Argent unhappy with erosion of principal role at Airport City
Argent withdrew from the joint venture delivering the £1bn Airport City Manchester development because it could not retain a principal development manager position, according to managing partner David Partridge.
Partridge said the split, announced last week, was “very amicable” but Argent’s role had evolved into one that did not suit the company any longer.
“What’s emerged over the last couple of quarters is that the airport are pretty keen to build up their own team and that doesn’t frankly leave us in a principal role any more, which is what we always try to maintain if possible,” Partridge said.
Argent restructured in 2012 to concentrate on development management and asset management services. By 2014, Argent’s massive King’s Cross development was gathering pace with several buildings completed and fully let. In March 2015, Argent agreed a funding deal with US private-rented giant Related Companies to pursue UK developments. Argent now has a development portfolio of 15m sq ft of proposed project which would be valued at around £10bn when built out.
Manchester Airports Group named Argent as development manager of Airport City in April 2013. The contract, tendered publicly through the Official Journal of the European Union, did not have a fixed term. Last week, all parties claimed the Argent role was always limited to the early stages of the development and the exit, after less than three years, was planned from the start.
Argent did not have any equity in Airport City and was a consultant from day one. The role suited Argent during the downturn but since the market has picked up the company is keen to take equity positions in developments again, backed by Related.
Partridge added: “Where we have done development at One St Peter’s Square [with Greater Manchester Property Venture Fund], the Hive [with Manchester City Council] and so on we were the principal developer. The airport was becoming more of a consultancy role. We went in with our eyes open and the arrangement has run its course. It’s not right for us to do project management, it’s not how Argent is set up.”
Argent’s involvement at Airport City was steered day-to-day by Ruairidh Jackson, senior projects director, who joined in March 2014 from the Co-operative Group, where he was one of the senior managers leading the Noma development in Manchester city centre
Jackson will remain with Argent to concentrate on new developments. Partridge said: “Ruairidh has done fantastically well with the business plan and getting the first phases underway.”
Partridge added: “We weren’t part of the equity stack at Airport City, which was always the case, the equity was with Carillion alongside the Chinese, as well the pension fund and the airport. We would rather put our own money in, have some skin in the game, and not be a project manager.
“It’s fair to say we are in a much better, stronger position now because we have international capital behind us and we are more open to taking equity positions.”
Partridge declined to go into the financial terms of the contract with the airport other than to say the firm will benefit if deals it advised on with occupiers over prelets at the scheme complete then Argent “will get a share of the success fees,” alongside the letting agents and other incentivised advisors.
Argent is among the longlist for the Mayfield development around Piccadilly Station and is expected to hear in March if it has made it onto the shortlist of two or three developers.
Success at Airport City to date has been mainly limited to the distribution park to the south of the masterplan where Amazon and DHL have signed for warehouse space. The proposed offices and hotels have yet to be developed in the north of site.
The ownership structure of Airport City is Manchester Airport Group has a 50% stake, Beijing Construction Engineering Group and Carillion 20% each and Greater Manchester Pension Fund 10%.
No one at the airport was available to comment when contacted this morning.