Opportunity to invest in Leeds ‘jumped off the page’ says founder and CEO of property firm

Fonan Faherty talks at TheBusinessDesk.com’s Property Professionals Lunch

The founder and CEO of a property development firm which has outline planning permission to build a £62m scheme comprising of two hotels and 54,000 sq ft office space in the Northern Civic Quarter of Leeds says that opportunity to invest in Leeds “jumped off the page.”

Ronan Faherty, the founder and CEO of Idé Real Estate, spoke at TheBusinessDesk.com’s latest Property Professionals Lunch on Friday about the scheme itself and updated the sold-out audience on his views of the marketplace at present. The lunch, sponsored by Bevan Brittan, was held at Gusto.

Idé Real Estate plans to develop the listed former council buildings off Millennium Square into 54,000 sq ft of office space around the Thoresby and Leonardo buildings. Two hotels – a 173-bed development in 2 Great George Street and a new-build 166-bed hotel – will be delivered alongside investment in the public realm.

Faherty, former commercial director at Land Securities, said that he always felt that there was real potential within the Leeds City Region. He added: “But it was never really understood what the potential of the market could be. We went away and thought through opportunity.”

Idé Real Estate was interviewed three or four times about the proposed scheme they submitted to Leeds City Council and then went through the vetting process before being told they had been successful.

Faherty said: “Our plans have always been the same. This is a wonderful block with a bunch of buildings that are absolutely stunning. They’ve got their challenges but they’re stunning buildings and our intention was to bring those back to life. I’m not sure if it’s by design but certainly going forward we are tending to focus on listed buildings.

“Every developer’s challenge is to create a sense of place and when you’re building a brand new building that’s a tough thing to do because you’re trying to bring people to a location that they never were part of. But

A planned 166-bed hotel in Leeds’ Northern Civic Quarter

with a listed building, they’ve always been there.”

Idé hopes to be on the Leeds site by September, and then there will be a two-year build period. Faherty said: “It is a very exciting opportunity for us. I hope and I believe it will deliver a very exciting district.

“Everything we do has got an anchor which then allows the institutional funders to come in behind us so what you then get is investment in the city from somebody who is going to be there for the next hundred years.”

Ronan Faherty and Kayley Worsley, Yorkshire editor of TheBusinessDesk.com

Faherty said he and his team created a road-map of places across the UK where they believed they “could get traction,” where there was a gap, where they had really strong contacts into the sector and then also also knew there was appetite from an occupier demand perspective. Faherty said: “Leeds jumped off the page –  genuinely jumped off.”

He praised Leeds City Council as “being proactive, challenging but willing to engage and get involved, willing to give an opinion and confirm strategy.”  He said the same could not be said of many UK cities.

“The fundamentals were there and I enjoyed the fact that we could look at the opportunity and say, yes, the basics are here,” he explained.

Faherty has already shown potential operators around the buildings who are interested in investing in the city. The Leeds scheme is the first outside of London for  Idé Real Estate and Faherty revealed that he also has plans to invest in other northern cities. Because of affordability, the rising use of tech and the number of start-ups in Yorkshire and beyond, Faherty added: “I genuinely believe the regions are going to be strong for the economy”

Idé Real Estate has raised over £920m and in the last four years the firm has worked on over £4bn of transactions. Today, the firm has £550m funds under management and in the pipeline. In his career, which started in retail, Faherty made some great contacts in the venture capital world and then “fell into” property.

Updating the audience on challenges during his time in the property sector, he said that during the financial crash, Faherty and the team had to focus on ensuring that developments still retained operators through the “incredibly difficult times.”

After around seven years at Land Securies, Faherty’s brother announced he had become a multi-millionaire and asked him to set up a property portfolio at a time when “cash was king” and they could seek out the opportunities which would attract further investment.

They bought “very dry assets” and then put it all down into family trust. It was after this that, for the first time, Faherty was able to start his own business and so he built a team up around him to create Idé Real Estate four years ago, now employing 12 people.

Faherty said: “All of a sudden we had a skill set that was across the board. And when we sat and talked about any opportunity, we could discuss it openly and address the issues; so it worked incredibly well for us.

“So the strategy of our business and where our business is  today is that we really look for distressed assets. Somewhere you have to have a high level of intervention.”

The firm then works with institutional investors to then become the long term investor. Faherty said: “We then try and de-risk. We take a very strong collaborative approach so we understand where the demand is

Networking at TheBusinessDesk.com’s Property Professionals Lunch

and then target that location.

“We also have a fantastic contact book. There isn’t anybody we don’t know in the sectors that we want to be in and if we don’t know, we know somebody who does know.

“We’re an active business but we kind of come under the radar. When we first got Leeds, I couldn’t believe the local developers didn’t have that marked off already. But, I think in fairness to the council, they had a clear strategy as to where they wanted to be with the site.”

Faherty added that for the good of the north and for Leeds, businesses needed to worked in a collaborative way. “We looked around the market and there’s a lot of exciting things happening in the market. But if this market goes up by 20%/21% over the next 10 years, there’s plenty of room to grow,” he said.

“If I can find six or 10 operators who want to come here, there can only be more out there. I think it’s about taking a collaborative approach. We are a commercial business at the end of the day but once we have  solved a problem, it’s about passing the opportunity on to the next guy.”

Faherty said of the Northern Powerhouse concept: “I think it’s great idea but I don’t know how it’s going to work.”

He also said that the hotel occupancy rates in Leeds, because of the amount and variety of cultural and sporting activities on offer as well as business growth, was very high and often led to rooms being priced at £300 a night when major events are staged. He said the hotel market in the city needed “a better, more diverse offer” and that his plans could address this and the pricing fluctuation due to lack of availability currently.