In Conversation with….Nick Payne

NICK Payne, the co-founder of Manchester-based property developer Nikal, argues that despite the strains that the property market has faced, his firm has never been busier – at least in terms of activity on construction sites.

“Ironically, even though the economy has been difficult, we’ve never built as much property before. Within the last 12 months, we’ve been on site at three major schemes,” he said.

The firm, which has specialised in major regeneration schemes, is currently on site building the first phase of the Soapworks scheme in Salford and the Cathedral Park office scheme at Wells in Somerset.

It has also been building two blocks containing 340 apartments at its huge Masshouse development in central Birmingham.

“All of those projects are coming to fruition now, so we’re looking at our next phase of development, which is probably going to be the next phase in Birmingham, a second phase in Wells and a hotel and 92 apartments in Poole.”

“Whilst we’re based in Manchester and we dearly love the city, in terms of strategy we’ve never really seen ourselves as being a Manchester-focussed development company.

“We’ve aimed to spread our pipeline far and wide.”

Nikal’s biggest scheme is the Masshouse – a 1.1m sq ft, £330m mixed-use scheme set to be delivered over several phase. The first phase has building 340 apartments in two blocks which, although requiring grant funding from the Homes & Communities Agency, have been selling well since completion, insists Payne.

“We’re outselling our competitors by two-to-one at the moment, which is really gratifying. “And we’re achieving prices of £250-£260 per sq ft, which for residential we think is a good price. We’re also selling a lot to owner-occupiers, which is very encouraging.”

Payne said that it remains in talks with HM Courts Service about plans for a new magistrate’s court on the site, which has been deferred as a result of government cutbacks. However, he added that Nikal would aim to be on site with the next phase to deliver 500,000 sq ft of offices over three buildings and a hotel next year.

“That is all looking very positive. We’re talking to potential occupiers and we’re talking to hoteliers.”

The company will also begin work at its West Quay Marina site in Poole next year, and Payne said that it hopes to be on site at Altair in Altrincham despite losing out to a rival development from Citybranch as the preferred site for the new Trafford General Hospital in the town.

This is just the latest in a number of setbacks experienced for a scheme which was initially a joint venture with the (now defunct) David McLean Group, but although Payne said Nikal may issue a legal challenge, it is not essential to the project’s continued development.

“It wasn’t hugely fundamental to our scheme – it didn’t actually make us very much money – but it would have been a nice thing to have delivered.”

A CPO process is currently under way to assemble some of the land needed for the 5-acre development, which will include offices, retail, a hotel, restaurants and a new ice rink. If that concludes successfully, Payne hopes to be on site with the scheme by the end of 2012.

It is a scheme which he believes that Altrincham needs, particularly due to the high level of voids in an area with a relatively wealthy catchment.

“We mustn’t be lost to the fact that we’ve got to look at modern buildings with modern uses. If we’re going to stimulate Altrincham, it’s not going to be about painting the window frames and putting plant pots out.

“It’s going to be about building new buildings and infrastructure that will make people want to come and live there. Altair is, I think, a very significant piece in that jigsaw which will bring 2,000 jobs and a lot of people in.

“It will create something that is currently missing. It will offer retailers properly-sized units they would like to occupy, would legitimise a bar/restaurant pitch that’s a little bit piecemeal and would bring investment into the town, which is crucial.”

The firm’s other main scheme in Greater Manchester is at the Soapworks – the 400,000 sq ft former Colgate Palmolive Factory in Ordsall being developed alongside Abstract Securities for funder Carlyle Group.

The first phase – a rebuild of the Boilerhouse building into 20,000 sq ft of contemporary offices, is set for completion by September.

“We’ve already got a lot of interest and we’re hoping to sign our first few tenants over the next few weeks.”

He added once the building is complete, it will give potential tenants of the larger adjoining buildings – which has floorplates of up to 90,000 sq ft, the ability to see how their space will look.

“What we’re looking at Soapworks is £20 per sq ft as an occupation cost – not rent – so it’s incredibly competitive.

“It’s a compelling location for people who want to be park of Mediacity but housed in a historical building.”

Payne also said that Nikal is also looking to pursue other business lines, particularly relating to green energy and green housing schemes.

“We think getting involved in housebuilding would be a good thing and we would hope we could move into that sector within the next 12 months. We see the need for housing is getting stronger as we come out of the doldrums.

“The country is not making any more land and as a consequence of that we’re going to have to look at denser accommodation, or we’re going to have to look at more efficient use of land.

“The boom in the apartments sector has sort of helped that in a way because you were seeing very dense development taking place, you were seeing a move from suburbs to city centres and that was going very well. It hit the buffers largely because of the debt market, but it served a great purpose because a lot of people want to rent.”

He said that a new venture would look to promote more environmentally sensitive methods of construction, moving away from traditional brick and block-built structures to greener homes which can be partly built off-site.

“When you talk about modular housing in this country, people think it’s cheap and nasty.

“The reality is that people should be saying that we need to provide housing that can be built more cost-effectively and in a quicker fashion.

“I think we could learn from methods used in other parts of the world.”