Five years ago, almost to the day, Ardeshir Naghshineh’s Norwich-based property empire hit an iceberg. Targetfollow Property Investment & Development and Targetfollow Property Holdings fell into administration in late September 2010, becoming one of the first victims of what was then called the credit crunch.
Lloyds Banking Group, mired in trouble of its own, attempted to recoup loans of £827m and in the process pulled the house down.
It took until 2013 to offload a star-studded portfolio of 22 properties including London’s Centrepoint office block and Birmingham’s Baskerville House. Then there was silence – or so it appeared. Targetfollow dropped off the map.
Today Targetfollow Estates, the management company, and the investment business Targetfollow Group, both unaffected by the administration, are still in their Norwich HQ at Riverside Road.
But the scale of the business is much diminished. The 100-plus staff of the good old days has dwindled to 20, and a portfolio that still stretches from South East to North West has, inevitably, become more focused on Norfolk.
The more local focus is symbolised by chief executive Corin Thoday and the main development prospect, Norwich’s Dukes Wharf (pictured). Thoday – a north Norfolk local turned Hermes director with an ancient East Anglian pedigree – took over in 2012. By that time, the Dukes Wharf story was already a long one.
The two-acre site has been derelict since 1999. Despite being widely regarded as a prime spot – close to the river and the shops – it has defied development.
A 2001 plan was approved but never acted upon, and a 2007 plan was withdrawn, returning in 2008 with provisions for 160,000 sq ft of offices and 32 homes.
In the interim period, the former Eastern Electricity office site has been a not-so-temporary car park operated by Norwich-based RCP, a business run by Naghshineh’s brother, Shapoor.
Thoday says the time for action is fast approaching. Planning permission was secured last year for a 154-flat scheme and some associated retail.
“This is the best site in Norwich,” says Thoday. “The next stage is delivery. We need to tender for the construction contract and hope to be on site in the next few months.”
The first phase of two shops and 16 homes ought to be completed in late 2016, says Thoday. Other phases will stretch into 2018 or 2019.
There is no arguing that the site is a good one, and ideal for residential, but it isn’t hard to find locals who expect to see the temporary car park operating for a long time yet.
The concern is that the Dukes Wharf scheme, in trying to get the maximum value and in trying to adapt to the latest trend, could miss the market.
Dukes Wharf was once an office prospect – and, interestingly, Thoday thinks that is where Targetfollow may be going next.
He thinks the spate of office-to-residential conversions ahead of the permitted development rights deadline of May 2016 has tightened the supply balance, and created interesting opportunities.
Local agents estimate that at least 200,000 sq ft has been taken out of an office market with about 750,000
sq ft of vacant space and annual take-up that hovers around 250,000 sq ft.
“There are opportunities for residential conversion, but those we looked at we didn’t think were particularly viable,” says Thoday.
“But there is a Norwich opportunity on the commercial side, where demand is coming back. Office occupiers want to be in the city centre, including occupiers who moved out to business parks in the 1980s and 1990s.”
There are plenty who agree with him that supply-side constraints are beginning to make the office market look more appealing – among them former Targetfollow managing director Ian Fox, now presiding over his own Norwich-based development business, FW Properties (see box). But they doubt the time for development has arrived.
“Demand in the office market is thin and sporadic, even if the supply side constraints are getting tighter,” says Fox. “It would be risky to develop speculatively. It is still very much a residential story in the city centre – and retail or leisure if appropriate.”
City agents think the opportunities for offices are slender. James Allen, senior partner at Roche Chartered Surveyors, says: “There are not vast development opportunities, and nothing headline-grabbing on the market.”
Will Jones, Norwich-based office partner at Bidwells, which is advising on Dukes Wharf’s residential element, says: “Most decent sites are in the hands of developers already. Heritage, Dencora and Wrenbridge are all getting busy again.”
Today Targetfollow’s portfolio has a strong Norwich flavour – although Thoday insists its horizons are much wider. “Property is a local game,” he says. “We have traction because of our presence in Norwich.
“For the future, we will typically look to hold long-term, and income is absolutely critical to us.”
Getting Dukes Wharf afloat will be a sign that the long-term does include development.
Sites in the works
Dukes Wharf is not the only Targetfollow site to be moving forward.
Development is now imminent at another former Targetfollow site – two years after it was sold.
The Bally shoe factory in Norwich was one of the portfolio’s jewels.
The 21-acre Harford Place site was valued at £122m in 2011, and a 450,000 sq ft mixed-use development was planned, including a 61,000 sq ft Asda store and 232 homes.
The site was cleared in February ahead of building an Asda supermarket and petrol station. Administrators charged with selling it in 2013 were expected to get about £15m.
Where are they now?
Former Targetfollow managing director Ian Fox and development director Julian Wells formed their own business, FW Properties, in 2011.
After 10 years in Targetfollow for Fox, and five for Wells, the move could have been traumatic. Yet speaking to EG at the firm’s annual Cathedral Close cocktail party, both were confident they’d found a silver lining in the cloud.
“We are looking at more conversion from office to residential,” said Fox. “We are bidding on sites, concentrating on Norfolk and Suffolk, our home patch.
“It is a massively different business from Targetfollow – different in scale, smaller team, more local purposes.”
The £10m Norwich Westlegate project (pictured), which saw a 20,000 sq ft office block converted into 19 homes and three shops, was completed this year. It is part of a development pipeline of 100 units, mostly in Norfolk.
