Developer Urban & Civic has plans to build 40,000 homes on difficult, large sites - and after a key acquisition, looks well on the path to achieving that. Iain Withers meets MD Robin Butler as he scours the land for housebuilders
Urban & Civic has quietly, but surely, been gearing up to deliver four of the UK鈥檚 largest housing developments. The developer, founded by managing director Robin Butler and executive chairman Nigel Hugill - an executive duo that previously ran developers Lend Lease Europe and Chelsfield - specialises in huge, tricky strategic land sites that deliver thousands of homes apiece. With 20,000 homes in the pipeline, and plans to acquire two or three more major sites to double that number, Urban & Civic is set to play a key part in addressing the UK鈥檚 housing crisis.
This is a good time to get to know Urban & Civic. In 2015, the developer will start putting its plans into action, by engaging with housebuilders which can build out its huge pipeline of homes, with several opportunities for both regional and national housebuilders on the immediate horizon. Delivery of these strategic sites - two in Cambridgeshire, one in Rugby and one in Newark - has been given new impetus by a brace of Urban & Civic acquisitions over the past 13 months: the acquisition of Midlands housing developer Catesby in March this year, and its merger with listed commercial property developer Terrace Hill in April 2014, which took the combined firm onto the London Stock Exchange. These deals have added quick cash-generating businesses to the Urban & Civic group, producing the funds to help fuel development on the company鈥檚 longer-burn strategic sites.
What makes Urban & Civic stand apart from its competitors is the pedigree of its leaders, Butler and Hugill. Having cut their teeth on the early stages of some of London鈥檚 most successful urban commercial schemes at Lend Lease and Chelsfield - including White City, Stratford City and Paddington Basin - they are now bringing that experience to bear in the housing sector. 鈥淲e absolutely want these sites to be exemplars of large-scale quality developments,鈥� Butler enthuses. 鈥淲e expect to build these out over 15-20 years. The quality will be our legacy.鈥�
In the company鈥檚 headquarters in the heart of London鈥檚 historic Mayfair, Butler explains how housebuilders can get involved in the Urban & Civic mission, and what its plan is to ensure success on these challenging schemes.
The Urban & Civic pipeline
Urban & Civic鈥檚 strategic sites focus on 鈥渓arge-scale residential opportunities with proximity to London, strong existing infrastructure connections and access to good long-term employment opportunities,鈥� according to Butler. He and Hugill set up Urban & Civic in the teeth of the recession as they judged residential would be 鈥渢he next recovery sector that would be coming out of the downturn鈥�. Its business model is to take on large sites and put in the infrastructure and utilities that can unlock the site for housebuilders. The sites are broken up into plots and offered to housebuilders for sale or under a profit-sharing licence deal. Butler then says sites will work like 鈥渁 conveyor belt鈥�, with plots rolled out 鈥減aying like annuities鈥�.
The most successful developments are the ones that have been open 10 years and you arrive and it feels like it鈥檚 been there forever
Robin Butler
The acquisition of Midlands housebuilder Catesby from housing industry grandee Eric Grove (see box overleaf) is designed to support the strategic land business model. The Catesby business deals in quicker turnaround, high quality sites in the tens or hundreds rather than thousands of homes. 鈥淭he Catesby business was very attractive to us. On the one side you鈥檝e got this large scale, lumpy strategic land business,鈥� Butler says. 鈥淵ou marry that with something much swifter and we鈥檝e now got a machine that can turn positions into cash on an annual basis, providing funds until the large sites start producing.鈥�
Urban & Civic鈥檚 four current strategic schemes are 5,000-home Alconbury and 7,000-home Waterbeach, both near Cambridge; a 6,300-home scheme outside Rugby; and a 2,500-home scheme in Newark, Nottinghamshire that was acquired with the takeover of Catesby. The Alconbury scheme - a mammoth 1,450-acre site taking in an old Second World War and Cold War military airstrip - will be the first out of the blocks. Construction of the first homes could begin as early as this autumn, with the first housebuilder appointment to be confirmed shortly, Butler says. The scheme is also a designated enterprise zone and is earmarked for 3 million ft2 of business space. Rugby is likely to be the next scheme to get going - once a newt population has been moved off site this summer - and could be on site with housebuilders early next year. At Newark, Urban & Civic will commence discussions with housebuilders 鈥減robably later this year,鈥� Butler says.
