Heathrow’s head of property excited about redevelopment opportunities and maximising revenues from airport’s property
Talking to Property Weekly, Heathrow’s head of property and facilities, John Arbuckle, is bullish and “excited” about all the property and developments he is looking forward to, with a 3rd runway, He can see “redevelopment opportunities as well as maximising revenues from the airport’s property.” The Heathrow investment property portfolio is worth around £2bn, and that will grow when more land is obtained (by compulsory purchase, and by buying up homes that will be too polluted or too noise to live in). Heathrow now has around “1.9m sq ft of buildings, 100 hectares of leased land, more than 200 houses and 807,000 sq ft of warehousing and offices leased from third parties.” Heathrow also owns around 1,250 hectares of land around the airport. It is expected that there will be more hotels, for the expanded airport. John Arbuckle, in typically bullish Heathrow fashion, hopes to “put the building blocks in place for a third runway in 2025.” He manages to coyly avoid mentioning the destruction of much of Harmondsworth and parts of the Heathrow villages, and compulsory purchase, just talking about the airport “working closely with our local communities” and “being great neighbours to the local community.” Property companies are rubbing their hands with glee at increased demand for commercial office and industrial space near Heathrow.
Heathrow Airport: project runway
Extract from a longer article:
While there remain both planning and political obstacles to overcome, the property team at Heathrow is gearing up to take advantage of the third runway.
Leading the charge is John Arbuckle, Heathrow’s head of property and facilities, who is tasked with identifying redevelopment opportunities as well as maximising revenues from the airport’s property.
Arbuckle is in charge of an investment property portfolio worth around £2bn, a figure that now looks likely to increase significantly as developments associated with the third runway come on stream. [That probably means if they end up buying some 3,500 properties, that will become too unpleasant – from noise and pollution – for residents to remain in. AW comment]
“It is a really exciting time for me,” he says. “I want to focus on developing growth areas for our current customers as well as looking at how we might attract new customers. Our targets are to increase customer satisfaction and develop space solutions that are built sustainably and safely. This is at the heart of everything we do and informs all our future plans.”
Arbuckle’s property team manages around 1.9m sq ft of buildings, 100 ha of leased land, more than 200 houses and 807,000 sq ft of warehousing and offices leased from third parties.
The type of space varies from hotels to offices and VIP passenger lounges to aircraft hangars, as well as a host of operational facilities.
The portfolio is 99% occupied and Arbuckle says there is high demand from prospective tenants, although it can be difficult to accommodate them.
Heathrow owns around 1,250 ha of land around the airport, but most of it has already been developed and there is no land bank. The airport uses “every piece” of land it owns, according to Arbuckle.
“My role involves making the most of what we have and identifying redevelopment opportunities,” he says. “We work in a very constrained environment where every square metre is important to us.
“Our priority is to understand and respond to the space needs of our customers. We have a wide range of property customers, from airlines to service companies, hotels, lounge operators and business centres, and they each have individual requirements. So it is important we listen to them and continue to work with them to meet their needs.”
The airport continues to develop new passenger lounges for airlines and independent lounge operators, as well as Regus Express business centres. New spaces for Regus are planned for Terminal 2 and Terminal 3, in addition to the existing location in Terminal 5, which opened in 2014.
A number of hotels are also scheduled to open in response to the growing need for hospitality close to Heathrow. The airport’s recent successes include the extension of its partnership with the Arora Group to deliver two new terminal-linked hotels: the 750-bed Crowne Plaza/Holiday Inn Express at Terminal 4 and a 300-bed Hilton Garden Inn at Terminal 2.
“Part of my role involves developing our existing infrastructure to put the building blocks in place for a third runway in 2025,” explains Arbuckle. “We will complete the first stage of our long-term plan by 2019 when the new Terminal 2 hotel opens. Work begins this month.”
Despite the land constraints, Arbuckle is excited about the prospect of further development around a third runway. But he is keen to point out that working with the local communities surrounding Heathrow, many of whose residents work at the airport, remains a key priority. [What this delicately omits to say is that there will be around 780 homes compulsorily purchased, with residents made involuntarily homeless. Many others will have no obligation but to take Heathrow’s terms and sell up, moving away from their homes and communities. AW comment]
“The government’s support for the expansion of Heathrow brings with it the opportunity to develop the surrounding areas,” he explains. “We have a dedicated expansion team that is working closely with the government, our local communities and our airlines throughout the consultation and delivery process to ensure Heathrow expansion is affordable and benefits all of Britain. [Typical example of the sort of slippery language that conceals the reality of the removal of half of Harmondworth, and its death as a village. And damage to other Heathrow villages. AW comment]
“On a local level, it is important we work with local businesses and the community on benefits and what this means for those living close to the airport. We have to work hard to make the most of the space we have and develop it in a way that takes into account both the smooth running of the airport operation and being great neighbours to the local community.” [Sic].
Over the next five to 10 years there are plans to develop the Central Terminal Area (Terminal 2 and Terminal 3), which will involve ensuring all existing lettable space is being maximised and identifying opportunities for new commercial developments.
Logistics space is likely to come to the fore. Not only is Heathrow the UK’s largest airport, it is also one of the country’s primary cargo hubs, so the decision to expand presents an opportunity for more logistics development in the vicinity of the airport.
The connectivity that is vital to local businesses will continue to be on their doorstep – Adam Hetherington, CBRE [CBRE is a large, global property group]
In the wake of the Heathrow announcement, CBRE said that it expected expansion to lead to increased requirements for commercial office and industrial space within easy reach of the airport.
The airport itself expects a doubling of cargo throughput once a third runway is in place.
Adam Hetherington, CBRE’s London managing director, says that occupiers surrounding Heathrow can now make long-term location commitments “with the certainty that the national and international connectivity that is vital to their businesses will continue to be on their doorstep”.
Arbuckle’s task is to exploit the opportunities that the new runway and greater connectivity will bring. The challenges are very real, but if he can pull it off so too are the potential rewards.