finance director Clive Green. And he’s preparing to take the business in a new direction.
Property attracts a lot of charismatic entrepreneurs who enjoy making deals but aren’t into running a long-term business
Chris Oglesby, Bruntwood Estates
The problem Bruntwood faces is that there will come a point when there simply aren’t any more opportunities for expansion. The supply of suitable office buildings ripe for refurbishment and rebranding is not inexhaustible.
But the company has already dipped its toes into new ventures. In July 1998 it bought the 22-storey, 14,000 sq m (150,700 sq ft) North Tower in Manchester from London & Regional Properties. It invested £4.5m in a Shell-and-core refurbishment, but decided it could squeeze more money out of the project by turning its back on the office sector. It let the top 12 floors to housebuilder Crosby Homes for 96 apartments and the bottom 10 to Scottish & Newcastle for a Premier Lodge hotel. Within 18 months this massive Manchester landmark was off its hands.
The company has also made a cautious move into the serviced office market. Its fourth centre in the city opens this month, bringing the total floorspace to 4,645 sq m (50,000 sq ft). And the Stockport Infirmary deal heralds a cautious move into property development, an area that, until now, Oglesby has kept at arm’s length.
Oglesby’s strategy is diversification. ‘The business has grown at the rate of 15-20% every year, and if we are to keep up that pace we need to diversify,’ says Oglesby.
‘In the immediate future I believe we can double the size of our portfolio in Manchester, and that could take as long as five years. Beyond that we are going to have to diversify by sector or location,’ he adds.
The expansion of the profitable serviced office network is an obvious possibility. Another is a joint venture with a self-storage operator that will be unveiled in the next few months.
But Oglesby hints at more, and doesn’t rule out some surprising switches of direction. ‘We’ve got a couple of other business ideas which we are considering, and which might fly,’ he says.
Geographic expansion into other cities may also play a role. Bruntwood wants to expand in Liverpool, and if something unmissable came its way in Leeds or Birmingham it would give it a look. But Oglesby gives the impression that, outside Liverpool, expansion is not high on his agenda. ‘There are more opportunities in our home patch,’ he says.
Market sentiment is entirely in Bruntwood’s favour. Despite a few rough moments in the mid-1990s when the company was accused of using its massive market muscle to drag Manchester office rents down, the mood is good. Even privately, Manchester agents have nothing but warm words for the Oglesby empire. Bruntwood’s powerful brand image – the name and the red ellipse logo are to be found on a hundred foyer doors – scores high recognition and much respect.
Jeremy Hobson, managing partner at The Elliott Partnership, says: ‘Bruntwood sees the customer as its reason for being there, unlike some developers that think they are doing tenants a favour. It is building up a business and it just happens to be in property.
‘It is one of the best at brand loyalty. If a tenant leaves a Bruntwood building, the chances are they will go to another Bruntwood building, whether it is a smaller or larger requirement.’
The expression of brand loyalty is not out of place. Bruntwood is more than happy to talk about its brand name and is very conscious of its power. Keen pricing, customer care: it’s so different from normal commercial landlord-speak.
But if embracing the service culture has been such a success for Bruntwood, why have there been so few imitators in the property sector?
Oglesby thinks the industry is too hooked on deal-induced highs to focus on anything so drab as service. ‘There’s just a lack of desire to run that kind of business. Property attracts a lot of charismatic entrepreneurs who enjoy making deals but aren’t into running a long-term business,’ he says.