Copyright: David Lawson - Property Week Nov 2000Home page
How many propeller-heads does it take to advise a telecoms company on its property? None. How many qualifications in electronics does an agent need to keep up with high-tech issues dominating the industry? You’ve guessed it: again, none. Familiarity with the language of Rice Crispies may be useful, however.
If that sounds bemusing, it is not a patch on the confusion generated by the rise of new technology to dominate the property industry, particularly the frenzy over demand for Internet data centres. Agents who have barely got to grip with the on button of a computer are desperately boning up on differences between bits and bytes, web-hosting and co-location, e-commerce and email.
‘But they are missing the point,’ says Mark Lacey of Rogers Chapman, which is rapidly carving a niche as one of the switched-on consultancies in this sector. ‘You don’t need to know everything about technology. You need to be a good agent.’
‘These high-tech companies are expanding fast and want instant service. Of course, you need to learn what they need, and that involves spending a lot of time discussing the way their business ticks. But at the end of the day they will provide their own technical expertise. They just want someone to find the right property in the right place - and preferably find it yesterday.’
Many of the leading consultancies have created giant departments specialising in areas like telecommunications, yet a smallish agent like Rogers Chapman proves that big numbers and technology specialists are not crucial. ‘Service is crucial, just like any other area of property,’ says Lacey.
He can speak from experience, as the firm is guiding some of the top technology names into areas as diverse as a German web centre, the Dartford Tunnel and the cable ducts of buildings across the UK. This is where expertise in a well-known breakfast cereal emerges.
Phil Daniels, an associate director in the firm, feasts daily on SNIPs, SNAPs, POPs and nodes. For the uninitiated, synchronised network interface/access points, and points of presence are geekspeak for connections to the fibre optic cable routes. Daniels points out that this kind of work requires a whole new field of expertise but Lacey emphasises that the critical skills should already be part of a good agency.
‘You need to know who are the landlords likely to be willing to allow in these cables and rooftop aerials, which buildings can support them, how planners think and whether leases allow for access,’ he says. ‘You need contacts and local knowledge to get deals done quickly.’
At a time when IT newcomers are popping out of the woodwork, it also pays to have a good idea which coat tails to grasp. The firm’s move into high-tech came from a mundane inquiry in the early Nineties for conventional central London offices. Lacey fixed up a company called Telecom Electric with 20,000 sq ft on the Embankment. Although the name initially appeared obscure, it turned out to be the new telecoms subsidiary of the National grid.
Lacey realised this was no ordinary firm, and would justify extra nurturing. He was right: it was the forerunner of Energis, which quickly transformed into the third biggest telephone company in the UK and recently graduated to its biggest business Internet provider. That not only required a 100,000 sq ft centre in Reading but sent the firm hunting for operational and administrative centres as well as building links throughout the country. Today, Energis gets celebrity treatment, with a bank of dedicated staff on the line 20 times a week discussing requirements.
Ironically, Rogers Chapman was badgering landlords long before the current fashion for buying Internet services to enhance property values. Or at least, it was trying, as many of today’s enthusiasts were door-slammers in those days. Giants like Canary Wharf and Broadgate were an exception, realising the value of a POP in the basement.
Now Rogers Chapman has stepped up to a new level, scouring Europe for a string of data centres as Energis goes global. This month Energis announced it would expand its Leeds operation, build another data centre in Watford and add to a European chain with buildings in Milan and Warsaw.
This has brought a whole new area to test a firm previously known mainly for its specialist knowledge around Heathrow. But the same agency principles apply, says Lacey. Hunting for high-tech centres in cities like Frankfurt and Amsterdam has been outsourced to local experts with local contacts and market knowledge. It has been crucial, however, to oversee the project carefully to interpret and manage the client’s needs.
It might appear that desperate telecom companies will take any shed or office block close to trunk fibre cables. But not all data centres are alike, he says, in a barely-veiled warning to landlords rushing to offer their office blocks and warehouses. Energis, for instance, runs its own equipment, unlike telehotels and co-location centres which will rent space to others. That means different servicing, power requirements, density of use and layout.
Some leading European cities could discover this to their cost, as developers dive into the booming market. ‘There are surpluses already building up in places like Barcelona and Paris,’ says Lacey. Half-finished data centres will add to these woes as tenants take a pasting from disenchanted investors in the City and on Wall Street. ‘There will be more failures and amalgamations,’ he says.
This is one reason the firm is congratulating itself for taking an early bet on Energis. It has the strength of a large company now gaining plaudits from analysts for its business plan involving its own cable, data centres and Internet services rather than providing for others. That knot has now been tied even tighter, as Rogers Chapman has taken over management of the firm’s whole portfolio.
There is also a message for UK developers considering speculative building to feed the Internet boom. It is well-known that carriers take space they would normally consider unsuitable because they have to be up and running quickly to grab business. But trying to anticipate their needs can still be dangerous.
‘The best approach is to develop alternative modular designs for different potential tenants. Then clear the path with planners and power suppliers. That way, you can promise tenants something quickly.’
The last two are by no means simple. No-one has yet decided whether data centres need planning permission. They don’t fall into any specific use class, which gives planners ammunition for rejecting schemes. That could be a growing threat as local authorities realise how few people work in these centres. They could fall into the old trap which blocked conversion of industrial into mixed-use business parks until B1 classifications were invented in the late Eighties.
Power is also a critical problem. Electricity companies are becoming notorious for demanding huge payments to reserve power loads for sites, adding up-front costs and risks. Lacey says developers should think seriously about alternative supplies. Generators are already being dropped in to guarantee these high-tech sheds face no threat of power cuts. But Rogers Chapman is working on a more revolutionary idea with some clients that turns this arrangement on its head.
‘ Instead of acting as back-up, they could be the primary power source, with the grid acting as a reserve,’ says Lacey. That would free up far more sites and relieve the shadow hanging over west London, where electricity supplies for these power-hungry facilities could soon run out. It seems that even an agent can teach propeller-heads a thing or two about technology.
Offices in West End, Heathrow, and Bracknell - 75 staff.
Shane Redmond Rogers Chapman launched last year in Dublin.
General practice plus specialist in airport property, corporate and public sector consultancy.
Workspace consultancy via Merlin Project Management