ASK chief looks for positives after "most difficult year"
THE boss of North West property developer ASK said today he is confident a new business plan will see the company through the recession.
Ken Knott said ASK had reacted quickly to a “seismic” shift in the commercial property market, and had refinanced and cut costs.
The company is in talks to let part of its landmark First Street scheme on the fringe of Manchester city centre – one of few major projects continuing in the city.
He said: “We’ve a couple of players in advanced negotiations to take part of the building. We lost out on two or three deals, including the College of Law, because of the remedial environmental work which was continuing at the site. I am confident in the building – it’s a fantastic space.
He said the College of Law deal had fallen down at “the 11th hour” after a site visit from the organisation’s senior management, who were put off by the fact that the area around the building was not finished.
Mr Knott said: “It’s frustrating as we would have had a deal if we had got the site really nicely landscaped, but we are dealing with that issue.”
The £115m first phase of the project – which comprises of the refurbishment of the former BT building at Grand Island – is an 80-20 joint venture between ASK and its shareholder Morgan Stanley, with the financial services giant taking the lion’s share.
Mr Knott said: “It is a big, big building that is standing empty in very difficult market conditions and it would not be sensible for us to have taken that risk on our own.”
Looking at the decline the sector has seen this year Mr Knott said: “I have never seen anything like this downturn before. I was in the industry, with Amec in the early 1990s and wrestling with that recession, but that was not stimulated by financial services sector and at the moment it’s difficult to see anything positive on the horizon.
“However within our sector we are not massively oversupplied in retail or offices, whereas in the 1990s this was an issue. Yes, there is some oversupply, but it’s not ridiculous and it will get absorbed as the general economy starts to pick up.
“We are forecasting a really grim couple of years and no material improvement before 2011. As and when green shoots start to appear the industry will be well-placed.”
He said Manchester-based ASK had spotted the looming crisis early and “ripped up” its original business plan.
“We have de-risked the business and are not progressing any scheme that is not pre-let. We refinanced with our shareholders Morgan Stanley too.
“This has been the most difficult business year of my life. We have had to face up to tough decisions and had to reduce our fixed cost base.
“We had to let some people go in May, which was very difficult thing to do, having built a team with a great family spirit.”
He said he is confident ASK, which was behind Manchester’s popular Deansgate Locks development and has ongoing schemes in Bury and Urmston town centres, can weather the storm.
