Innovation-led assets drive massive increase in profits for Bruntwood

Bruntwood has reported one of the strongest set of figures in its 46-year history.

The property investor and developer saw pre-tax profits increase by 68% to £75.2m for the year ending September 30th, 2022 – the second highest on record – which it attributed to the growing appeal of its portfolio of assets that serve the UK’s innovation economy.

A major driver behind the numbers was the growth in income from its Bruntwood SciTech 50/50 joint venture with Legal & General, which had the best year since its formation in 2018.

Profitability there was boosted by the completion and successful letting-up of several key assets and the growing recognition of life sciences as a distinct real estate asset class, all of which contributed to significant revaluation gains.

This included the first two phases of Circle Square that completed and are now fully let, an expansion and 100% letting of a building to existing customer and international molecular diagnostics group Yourgene Health at Manchester Science Park, and Alderley Park, the UK’s largest life sciences campus and now a growing tech hub, which has become income generative following a sustained period of investment and redevelopment activity.

Meanwhile, Bruntwood’s Pioneer buildings, which are focused on high-end amenity and shared spaces in core city centre locations under its Works brand, are now 100% let following strong customer demand for workspace from innovation-linked industries such as tech and digital.

Across the group, net asset value rose by more than 10% to £671.5m (2021: £606.5m) and the value of its combined portfolio, including Bruntwood SciTech assets reached £2bn (2021: £1.8bn).
Bruntwood made a number of significant investments and acquisitions that contributed to this growth, while market sentiment towards science and technology real estate assets strengthened.

Within the Bruntwood SciTech portfolio, it unveiled a £76.2m investment into the purchase and regeneration of Glasgow’s famous Met Tower, to create a new tech and digital campus and marking Bruntwood and Bruntwood SciTech’s first development in Scotland.

Elsewhere, Birmingham’s first ‘smart-enabled’ building, Enterprise Wharf, topped out in the Spring while No.1 Birmingham Health Innovation Campus, the first building at the £210m scheme that shares its name, reached the same milestone in September. In Manchester, the £87m, 264,000 No.3 Circle Square secured planning approval, the hub for Industry 4.0 at Manchester Science Park – Base completed, and a £20m investment into new high specification biology and chemistry labs launched at Alderley Park.

Within the Bruntwood Group’s Works portfolio, it completed the £3m refurbishment of Liverpool’s The Plaza, gained approval for the net zero redevelopment of Manchester’s Grade II listed Pall Mall and work started on the 90,000 sq ft Castle House in Leeds as part of the wider West Village regeneration project.

Plans were also submitted in Manchester for the £93m The Alberton scheme, which will create a new 18-storey, wellbeing-led workspace with the highest workplace pool in the UK, and the Ev0 building, which is set to become the UK’s lowest carbon new build workspace.

There was also a resurgence in lettings agreements with new hospitality operators, including the operators of new restaurant, Climat, on the rooftop of its Blackfriars building in Manchester
Demand for flexible workspace continued to strengthen with occupancy averaging 90% across the year in Bruntwood’s Works portfolio. Plans to expand the availability of its Serviced Space product are included in the Plaza, Pall Mall and West Village developments.

Bruntwood’s town centre regeneration arm marked a significant expansion with the formation of a new 50/50 joint venture with Bury Metropolitan Borough Council and the acquisition for redevelopment of the town’s Mill Gate Estate shopping centre.

Its existing partnership with Trafford Council reached several significant milestones including the start of work on the redevelopment of the former Rackhams (House of Fraser) building in Altrincham into Foundation, offering new retail, leisure and flexible workspace, while planning approval was secured for the regeneration of King Street in Stretford and with it the relaunch of the town’s original high street.

Chris Oglesby, CEO of Bruntwood, said: “We have always looked beyond the short term to base our investments around the strategic trends we see reshaping our towns and cities. This approach, from the formation of Bruntwood SciTech in 2018 to the Pioneer programme of forward-thinking, flexible workspaces that we launched long-before the pandemic, is the foundation of this year’s strong financial performance.

“We have aligned our products and proposition with the businesses and organisations driving the future of the UK economy in innovation-linked sectors like tech and digital, life sciences and their supporting ecosystems, all of which continue to show huge potential in many of our regional cities.

“As we now lean into the challenges presented by the end of another economic cycle, this will remain our focus. We will continue to focus our energies on investing in assets, whether that’s for Bruntwood SciTech or Works, in such a way that meets the needs of modern business and industry, targeting growth into new and existing cities around the UK.”