Property Focus: The Interview

NEIL McMillan, development director at Carillion Developments, established the company’s Leeds office in 2006 to manage the firm’s development activities across the north.

Key current projects include the £80m mixed-use The Square scheme in Sheffield which has been supported by the regional development agencies due to its significant contribution to urban regeneration in the South Yorkshire city.

The Square comprises up to 250,000 sq ft of office accommodation, a 114 bed Travelodge and a 400 space car park.

Phase one of the scheme is complete with 43,000 sq ft of offices occupied by South Yorkshire Passport Transport Executive, with the Travelodge and Q-Park both also complete and open.

Phase two is nearing completion with the construction of Office 2, a Grade A 42,000 sq ft office building set over six floors.

In addition to The Square, Mr McMillan’s other significant project is Durham Gate. Carillion Developments, in joint venture with Hartlepool-based property investment specialist Arlington Real Estate, has acquired a 60-acre site in Spennymoor, County Durham from Black and Decker.

The joint venture partners have leased the building back to Black and Decker with up to five years remaining. A planning application detailing comprehensive redevelopment plans, newly named Durham Gate, will be submitted to Sedgefield Borough Council in September and will include office accommodation, ancillary retail, a hotel, residential space and a pub. 

What are your views of the current state of the commercial property and property development markets?

“In one sense we’ve talked ourselves into a situation but the market was overvalued and what we’re seeing is a correction of that market. The banks are key to it and are reducing their loan values and lending strategy.

“People speculatively building or those with building opportunities are clearly waiting for someone else to make a move before they do something. All of that has slowed the commercial property sector down. The only ones spending money are the Government on health schemes and other public sector work.

“But the banks want to lend money so at some point they’ll have to change their criteria on what they will or won’t fund. I think in the next 12 months we’ll start to get into some sort of normality. Land values have started to become a bit more sensible and that gets things going.

“Carilllion is sat in quite a nice position. But what we’ve not been doing is buying lots of plots and sites over the last couple of years. Several opportunities we’ve got are ones we can still deliver on.”

What key challenges and pieces of legislation do you think will most affect your sector over the coming months?

“Empty rates is the one that’s the hot topic at the moment. It cannot have come at a worse time really. A lot of developers won’t have accounted for it. I think large sheds will have a huge liability in rates.

“The aim was to not let people sit on empty buildings. But I think it’s a fallacy that owners won’t want them to be let. It’s something that nobody agrees with.

“I don’t think the Government fully understands it. Something has got to give. It is going to stifle speculative development. But ratings surveyors are doing well!” 

Why do you think Yorkshire is a good place to do business?

“People in Yorkshire are nice people to do business with. Like a lot of industries there are a core of key people in the area (in property development). I was previously doing some work in Wiltshire and certainly I would say there’s a greater will from all parties here in Yorkshire, be it developers, councils or regional agencies, to make things happen.

“It’s about the right relationships and about the right property and opportunity.”

What is your favourite building or development in Yorkshire and why?

“I think that in Sheffield bodies like Creative Sheffield and the Council have done such a fantastic job of bringing some major schemes forward and they’ve got the quality right.

“Sheffield was getting £12 to £13 sq ft office rents a few years ago and you couldn’t do much with that but Creative Sheffield and Sheffield Council have, using Objective One funding, done a great job bringing the city’s public realm up to scratch. I believe in what they’re trying to do.” 

If you could improve anything in the region, what would it be?

“Rail journeys from Yorkshire to London and other big cities aren’t bad but the internal links between the region’s towns and cities can mean that it can take as long to get to Sheffield from Leeds as it does to get to London from Leeds.”

What barriers have you had to overcome during your career and how have you overcome them?

“The biggest barrier was getting into development in the first place. I always knew I wanted to get into it. But the number of people in development are few and far between because you normally bring consultants in to do things for you.

“I was lucky enough to be put on Carillion’s leadership programme for senior managers of the future and as part of the process I got to do 12 months in another department. So I went into the development area and stayed.”

What was your first job and how did you enter your current line of work?

“I’m a civil engineer by profession. I joined Tarmac as the company was then before it became Carillion in 1999. I spent a number of years in project management roles in construction before I made the switch to development and management roles at Carillion.

“Through various opportunities I was able to become a director looking after the north.”

What do you most enjoy about your job?

“The variety of it. The biggest thing for me is the lack of a process. Every project is different so you have to work it out yourself. There’s no fixed approach.

“You’ve got to work out your own strategy and bring the people who you trust and believe in to bring that strategy to success. Also the people in this industry are interesting people to be surrounded by.”

What is the best piece of advice you’ve been given during your career?

“Be the same to people on your way up as you may need them on the way down. Treat the person on reception the way you would the chief executive.”