It is raining buckets as Estates Gazette arrives at Derby’s Pride Park on a stormy Monday morning. Inside HEROtsc’s contact centre on the appropriately named Riverside Drive, all is dry and calm, however.
The company’s chief executive, 52-year-old father of three David Turner, has already been busy, giving his accountant son (seconded to a post in Derby) a tour to show him “what can be done in terms of improving customer interface”.
Turner, a one-time retail executive at Marks & Spencer, is something of a contact systems evangelist, and undoubtedly a major force behind the rising fortunes of an originally modest call centre operator (see box). In fact, it is difficult to get him to talk about anything else, such as how his business ended up in Derby taking on some of the former offices of the UK’s first internet bank, Egg.
Amiable but direct, Turner is not one to mince his words: “For me it’s not about the building. I think we have here the finest contact centre in the UK. But that has nothing to do with the building – it’s how we utilise the space.”
In the case of Pride Park, the changes have been almost wholly cosmetic and very few physical alterations made since Egg moved out. Visually, however, the differences are substantial. The aircraft hangar-like main hall in building PB3 (see box, above) is punctuated with brightly coloured break-out and training zones, with cosy furniture, a snooker table and plenty of hi-tech gadgets for staff to use when they are not on the phone either selling to or servicing customers of HEROtsc’s client Sky.
The media giant’s decision to outsource its customer contact operations has been Derby’s gain, but the result was not a foregone conclusion. HEROtsc had already started to think about new premises in late 2010, because its existing centres were nearly running at full capacity. Initial research suggested that the East Midlands offered the most favourable balance of skilled staff, transport infrastructure and costs, so last summer Jones Lang LaSalle, which had advised the company on previous property matters, was tasked with shortlisting suitable sites.
Matthew Smith, lead director of JLL’s Nottingham office, put six buildings on the list: three in Nottingham (including one on edge-of-town business park ng2), and the rest in Derby, all of which were visited by Turner.
“The big advantage of Pride Park was that it was a single facility and Citibank was a willing landlord,” says Smith.
Citibank was accommodating because it was selling off the Egg business it acquired from Prudential in 2007, which included a rather chunky lease commitment of 140,000 sq ft. Persuading HEROtsc to take it on would be something of a challenge because Barclaycard, which had bought the credit card business from Citibank, had already moved out. “The offices didn’t stand out for all of the team, either ours or Sky’s,” recalls Turner. “The lifeblood had gone, but my view was we could do something special here.”
At the same time, Marketing Derby had already started on an innovative campaign that advertised the buildings and staff as a single package. “We wanted to make it clear that there was a real opportunity to take on both a call centre and staff,” says managing director John Forkin. Turner applauds the way the organisation smoothed the path towards an eventual deal.
But the final negotiations, as 2011 came to an end, were in the hands of Derby city council. The local authority had experienced a challenging year, with potential job losses reaching 5,000, so was determined not to let a potential occupier slip through the net. Within the space of a single fraught week a range of incentives, using money from the city’s £10m regeneration fund, were agreed and HEROtsc agreed to a lease assignment of the whole of PB3, although it would initially occupy only half the building.
“We worked late into the night,” says the council’s director of regeneration, Richard Williams, “but next time a similar opportunity comes up I’m confident we’ll be able to deal with it in the same way.”
So, for now, 25% of the former Egg space is occupied and Turner is hopeful that HEROtsc can take on new business that will fill the rest of building PB3. The outlook for neighbouring PB4 is bright, too. Local agents report interest from owner-occupiers, which might split the building between them.
The potential location of HEROtsc’s 11th UK centre is less certain, though. Turner, who has taken on an unofficial role as an ambassador for Derby, admits: “I have no idea where will be next – that will depend on the client. It’s unlikely to be south of the Midlands, because things then get very expensive, both in terms of building and people costs.”
Wherever he ends up, though, he points out that the need for speed in a contract-led environment means that property is not at the top of his priority list: “Buildings won’t stop us getting there. The key question is: can I get enough people in time?”
Former Egg buildings
Scottish call centre operator TSC, founded in 1994, was purchased by the Indian HERO group for £40m in 2007. The outsourced contact centre operator, still based in Scotland, now has 10 UK contact centres.
The latest, opened in Glasgow this April, was preceded by the deal to take on the assignment of Citibank’s lease on building PB3 at Derby’s Pride Park. HEROtsc, headed by former retail executive David Turner, reported a turnover last year of £63m and employs 5,500 people in the UK. Other office locations include Rotherham, Warrington, Greenock and Kilmarnock.
The property partly occupied by HEROtsc at Riverside Road, Pride Park, was the first of two buildings, known as PB3 and PB4, originally constructed for Egg.
PB3
Size 140,856 sq ft
Completed 1998
Freeholder Cheval Properties
Leaseholder Citibank
Lease expires October 2018
Lease assignee HEROtsc
Rent £12.03 per sq ft (rises 3% annually each October to lease end)
PB4
Size 119,000 sq ft
Completed 2000
Freeholder Citibank
Status Vacant and freehold for sale.
Derby deals timeline
1998 Egg signs lease on first building (PB3) at Pride Park developed by St Modwen.
1999 Freehold of PB3 sold to Swiss investment company SC Immobilier for £14m.
2000 St Modwen completes second building (PB4) for Egg owner Prudential, which purchases the freehold for £8m.
2000s Freehold of PB3 purchased by Cheval Properties.
May 2007 Prudential sells Egg, including lease on PB3 and freehold of PB4, to US corporation Citibank for £546m.
2010 Freehold of PB3 marketed for £20.6m, but no sale results.
March 2011 Citibank sells credit card operations to Barclaycard.
June 2011 Barclaycard announces transfer of operations from Derby to Kirby and Northampton before year end.
July 2011 Savings and mortgages, plus the Egg brand, are sold to Yorkshire Bank. Operations in Derby to be wound up during 2012.
Summer 2011 Marketing Derby promotes “total call centre” package: both buildings, plus staff.
Summer 2011 HEROtsc wins contract with Sky and shortlists Derby as potential location.
Dec 2011 Derby city council offers incentive package. HEROtsc agrees to a lease assignment for whole of PB3.
Jan 2012 HEROtsc staff occupy half of PB3 on behalf of Sky.
Autumn 2012 Potential occupier/s sought for remainder of PB3 and whole of PB4. Freehold of PB4 also on the market.
