As the £15m Enterprise Way link road nears its completion date in the first quarter of 2018, MAG Property is gearing up for a big year with Airport City, chief executive Lynda Shillaw has told Place North West.
Airport City’s been in development for some time now, with the early years dominated by industrial. What’s the timeline of projects as things stand?
The story of this year has been about us disposing of 45 acres at Global Logistics to TPG. On the back of what’s been a successful time we got to the point of asking ‘do we want to keep developing, or can we move on and focus elsewhere?’ For a major US fund like TPG to buy 45 acres, with potential for 1m sq ft of development, highlights what has been achieved there.
Airport City North is a different product entirely, it’s mixed-use and is much harder to initiate. We’re at a point now that has taken us three years to reach in terms of masterplanning, refining, really getting into the guts of how it will work. This year is all about infrastructure, which will be finished in spring 2018. Enterprise Way will be the game-changer, the sites are oven-ready and just need access.
Are deals on the horizon here?
While all the infrastructure’s been going in, we’ve been working away to get deals done. We’ve got four hotel deals that are really close, which is really important for the airport – such has been the rate of growth in passenger numbers, we don’t have enough hotel beds. Hopefully in the next few months we’ll be able to talk about these things. I’m confident that there will be 1,000 new hotel beds at Manchester Airport committed soon.
There’s talk of major office deals, can you say anything about that?
Of course we’re keen to secure our first major office occupier for Airport City North, and we have been in discussions with a particular party for some time, which would be transformational. The timeline though is for infrastructure this year, and next year we’ll be in construction. That will allow people to see how it’s all opening up. Our team will continue to work incredibly hard on behalf of the airport’s shareholders.
Another thing that’s spoken about is the sale of MAG Property by the airport group, which is something that other airport operators have done. Could the property business be described as “up for sale”?
This is something that’s often been talked about, and it’s not as if a potential sale of the property division is a big secret. It’s part of the reason I came into the business, because this was being considered as an option three years ago.
MAG has four airports and a property company, there’s presently a £1bn investment programme at Manchester Airport and significant investment into Stansted, and in the MAG online business. Property at MAG doesn’t deliver returns on a par with the airport assets and at some point the group could look to monetise some of its lower returning assets – it might be that the group decides to float off some or all of its property holdings.
But what it won’t be doing is selling off terminal buildings and other core assets, it will be sheds, hotels, development land. Probably at some point in the future it will happen.
Is MAG Property a different proposition to what it was a few years ago, then?
Since I arrived at MAG we’ve been focused on business restructuring – there were a lot of temporary people, and vacant positions, and we’ve brought a lot of good people in. We’ve spent time on building the brand as distinct from the airport, and we’ve spent time putting in systems and processes, professionalising the business.
If at some point the group does decide to sell, our aim has been to make sure MAG Property is in the best possible shape and has the right management team. If a sale were to happen tomorrow, that would be OK, if it were to happen in two years, or never, that would be OK too. We’re stable, we’re pretty full in terms of occupiers, we have a pretty unique proposition.
You took over in 2014. Three years on, are you pleased with progress?
There were three reasons I took this job. Firstly, the invitation to make a property company an investable proposition seemed like a fantastic opportunity. Secondly, I loved the idea of a real estate company linked to an airport, which Id had a taste of at Scottish Widows. Thirdly, the Airport City idea was very compelling. I’d previously left NOMA after putting in the early work there, and didn’t want to see that through over 15 years; but this was a different challenge.
The original aim of Airport City was for 1.2m sq ft, and Global Logistics, or Airport City South as it was, isn’t too far off reaching that, with Amazon having put mezzanines in. There are 2,000 jobs already.
Once we really start moving with Airport City North, we’re looking for 11,000 jobs in total. It’s really exciting, it’s placemaking, and value creation for the city region. The events space we’ve launched is part of that.
And when you consider Airport City alongside the Manchester Airport Transformation Programme, which will make 20 to 30 further long-haul routes viable – the impact of the Beijing flight’s already been huge, bringing an additional £50m spend into the region, and San Francisco’s looking like it will be huge for the tech sector. It feels like we’re on the cusp of something really exciting.