Developer sees profits soar as it builds back better
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Harworth Group has seen its operating profit soar as it builds back from the pandemic as the chief executive notes the business is continuing to “see depth of market demand from occupiers and investors”.
The Rotherham-based business has reported operating profit of £76.5m for the first half of the year, marking a hextuple increase on its 2019 figure for the same period and showing the business is building back better having last year reported an operating loss of £3.7m during the heigh of the pandemic.
The strong performance to 30 June 2021 was according to Lynda Shillaw, chief executive of Harworth, driven by both “a strong operational performance and the buoyant land market”.
She noted that the industrial and logistics market was in particularly fuelling growth, with demand outstripping supply and the business having secured 1.1m sq ft of planning consent for industrial and logistics space at its Wingates site in Bolton as well as starting construction on 332,000 sq ft of space at its Leicestershire Bardon Hill development.
The experienced property leader added that the residential market was also experiencing a boom with average house prices up between 5% and 6% to date in 2021 in Yorkshire, the North East and the North West. This she said is reflected by the “healthy levels of demand” for Harworth’s pipeline of sales of serviced land – a section of the business which typically completes in the second half of the year.
Looking ahead the move to undertake the direct development of much of its consented pipeline for industrial and logistics sites will fuel growth as it goes from an average of 200,000 sq. ft of direct development per annum between 2015 and 2021 to an average 800,000 sq. ft per annum between 2022 and 2026.
In terms of its the total landbank within the industrial and logistics sector the business has 9m sq ft of consented land with a Gross Development Value (GDV) of £1.1bn, which includes Bardon Hill, Wingates as well as future phases of Gateway 36 in Barnsley and the Advanced Manufacturing Park in Waverley.
Shillaw added: “Demand for our industrial & logistics space and serviced residential plots remains very strong and we expect these trends to continue for the foreseeable future.
“Harworth, with our sizeable landbank, is uniquely positioned to take advantage of the structural tailwinds in our end markets, and our strategy has unlocked the potential to deliver more and grow the business.”
She noted the focuse for the remainder of the year was, “to continue the build-out of our Major Development sites, complete plot sales across our residential portfolio and progress direct development across our industrial & logistics portfolio”, while also actively pursuing opportunities to expand its strategic landbank and churn its Investment Portfolio, in order to dispose of those assets from its existing portfolio where it have maximised value. This move is expected to reposition its portfolio towards modern, high quality Gade A assets with good access to infrastructure and proximity to urban centres,