START International nourishes hi-tech births
Copyright: David Lawson - published Property Week March 2005
Back when the dotcom boom was still just a quiet rumble, landlords came up with a spiffing wheeze. Rather than wait for tenants to batter down the door, they would grow their own. Like new-born babies, young firms can have all the promise of a long and fruitful life but are notoriously fragile. More than half of all startups die within a couple of years. No conventional landlord would have them on the premises, of course. After all, property investment is about long-term commitment.
But startups seem made for managed space, where the future is measured in months rather than years. Support services such as meeting rooms, fax centres and secretarial pools can be vital where employing a full-time typist can mean stretching the overdraft. All-in charges for rent, rates, electricity and so on also make it easy to figure exact outgoings when making those delicate negotiations with the bank manager.
Some landlords went as far as putting money into their own tenants, confident they would be able to nurse them through the critical period when every startup runs out of capital.Then came the crash. No amount of nurture could save crumbling dotcoms, leaving the pioneers with empty space and emptier pockets. But the principle remains sound. Most business centres see part of their role as the first step on the property ladder. This is not charity, as successful startups will grow to demand more space – probably within the same centre. They are the Jesuits of the business world: get them young and you have them for life.
Keeping ‘them’ alive is the problem, and Roger Perrin is aiming to fill that gap. He was happily beavering away creating conventional industry and offices in the South East with his firm Tartan when a French science park project sent him scurrying for advice to the market leader on his doorstep, St John’s Innovation Centre in Cambridge. This led to an aptly biblical conversion. ‘I knew little about serviced space until then,’ says Perrin. ‘I thought it was just all about Regus.’ The meetings sparked a vision for similar managed centres geared to cutting edge startups and linked to education institutions in other parts of the country.
Tartan changed its name to START International for the collaboration with SJIC and two centres are up and running at Fareham and Woolwich. Two more are planned for Oxford and Chelmsford and another six have just been acquired from HQ. They follow the St John’s model of linking to local education centres but Perrin is quick to point out that they are not just ‘boffin nurseries’. Business centres need to reflect local economies rather than stick to a universal model with a corporate brand, he says.
The planned Oxford centre will concentrate on laboratories but Fareham is a mix of high tech and consultants after research showed a lot of firms wanted workshops and offices in the same building. Woolwich has close links with the University of Greenwich yet includes a car hire company, small media firms and a former photographer of celebrities like the Rolling Stones, who is now selling on the iconic images.
Universities also do more than provide startup firms from among its academics. They sell training, research and advice to local communities, often using meeting space at START centres. But there are strong common factors. Perrin qualified as an architect, working for Nicholas Grimshaw and design-led developer Flaxyard, so design plays a big role. Each building focuses on an atrium, filled with restaurants, meeting spaces and light – a place of buzz and excitement where tenants mingle. ‘These centres should be seen as communities made up of individuals who want to meet, interact and learn from each other,’ he says.
He is bemused that so many seem to close at 5.30. Bonding carries on well after business hours, when tenants can be found chatting through events such as quiz nights.On a more hard-nosed level, designs take account of the fact that no-one knows how space will be used, so walls and services must be flexible enough for any layout. And unlike conventional space, cost in use is paramount to maximise income. Quality is critical, such as making sure toilets and kitchens are accessible and don’t break down. You can’t afford disgruntled tenants when they can move out in a flash. ‘We should be taking a lead from retailers and hotels rather than more traditional long-lease property,’ says Perrin.
The biggest step forward, however, is in development of the St John’s technique of providing comprehensive business support. It is critical to have advisors on site rather than at the end of a phone, he says. An immediate answer to a query about finding a local lawyer or filling a VAT form may seem insignificant but can mean the difference between business life and death to an inexperienced small firm. Surely this must load rents far beyond the means of small tenants? Not according to Perrin, who says all-in charges ranging from £35 to £90 a sq ft are comparable with competitors. The extra services have more than paid for themselves by attracting tenants. Fareham is running at 87% occupancy after 18 months and Woolwich has hit 65% in its first year
The business model is interesting enough to have won backing from Close Business Centre Capital. Planners have proven slower to convince, and impatient with the delays and red tape, START has begun buying up existing buildings to transform. Woolwich was a shell in the historic Arsenal in south-east London. More modern centres in Reading Bristol and Edinburgh have beeen taken over from HQ. Perrin says the first step in transformation will be creation of on-site events and restaurants. START is also launching a new service geared to the very birth of new enterprises by renting out as little as single desks in shared open-plan offices. Each is a university town, but innovation may no longer play such a dominant role in future. Experience has shown that all kinds of enterprises are drawn by good design and the vital element of support. ‘Or main aim is to create vibrant business communities,’ says Perrin.
START centres provide an on-site business support advisor to answer questions in a simple and practical way. The package includes services and contacts, free consultations and guidance, as well as discounted rates on business planning, raising finance, R&D, company establishment and operation and practical management and marketing advice.
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