Painting watercolours, golf and all things Irish have been longtime interests for Dan MacDonald. But his one real passion is his baby daughter Danielle.
“She has given me a different perspective on life,” says the very proud property developer, who became a first-time father at 55.
Some might have been taken aback by such a dramatic change at that time of life. But not MacDonald. The soft-spoken businessman takes life-altering changes – such as setting up his own development company seven years ago – in his stride.
It has proved to be a good move. The Edinburgh-based MacDonald Estates is now making a profit of more than £3m and is developing projects in 10 towns and cities with an investment value of £150m.
This has earned the firm the reputation of being, as one market watcher puts it, “hard task masters who drive a hard bargain”.
The commentator adds that MacDonald Estates has “gained a solid reputation as being pretty adept operators in their field”.
MacDonald, who is chief executive of his company, says he is striving to build a company that “is professional and credible in the eyes of those who might otherwise say we are just another developer in for the kill and who will then disappear with the money”.
It is this attitude that has helped the company to become one of the two developers – the other is Hammerson – on one of the biggest regeneration schemes in Scotland. The Falkirk Gateway project is a 300-acre, mixed-use development site – of which 130 acres is development land – next to the new Falkirk Community Stadium. The scheme will provide 500,000 sq ft of offices, a 250,000 sq ft retail park and leisure facilities. It will create 3,000 jobs.
Landing the £150m development, which is being marketed as “My Future’s in Falkirk” was a great coup, especially because it meant working with development/investment giant Hammerson.
A local agent says the combination works because of MacDonald’s “great use of local knowledge and ability and Hammerson’s international credentials and reputation”.
Masterplanning went before Falkirk council in June, and MacDonald is confident that planning permission will be received in early 2006. “The land is zoned for the purpose outlined, and it was pre-agreed with the council. We hope to be building the first phase early next year.”
Looking at a snapshot of where the company is now, it seems it was an easy ride for MacDonald. However, there have been a few bumps along the way – in particular,money worries.
Back in 1998, with a burning desire to be “in control of my own destiny”, MacDonald left his position as managing director of Morrison Developments.
With him went two of his Morrison colleagues. Kevin Robertson and Gordon Lawson are now MacDonald’s managing director and financial director, respectively.
Watching the clock
Using money he had put aside, MacDonald opened the company’s first office in central Edinburgh. At the time, the Forth Bridge was sporting a huge digital millennium clock, ticking down to midnight on millennium eve. This clock became strangely linked to the destiny of the new business.
“I used to look at that clock and say to Kevin that when the clock reached zero we would have run out of money,” recalls MacDonald, as he describes how the company was without work and spent the early days hunting for projects.
The scheme that launched the company was the 30,000 sq ft first phase of the Westway Retail Park in Arbroath, which has since had another 40,000 sq ft added to it. “We survived because we were able to make some money from the development,” says MacDonald.
Retail parks were set to become the company’s speciality. “It is a market we knew and I already had contacts, he says.”
MacDonald Estates has around 20 developments built or under development. The majority are in Scotland and are spread between Inverness, Ayr, Glasgow, Rutherglen, Paisley, Dunfermline, Linlithgow, East Kilbride and Fort William.
So far, there have been three ventures outside of Scotland. One is a 85,000 sq ft retail park at Currock Road in Carlisle, and the second is a 12,000 sq ft leisure development in Kidderminster, Worcestershire.
The final one is in Ireland. Having an Irish wife, and a love of Irish culture, it seemed inevitable that MacDonald would eventually lead the company to the Emerald Isle.
That opportunity came in 2001. MacDonald spotted a gap, albeit a 250,000 sq ft gap, in the market at Childers Road just outside of Limerick in south-west Ireland. The first phase of the retail park opened in May and a second 40,000 sq ft phase is under way.
A major turning point for the company came in December 2002. Abandoning its retail-only stance, it turned to mixed use when it took on the Falkirk Gateway. MacDonald says it was a necessary move in a marketplace where it was becoming difficult to find land and retailers were making more sophisticated demands.
“The market is changing,” says MacDonald. “Retailers have a broader market to look at. Major multiples are looking as far as China, so the attention we would have got from them before is not there. Retailers can’t grow profits like they did 10 years ago – and that makes the market smaller for us.
“We made the decision to apply ourselves to other areas of the market. Retail is the most difficult part of the market to develop because it needs such expertise. In the office and industrial markets, we find it easier to develop – but it is not as lucrative.”
Diversification leads
As far as the future is concerned, MacDonald says the company’s growth will continue to be led by diversification. There is still the Falkirk project to oversee and there are more opportunities in Ireland. “We are looking at three other sites in the Republic. They may come to nothing but we’ll see.”
There are also going to be more forays into England. “We have to go further afield to find good-quality land. As long as we are near an airport, we can develop,” he says.
MacDonald says the company will continue its policy of buying land other developers might not touch. “We are more than willing to take on land that needs a lot of work done on, for instance, decontamination. And we will undertake work in city centres, even if it involves lengthy CPOs.”
There will also be another change in tactics. MacDonald Estates was a company that builds to sell but that could be coming to an end. “Lately, we have been thinking of keeping an investment portfolio, but yields are now so sharp that it makes sense to sell and reinvest elsewhere,” says MacDonald.
As part of this reinvestment, the company is looking to buy shopping centres or retail parks to remodel.
And, in between doing all that, MacDonald says there is still time to get in the odd round of golf and to spend more time with his baby daughter.
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1998, January MacDonald Estates formed. MacDonald becomes chief executive 1972-97 Director of Morrison Construction and managing director of Morrison Developments. MacDonald was responsible for a development programme of retail, office, leisure and industrial projects valued at over £350m. Married, with one daughter, Danielle. Hobbies include watercolour painting, Scottish politics, golf and relaxing at his villa in Marbella |
