Forsyth seen as safe pair of hands by occupiers
Copyright: David Lawson
Published in Property Week June 2009
The last few years have not been kind to Kevin McCabe. After selling much of his property portfolio to fund manager Valad the market collapsed, leaving the shares he received worth a fraction of their value. Meanwhile the Blades, his beloved Sheffield United football team, was relegated from the Premier League then pipped for re-promotion last month, losing the chance of an estimated £60m in extra income.
But the veteran property developer matches his soccer stars’ ability to ride tackles and switch direction. He doggedly pursued rival club West Ham for compensation, claiming it was involved in dodgy player transfers and should have gone down instead of the Blades. Valad’s weak share price has also enabled him to buy a bigger stake and could see the tables turned with McCabe taking over the international group.
The same nimble footwork marks the fortunes of Forsyth Business Centres, which McCabe kept as part of his family firm Scarborough Property. A couple of years ago Forsyth was set for massive expansion out of its provincial heartland. The highly rated Jane Gwillim-David was brought in as chairman to add 40 centres across the South East, yet within a year control switched back to Scott McCabe, Kevin’s son. McCabe foresaw recession and ‘decided it was better to keep our powder dry,’ says finance director David Harrop.
Then a possible sale to Regus emerged. Forsyth has been a small but vital component of the McCabe business empire since 1991, servicing the listed Teesland Group and the family-run Scarborough as a ‘starter’ for developments. But bricks and mortar do not have the emotional attachment of a football team. 'Property is there to be sold,’ McCabe told me back in 2000, when he made a huge change in direction from traditional development to international fund management.
Regus had to make do with Forsyth’s Belfast centre. It was the best performing operation in the firm but McCabe ‘could not resist a good deal’, says Harrop. The master strategist hung on to the rest because, like one of his strikers, he changed direction yet again and headed back towards the goal of expansion.
The target is now less precise and plans for a market listing are on the back burner. The business model has also changed, as Forsyth is diversifying into selling its skills. Half a dozen management contracts have been set up in the last six months and another handful are brewing.
Landlords are weighed down with empty space as lettings subside and the collapse of leading business centre operator MLS has released a further tide requiring new managers. But the collapse has made landlords choosier about partners. ‘We have an advantage as we have been around since 1991 and are seen as a safe pair of hands,’ says Harrop.
This long history has also generated a wealth of contacts The McCabes are understood to have been approached personally by landlord Mayfair Capital to take over the Leeds centre abandoned by MLS.
Harrop offers no magic wand for distressed centres but a new management team and a few property improvements have seen occupation levels in Leeds rise from 50% to 60% since the transfer. The key factor is restoring a feeling of stability, he says. Tenants are no longer worried about deposits when they see a manager backed by an international parent with deep pockets.
The traditional Forsyth boast is that it can offer a wide range of options for tenants because of a long history in property ranging from secondary industrial space to prime offices. In recent years this has spread across Europe, especially since McCabe became involved with Valad. He has even married business and football ambitions, setting up centres and buying stakes in clubs in eastern Europe and China.
Yet the company still exudes a brisk ‘northern’ culture - forthright rather than glamorous, rooted in long-standing relationships rather than quick profits. This combination of family values and international power may prove crucial as economic clouds gather and security becomes paramount for landlords and tenants.
Forsyth Business Centres has agreed a management contract to run 15,000 sq ft of serviced office space at 117 The Headrow, Leeds, previously held on a lease by MLS Group. The centre has 16 tenants and seven ‘virtual’ clients who use the address and a business telephone number. Forsyth has opened centres in the last 12 months at locations including Darlington, Hemel Hempstead, Datchet, Tunbridge Wells and Leeds. Finance director David Harrop said the management contract deal shows how Forsyth can step in at short notice to help landlords with problem properties.
Founded in 1991, Forsyth is among the oldest serviced space operators in the UK. It has survived as part of the family-owned Scarborough Property Group during a blizzard of mergers and deals which turned chairman Kevin McCabe into one of the country’s richest men after the sale of subsidiary Scamp to international fund manager Valad for £850m. McCabe was Property Week Yorkshire and North East property personality of the year in 2008 and is well known outside the sector as chairman of Sheffield United.