Mitchell Labiak from Property Week interviews Matthew Lamb.
Matthew Lamb has just returned from Tribfest in Yorkshire, where he watched tribute acts transform into the likes of Led Zeppelin, The Killers and Rage Against the Machine.
Potter Space has recently undergone its own transformation from a logistics company into a landlord, changing its name from the Potter Group to Potter Space in the process. Lamb reveals what the family business has learned from pivoting from one industry to another.
The idea for the rebranding and business model switch came in 2013 when the company was approaching its 50-year anniversary. Founder Derrick Potter wanted to make the company easier to pass down to the second generation of Potters. He has four daughters who already play a role in what Lamb calls the “family council”, which meets formally twice a year.
Potter is still chairman of the company, but the day-to-day running of the business is managed by the executive team, which includes Lamb. Ownership of the business is then spread across the first, second and third generations of Potters in a number of trusts. “It’s complicated,” Lamb admits.
In order to hand down the business, Potter wanted to turn the Potter Group’s complex logistics operation into something that would be easier for them to manage.
“By operating in the chemical and food sector, it’s quite regulated and quite costly in its own way,” Lamb explains.
By contrast, real estate was seen as a relatively simple business model that promised a more predictable long-term income.
In October 2016, the Potter Group sold the logistics arm of its business to WH Bowker for an undisclosed sum. The deal, which Lamb says took just six months to finalise including due diligence, allowed the group to keep the five distribution hubs it had purchased while it was a logistics business.
“Once we sold the business, we effectively disappeared for 18 months,” recalls Lamb. Then, late last year, the Potter Group was relaunched as Potter Space. It is now a commercial business park company that rents out warehouse units from its portfolio of five parks. WH Bowker became one of Potter Space’s first tenants.
For Lamb, all this has been a steep learning curve. “Frankly, there’s a long list of challenges,” he says. “The buildings used to be the place where our business happened. Now, the buildings are the business.”
Refurbishing the portfolio
The next hurdle for Potter Space will be refurbishing its portfolio over the next five years and renting the space out to tenants. At the moment, its property is not as new as Lamb would like. Another issue is that it was designed for a logistics business, not a real estate one.
Lamb is pleased with how much interest Potter Space has received from potential tenants so far. In 2018, it completed the first 25,000 sq ft unit at its business park in Ripon, North Yorkshire, and Lamb says it is close to completing a further 27,000 sq ft unit on the 36-acre site.
"We thought it would take three years to relaunch the business after we sold it, but it only took 18 months"
In addition, plans are under way to launch a new development at the Droitwich facility, where the company has 283,000 sq ft of warehouse space across 38 acres.
It is also embarking on a mixed-use development with Homes England in Selby. The 260-acre scheme will be a hybrid of retail space, housing and 500,000 sq ft of Potter Space warehouses across its 62-acre site.
Potter Space has planning consent for 400,000 sq ft of new space at its five locations and this will take up the bulk of its capital expenditure in the next five to seven years, says Lamb.
The company has a lot to do across a lot of space and Lamb says the team has been working pretty much non-stop since the sale and relaunch of the company began three years ago.
Some might say that October 2016 – just three months after the Brexit vote – was not the best time to embark on a complete reboot of a 50-year-old business. Potter disagrees. “With something like Brexit, it’s beyond your control,” he argues. “You can’t really factor that into what you’re doing.”
Lamb claims Brexit has not dented demand, adding that he has talked to a number of US companies about taking space. Although he recognises that the market could cool off after Brexit, he says that at the moment he is seeing the same kind of stockpiling behaviour as occurred before the last Brexit deadline in March this year.
Still, if Lamb could do the relaunch over again, he wouldn’t do anything differently.
“We thought it would take three years to relaunch the business after we sold it. But it only took 18 months, so we wouldn’t change a thing,” he maintains.
Overcoming hurdles
Lamb says the biggest difficulties in becoming a real estate business were not to do with real estate or Brexit, but with people: hiring new staff; training existing employees in how to run a real estate business instead of a logistics business; and saying farewell to some others.
The end result is a significantly scaled-back team, with 12 members of staff as opposed to 300. But Lamb insists the downsizing had nothing to do with financial concerns. He points out that the Potter Group was a business in its prime in 2015, when it was named haulier of the year at the Motor Transport Awards.
The most important thing Lamb says other companies can learn from Potter space’s experience is that it is possible to pivot a business. Despite this, Lamb says that Potter Space won’t pivot again. It is a real estate company now and it intends to stay that way.
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