The architecture practice is looking to its next chapter of growth with a focus on opportunity sectors such as logistics, later living and social housing, while maintaining the supportive company culture for which it is known, according to its directors.
At the end of last month, Manchester-based AEW Architects completed a management buyout led by its new managing director Andy Rainford and director Colin Savage. The MBO is the second such deal in a decade for the practice – the first was led by former managing director, the late Steve Burne, in 2011.
In an interview with Place North West, Rainford and Savage explain why their strategy, as they take the reins from former majority shareholder and most recent MD Andy Critchlow, will never be about “ripping up the rulebook”. Rather, it is about “evolution, not revolution” in the words of Rainford, who defines his priorities as building on the strengths of the business and deepening its offering.
Listen to an excerpt from the interview:
“The MBO stands us in very good stead to move forward,” said Rainford, who has been with AEW for more than two decades after joining as a graduate in 1999.
“[Critchlow] always had 2021 in his mind as the year he would end his career in architecture and move on to do something in a totally different industry. In fact, when Steve died, he was almost quite reluctant to take the reins as managing director, but he absolutely thrived in the role and has elevated AEW to a whole new level, and we’ve been fortunate to be part of that process.”
The MBO, under which Rainford will lead the business alongside Savage and directors Alan Lamb and Phil Hepworth, “provides the new-look board with a chance to come up with fresh opportunities for growth”, and implement strategies to achieve that growth in the coming years, added Savage. He joined AEW in 2017 tasked with expanding its activities in the fields of housing, public sector and regeneration.
AEW, which was founded in 1992 and employs around 65 staff, recorded net turnover of £5.1m in its last financial year to end of June, up slightly from £5m the previous year. The gross figure for 2019 is higher, taking in around £600,000 of income from sub-consultancy fees.
The firm was on track for “a record year” in 2020 until the Covid pandemic hit, said Savage. “[The impact] was felt more in project delays than loss of work. Construction sites closed, planning applications were delayed or put on hold, and clients reassessed their financial position. Thankfully, that activity has come back.”
AEW is aiming for slight revenue growth in the next financial year despite current market challenges, according to Rainford. “We keep a close eye on our finances. At the moment, we can see the next five months through comfortably and we have a good pipeline of work beyond that.
“The three-month horizon is what most consultancy businesses focus on, and that’s true for us. Nothing ever stands still, and our future pipeline is strong.”
AEW has worked hard since the 2011 MBO to diversify its business – in particular, to reduce dependency on the retail sector. In 2013, retail work accounted for 85% of the practice’s revenues; today, it is more like 36%.
“This was done through strategic planning,” Rainsford explained. “We weren’t trying to shrink the volume of retail work, but rather to grow other sectors so we weren’t relying on retail so much.”
AEW’s retail projects are now increasingly integrated with larger, town centre regeneration and leisure projects, such as the Merseyway Shopping Centre revamp, which AEW has designed for Stockport Council, and Glenbrook’s STOK office scheme, also in Stockport, which has retail units on the ground floor.
Industrial is the “clear winner” driving AEW’s revenue growth today. The sector has swelled to account for 33% of the business from just 18-20% in the past year alone, as demand for logistics space soars on the back of e-commerce growth, especially during the pandemic.
Said Rainford: “There had been a dearth of industrial space coming to market in the two years after the Brexit vote because of related market uncertainty, but the rise of internet retailing coupled with an increase in logistics demand when Covid kicked in, has meant the sector has just grown and grown.
“We’ve had to almost double the size of our industrial team to 22 people to deal with the sheer volume of work, and we will probably add two more members of staff before the end of the year,” he added. Led by director Lamb, AEW’s industrial projects include Tritax Symmetry’s 158,000 sq ft warehouse in Middlewich, Cheshire, being developed on behalf of confectionery maker Swizzels Matlow.
The company is also designing facilities for aerospace giant BAE Systems, logistics developer PLP at Ellesmore Port, and Panattoni in Bolton, and has just finished the sixth phase of Birchwood Park in Warrington, on behalf of the Carrington/Himor development joint venture with which it has had a two-year client relationship.
“Industrial really is a very strong sector, in which we have a significant pipeline, and it will only continue to grow,” proclaims Rainford.
Meanwhile, AEW wants to grow its work with the public sector on town centre regeneration projects – it worked with Chorley Council on the £17m Market Walk mixed-use scheme, and is in talks to work with regional towns including Rochdale, Oldham, Bolton, Altrincham and Burnley with a view to “breathing new life into town centres”.
The company is also expanding its expertise in the ‘accommodation’ sector – encompassing everything from private residential and affordable housing, to senior living and care homes. This part of the business is headed up by Savage, whose team is working on the £11m Sale West Estate masterplan for housing provider Irwell Valley Homes, backed by Homes England, and Glenbrook’s The Trilogy build-to-rent scheme in Castlefield, Manchester, among other schemes.
An emerging sub-sector is ‘step down’ care for vulnerable young adults, such as those with severe learning difficulties. Savage said he is in talks with prospective partners in Ashton-under-Lyne and at Sale West to design such projects.
In pursuing such opportunities for diversification, both Rainford and Savage are adamant they would avoid a “scattergun” approach. “We want to focus on areas that we have solid expertise in, so that we can add real value,” said Savage.
Amid its quest to grow the business, AEW is set on maintaining a nurturing environment for staff, according to Rainford. “We’ve always believed in building people up from the bottom [of the ranks] and that ethos is still very much in place. We have a lot of very longstanding employees.”
Thus, keeping a grip on the company’s finances and putting in place flexible working arrangements to support staff during the pandemic have been crucial areas of focus for AEW’s board members in recent months.
Said Rainford: “We’ve maintained a profit throughout the Covid situation, and we have to. We have 65 staff and so 65 families, whose wellbeing and security we have an obligation to look after, and we take that very seriously.”
AEW has its head office in the Zenith Building at Manchester’s Spring Gardens. The office is currently closed and all staff are working remotely – a decision taken in the wake of the heightened Covid restrictions imposed on Greater Manchester last month – and AEW intends to consult with staff on their proposed working set-up ahead of a lease break in 2022.
“We are mindful that a lot of people are in a lot of different situations and we’ll be taking a balanced, sensible approach to make sure it’s working for all of us,” Rainford said. “We’ll almost certainly be moving offices at the end of that period and our new home will be an exemplar of a modern, sustainable workplace.
“I do believe the cat is out of the bag, though, when it comes to working from home, and it’s unlikely we will all be in the office full time.”
The priority here will be to ensure the younger generation of architects acquire the same set of skills as they would have from full-time office working, notes Savage. “The industry is changing so rapidly – with architecture compliance checks being mooted to ensure quality, new building regulations coming in and ever-evolving standards on environmental sustainability.
“We have to keep on top of these things and cannot afford to be behind the curve.”