How to get involved
When it comes to the first housebuilder appointments, the most important thing for Butler is 鈥渆stablishing a benchmark quality鈥�. 鈥淲ith the first few deals we expect to have a close working relationship with the housebuilder to ensure quality and design integrity,鈥� he says. 鈥淎s you move into the more mature stages of the whole development with the design code fully established, you can be more confident about broadening out the palette of housebuilders.鈥� The strong early emphasis on quality is partly to ensure Urban & Civic鈥檚 sites are resilient to any potential housing crashes. 鈥淥f course over a 20-year build we expect to go through cycles,鈥� Butler says. 鈥淵ou have to set these sites up strongly enough so that they are as resistant as possible to a market slow-down and catch the momentum as soon as it returns.鈥�
Nobody wants housing on their back door. The world and his wife are against you. You鈥檝e got to manage that, that鈥檚 the skill
Eric Grove
Butler expects to work with 鈥渢wo to three鈥� main housebuilders on each strategic site, with additional builders drafted in for plots with specific requirements - for instance, at Alconbury, the site is likely to have 鈥渕ore urban and dense housing in places鈥�. His preference is for regional housebuilders for the first few deals, before bringing in more national housebuilders. Urban & Civic is also on the hunt to acquire two or three more sites to double its strategic pipeline to 40,000 homes. Butler says it is possible two sites could be secured as early as this year, but he warns the market is 鈥渉ighly competitive for high-quality land鈥�.
So what lessons is Butler bringing to bear from his experience on major urban commercial schemes? He says a focus on infrastructure and public realm is paramount. 鈥淲herever you build you鈥檝e got to make the bones of the scheme very strong,鈥� he says. 鈥淚 learned very early on in development that the best advocates of any scheme are the people who work and live in the area as they create the desire lines - they drive a certain way, they walk a certain way, and if you try and make people do something that鈥檚 not natural you鈥檙e not going to succeed [鈥 The most successful developments are the ones that have been open 10 years and you arrive and it feels like it鈥檚 been there forever.鈥� For builders that want to help Urban & Civic achieve this vision, now鈥檚 the time to get involved.
Eric Grove: 鈥楩ont of knowledge鈥�
Veteran developer Eric Grove has seen a fair few elections. The 85-year-old has founded, built up and sold two successful Midlands housebuilders - Catesby and Canberra - over the course of his career and navigated many electoral cycles along the way. So he knows from experience not to put too much confidence in Labour and the Conservatives鈥� respective pledges to build 200,000 homes a year in the run-up to yesterday鈥檚 hard-fought election: 鈥淲hen I hear them I think to myself, perhaps all these politicians are going to sign up for a bricklaying course?鈥� he scoffs. 鈥淚s Mr Miliband, or Mr Cameron, or whoever it is, going to sign up to a carpenter鈥檚 course?鈥�
Grove may be exasperated at the election, but from a business perspective he is in good spirits. He says he is 鈥渧ery happy鈥� with how his sale of Catesby to Urban & Civic is panning out. He says the sale 鈥渨asn鈥檛 planned鈥�, but, after being introduced to Urban & Civic鈥檚 chairman, he says he became convinced a deal with the firm was a better route to expansion than through a stock exchange listing or raising funds on the equity market. Grove is now a significant shareholder in Urban & Civic and continues to work for the combined firm on a consultancy basis. Butler describes him as a 鈥渇ont of knowledge鈥�, adding: 鈥淚t is an added bonus to have Eric鈥檚 knowledge and contacts鈥�.
鈥淭here isn鈥檛 possibly one chief executive in the housing business I don鈥檛 know,鈥� Grove affirms. He describes residential development as a 鈥渧ery skilful business鈥�, where managing the planning process and potential opposition is key. 鈥淣obody wants [housing] on their back door,鈥� Grove says. 鈥淭he world and his wife are against you. You鈥檝e got to manage that, that鈥檚 the skill, managing the people; the opposition.鈥�
Grove has some colourful memories of his time at Alfred McAlpine, after the sale of his first housing business Canberra to the contractor in 1988. 鈥淢cAlpine was in a sorry state when I got there, with costs rising and profit collapsing,鈥� he says. 鈥淭hey had a ridiculous situation where the civils [division] were doing the building of the houses. They didn鈥檛 care if they didn鈥檛 sell them, they just built them.鈥� Acrimony within the company became so bad that there were 鈥渉undreds鈥� of internal claims between different divisions, Grove claims. He also recalls ruefully the court battle between Alfred McAlpine and rival contractor Sir Robert McAlpine about the use of the family name. 鈥淲e changed the [name on] all the vehicles, which was mad because we had hundreds,鈥� Grove says. 鈥淭hen when Robert won we had to repaint all the vehicles again.鈥� Grove hit the headlines when he and another Alfred McAlpine director were arrested in 2006 for alleged tax irregularities, but the case was dropped. 鈥淭hey looked into it and they gave me a clean bill of health,鈥� Grove says.
Grove suggests that as a serial housing entrepreneur he鈥檚 part of a dying breed: 鈥淭here are very few entrepreneurs left in the housebuilding industry,鈥� he says. 鈥淭here鈥檚 Tony Pidgely [of Berkeley], who鈥檚 done a magnificent job, there鈥檚 Steve Morgan [of Redrow], there鈥檚 Jonny Bloor [of Bloor Homes]. But now there are no small businesses starting up, as they can鈥檛 get the money from the banks.鈥�
Original print title: Urban鈥檚 realm
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