QUEENSBERRY RULES: PAUL SARGENT INTERVIEW BY HELEN CRANE, PROPERTY WEEK - 27 SEPTEMBER 2018
Monday 17th December 2018
Most people working in property have had to adapt to change at some point, but Paul Sargent, chief executive of developer and investor Queensberry, has been doing it all his life.
Born in the West Country but raised in Portugal from the age of 10, he cut his professional teeth working for Dutch shopping centre giant Multi Corporation - then Europe's largest developer - on projects in mainland Europe.
It's a very different background from the majority of colleagues that I meet here in the UK" he says. "I often get the embarrassing question 'do you remember so-and-so?' and I have to say 'no, I wasn't here then'."
Instead, he was working on schemes in Germany, Holland, Turkey, and the Czech Republic. Then, in 2003, when Sargent was in his mid-30s, he moved back to the UK to manage Multi's activities here, which included the development of Victoria Square in Belfast and Southgate in Bath.
When I moved to the UK, the people I met and spoke to were all talking about the couple of shopping centres they had developed over the past 10 years and I was talking about the 10 I had developed," he says. "I was in my mid-30s but had probably as much experience as most 50-year-olds, so I tried to use that to my advantage."
Now in his 50s himself, Sargent is still trying to use his experience to his advantage as the chief executive of Queensberry, which he launched in 2011 with Multi colleagues, Stuart Harris and Jon Munce, after Multi exited the capital-intensive UK market following the finanical crisis.
Queensberry began life as a shopping centre specialist, but today it is firmly focused on mixed-use and regeneration developments. That shift has been critical to the business's success", says Sargent. "As retail declines, what do we do? We get more jobs, because we become the go-to person when people want to know what to do with their shopping centres," he says.
By people, he means local authorities. In 2016, Sheffield City Council selected Queensberry as development partner on Heart of the City II - a revamped, £469m, mixed-use project on a site Hammerson had planned to turn into a huge shopping centre before the recession.
In the past 12 months, Queensberry has reworked plans for the site to comprise roughly a third each of office, residential and retail and leisure space. Last week, Queensberry announced it would open a new office in the city to run the project.
We have gone from a scheme you would have seen built in 2005 to the type of scheme you haven't even seen yet," says Sargent. City II has a large, pre-existing John Lewis store at its centre, but under the new plans will also have a courtyard occupied by designers and makers. "Even if John Lewis is in the centre of your scheme, the dependence cannot be on retail," Sargent says.
It is a similar story at The Glass Works in Barnsley, the 590,000 sq ft, council-funded retail and leisure project where Queensberry is development manager. Having seen developments with department store anchors fail to progress, Queensberry instead signed up Cineworld and Superbowl UK.
The scheme will also redevelop the town's historic market with a continental twist - think fresh meat and fruit as well as independent clothing stalls. When you talk about Barnsley, the last thing that comes to mind is a continental market," Sargent says. "But we are embracing those changes, not running away from them."
Despite his cautious take on the retail market, Sargent believes retail has a bright future if the right formats are used. There are certain products that really can only be sold at best value if you can see and touch them, but the locations must be experiential": he says. "I am more enthused by the number of new concepts than I am worried about the demise of the old system."
He recognises that the 'old system' had been in need of change for a long time, thanks to his early days in Europe, where shorter leases and turnover-only rents - both now touted as potential solutions to the raft of retailers shedding their unwanted stores via company voluntary arrangements - are common.
I remember me and Peter Miller [Australian developer] Westfield asking at British Council of Shopping Centres meetings 10 years ago: 'Why do you have such archaic lease systems? Retail is moving so fast that you don't want a retailer for 10 years [before their first lease break].' And look where we are now."
Queensberry made another important change three years ago, when it decided to shift its purely regional focus to also take on projects in the capital. Today, London schemes account for around 25% of its turnover.
With the market evolving since 2013 in not the most positive way due to a number of issues, Brexit being one of them, the amount of decent development opportunities in the regions has been challenging," he says.
Queensberry is the development manager on CBRE Global Investors' redevelopment of retail and leisure complex Angel Central, which is set to be completed in early 2019, and is also involved in the early stages of the same investors' review of its holdings around Fulham Broadway.
Its latest major appointment is as development manager at Borough Yards, Meyer Bergman's redevelopment of the former Vinopolis site in Southwark, which will comprise 50 retail and leisure units, an Everyman cinema and a 62,010 sq ft office building pre-let to The Office Group.
