Cast your mind back – remember those days of double-digit growth? Well, Admiral Group is still living those halcyon days. The Cardiff-based insurer is targeting 20% growth this year. Last year it grew by a steamy 26%, and with it its offices across South Wales have been swelling, too.
Corks popped and streamers flew when Admiral signed for a 220,000 sq ft prelet on Cardiff’s former David Street car park. It was a deal so big that not only did it top the city’s take-up charts, it was one of the largest regional transactions in the UK last year.
The insurer then announced its search for up to 80,000 sq ft of space in Newport. This came on top of a deal in Swansea for 38,000 sq ft at the DVLA’s old building, Telelink2.
Similarly, big moves are underway for a support centre in Canada. Yet this is not the end of Admiral’s expansion.
To say that it is a company on the move is an understatement in the extreme.
Last year, staff numbers grew by more than a quarter and it is now the UK’s second largest private car insurer behind RBSI, which is probably better known by its household brands Direct Line, Privilege and Churchill.
In Wales, Admiral has become virtually the only panacea to a sickly office market and a hotline for agents with space to shift.
The man on the other end of that hot line is Huw Llewellyn, Admiral’s head of property, a plain-speaking Welshman with a sharp eye for a deal.
Looming presence
Llewellyn joined Admiral in 1995. Since then, he has watched the firm’s Welsh connection grow from a few hundred people to nearly 4,200 staff housed in more than 10 buildings.
Today, the insurer’s looming presence over Greyfriars Road in Capital Tower, Cardiff, is still felt but, with the offices looking tired, it is time for a new home.
Finding the right-sized property in a place with the right demographics and decent local facilities, has been a challenge, admits
Llewelyn, “mainly because of the lack of speculative developments in the market, but also because there are lots of smaller buildings available, while we wanted something bigger”.
Admiral eventually found what it was looking for in the 11-storey pale stone and glass headquarters on David Street, designed by Glen Howells Architects and developed by Stoford.
The insurer wanted to work with a local developer but ended up choosing Birmingham-based Stoford, which “gave us transparency in the deal and the development”, says Llewellyn simply.
Other sites had been in the frame, such as the MA Rapport site on Bridge Street – a joint venture with Rightacres – but Admiral plumped for David Street mainly, explains Llewelyn, because it is more central.
That and the fact, of course, that it was a cracking deal.
Despite assertions by agents that occupiers do not sweat the pounds and pence of deals, and that staff is their biggest expense, Llewellyn says: “We are in a cost-sensitive business and it makes sense to look for value-for-money deals.”
Admiral certainly got that on reported rents of £16.75 per sq ft. However, Llewelyn shrugs at what some would consider an amazing deal for a prelet.
“We came to the market at a good time as a lot of development has been stagnant, which meant we were able to benefit from competitive build costs,” he says.
Yet some in the market have questioned why Admiral did not opt for several smaller homes that could be disposed of easily if the business ever began to shrink. Llewellyn smiles: “Of course they would want that – the market is slow and all the fee-earners are looking for a fee!”
More seriously, he explains that Admiral does have alienation rights if it decides to downsize, but adds: “We think the building is a safe size for us to grow into.”
So, instead, the scheme will make quite a mark on the Cardiff skyline, but it is not a statement loved by all. According to local press reports, members of Cardiff’s planning committee have labelled the building’s design “awful”, “underwhelming” and a “missed opportunity”.
The building has been also been dubbed “the convection heater”.
Value for money
Llewelyn is philosophical about the criticism. “I was at the planning committee meeting and only one person described it as a convector heater – it’s certainly not the Gherkin!” he says.
He believes the committee wanted a landmark, statement building – something not really connected with Admiral.
“We wanted value for money and function rather than a statement HQ building which, in our eyes, would be a bit of a waste of our shareholders’ money,” Llewelyn says. “The costs for providing a statement building are quite prohibitive.”
The next big job will be to find a new home in Newport. Admiral is down to a shortlist of two buildings in its hunt for up to 80,000 sq ft in the city and, although the company is keeping tight-lipped about them, the market believes they are Midas’ and Network Rail’s Central Point site and Scarborough Development’s Cambrian Centre, both situated very near the station.
“Newport has been quite hard done by economically,” says Llewellyn. “It’s the first city you come to after crossing the Severn bridge, and it’s just off the M4; it has a good demographic catchment area and good routes in via roads and public transport. It has been unlucky in the recession.”
While Admiral awaits its big move, it has taken on 12,000 sq ft of space at Newport’s Langstone business park, where it already has a presence.
Fantastic deal
The firm is also taking short-term space in Swansea. It has signed for 38,000 sq ft with the city council and the Welsh government at TeleLink2 on Sandringham Park, Llansamlet.
Llewellyn describes this as a “fantastic deal”. One signed at a passing rent of £9.50 per sq ft but, Admiral is reportedly paying only half this amount.
In contrast to its activities in Cardiff and Newport, the insurer has chosen an out-of-town location in Swansea – and Llewellyn makes no apologies for this: “Swansea council has taken the approach in recent years to move a lot of its retail out of town, and the city centre has suffered,” he says.
With Admiral renewing its strategy every quarter, it is likely that there will be plenty to keep Llewellyn busy, but his next move will be to conduct talks with the government. He has been meeting with its feisty business minister Edwina Hart.
Llewellyn would like to set up a partnership with the Welsh government with the aim of bringing businesses and government closer together.
When an employer the size of Admiral starts to take an interest in such things, the Welsh government will probably be inclined to listen.
Forensics of a deal
At £16.75 per sq ft, Admiral has signed a deal that many might think is the deal of the century. For that, the insurer will get 220,000 sq ft prelet at Cardiff’s former David Street car park.
The deal allows for a secured priority return to the developer and, thereafter, a split on any other overage. It has also secured fixed five-yearly rental increases linked to RPI.
The latter was most important. Huw Llewellyn, head of property for Admiral, explains: “The RPI collars and caps we have give certainty on the rental costs going forward, which is great for cost control in the business.”
Huw Llewellyn, in his own words:
• Take the time to understand us; don’t just contact us through brochures.
• Stephen Widnell, partner at Knight Frank, worked tirelessly on the net present value calculations, which have provided us with a fantastic understanding of value.
• We are not your typical call centre occupiers, so we don’t look for out-of-town locations as a long-term solution to requirements.
• We are not a Google in terms of fit-out, but we do invest in making work creative and fun for our employees. We have chill-out areas with putting greens, games consoles, table tennis and televisions. Our philosophy is that people who enjoy what they do, do it better, so we try to make the work environment an enjoyable place to be.
• The three things that are most important to us when we look for new locations are a steady, reasonably-sized demographic of employable people, public transport and good car-parking facilities.
CV: Huw Llewellyn
Born: September 1972 in Cardiff
1995: Joins Admiral’s accounts department
2000: Becomes facilities manager after helping to move 700 people into Cardiff’s Capital Tower in 1999
2001: Operations facilities managerfor Admiral’s growing property portfolio.
2005: Works with the Welsh Assembly government on the deal that moved the firm’s Swansea operation into the SA1 development
To date: Worked on various overseas property projects in Italy, Spain, India and Canada
Interests: Enjoys fishing and gym/fitness work. Likes all sports but particularly rugby (Admiral sponsors the Welsh national team), football and cricket. Enjoys nice meals with average wine and entry-level Spanish brandy.