Shifting both the property and geographical focus was bold but necessary given the way the market is changing, says Sargent. When you diversify, people say you are losing your focus - but I think the UK market has been far too siloed for far too many years," he elaborates. "Part of the problem everyone is grappling with now, and one of the reasons for the turmoil going on in the agency market, is that everyone has been hanging on to the sectors almost artifically for quite a long time when the lines between them have been blurring."
Sargent categorises Queensberry as a "medium-sized, independent developer and development management company" and believes its agility is one of its big advantages.
The ability to see something coming down the line then change and adapt is fundamental. The REITs are all adapting, but it's the oil tanker versus the racing yacht. We can do that much quicker."
The three partners each have their own remits. Harris, a former agent, focuses on leasing and market intelligence; Munce is a construction expert; and Sargent tackles funding, deals and finding new opportunities.
However, adds Sargent, they always keep an eye on the bigger picture and encourage the rest of the company to do the same. We try not to pigeonhole people. We talk together; it is an open space; everyone knows a little about everyone else's job," he says.
The company culture has been partly influenced by the partners' experience at Dutch multinational Multi. We had a combination of Southern European and Dutch culture, which makes me quite direct with people - there is a certain image of the Dutch being quite rude," says Sargent. "People are cometimes a bit taken aback by my approach, but it's about being honest, direct and getting to the point."
He adds that he is a "challenger by nature" having grown up in southern Europe. I think the UK market is fantastic and there is loads of opportunity, but I tend to look at it from a slightly different perspective," he says, citing a legendary Portuguese football manager: " As Jose Mourinho said: 'I'm not one from the bottle.'"
He will need to be able to draw on all of these attributes if he is to successfully steer the business through Brexit. He is fairly sanguine about the impact to date.
We would have grown the company more in the past few years if it hadn't been for Brexit - you don't; you wait and see," he says. "That's a reflection of what everyone else is doing in the market." Sargent sees positives and negatives in the UK's impending exit from the EU and says Queensberry is currently sizing up the opportunites.
We're going to pick the places we think are the right locations and deliver new and exciting assets that are fit for purpose and flexible," he says. The common thread that runs through most of Queensberry's projects is that they are challenging. It has typically taken on sites that others have failed to bring forward, perhaps because they include listed buildings or difficult structures such as railway arches, or that are being overseen by public bodies with little development experience.
Queensberry has been involved in council-funded projects since 2011, when it developed Friars Walk in Newport. In order to do so, it had to first convince the council to take a £90m loan from the Public Works Loan Board to keep the long-planned scheme going when a private sector funder could not be found.
It succeeded. When it opened in 2016, Friars Walk won Revo's New Centre of the Year award and Queensberry sold it to Talisker last year for around £90m. The scheme is not the only one that if it were not for Queensberry may have continued to languish undeveloped.
The Newport site has been around for about 15 years, Bath for around 18, Sheffield for at least 15. Unlocking those opportunities is what drives us," says Sargent. "We thought we were going to be private sector orientated when we set up, and actually we have become very much a public sector partner."
Another of Queensberry's preoccupations is good design, an aspect of its developments that Sargent likes to oversee.
Good architecture doesn't cost any more than bad architectue, so we always push on the design front," he explains. "I get quite upset when people say 'oh it's only Newport' or 'it's only Barnsley'. If you dumb down your expectations or ideas because it's 'only' that particular place, then you will get mediocrity."
A similar ethos imbues its wider strategy, which will also evolve and improve over time, hopes Sargent.
Our focus is defeinitely on new sectors," he says. "The next projects will possibly be more PRS focused - we are involved in sites across the country where we want to introduce residential development."
His continental background, meanwhile, will continue to inform his decisions and approach.
In the back of my mind, there is always a temptation to jump across the channel and do something in Europe at some stage," he says.
Looking ahead, he anticipates further significant change be that because of Brexit, economic headwinds or new property trends.
Bring it on, says Sargent defiantly. "We are really driven to just develop and be involved in change," he says. "Call me a masochist, but I'm looking forward to it."
As are local authorities who schemes Queensberry is set to unlock.
Snapshot: Paul Sargent
Family: three children, one grandson
Hobbies: cooking, drawing, tennis
Languages: fluent Portuguese
Education: Reading Univeristy, Diploma in Estate Management
2011-present: chief executive/co-founder Queensberry
2003-2010: managing director UK, Multi Corporation
1998-2002: commerical director southern Europe, Multi Corporation