22 / 06 / 22 - 0 minute read
The UK’s space sector is growing rapidly, propelling the demands for high quality real estate to new heights. But innovation in space technology needs the right kind of real estate to thrive. Whether you’re developing rocket engines to launch a new sat
Ep 5 Westcott Venture Park
Ed Whittaker 00:00
From processing our banking payments through to tracking the impact of climate change, space technology has become a fundamental part of our daily lives, but where exactly does space innovation take place?
Lucy Edge 00:11
Westcott has got everything in very innovative style. It's got strong leadership, which means that it allows us to do great things.
Ed Whittaker 00:22
I'm Ed Whittaker and a warm welcome to the PAT Cast, the podcast from PATRIZIA, the leading investment manager and partner in global real assets. In this podcast, we offer you insights on a range of hot topics from the real assets industry, from important sector trends to key business developments and strategic decisions.
Today, we're taking a tour of Westcott Venture Park, a humble industrial asset in the south of England that is playing an essential role in powering space innovation and propelling the UK's space sector onto the world stage.
Colin Theobald 00:53
I've been coming to Westcott for 16 years, and I think if you cut one of my legs off, please don't, you would find it would have Westcott written around the outside.
You, you just get engrossed in all the amazing things that we've done and are doing here.
Ed Whittaker 01:06
That's Colin Theobald from Lambert Smith Hampton, PATRIZIA's managing agent for Westcott. He's on our panel alongside Lucy Edge, chief operations officer at the Satellite Applications Catapult, a tenant at the park, who you heard from at the beginning. Luke Le Brun, a director in PATRIZIA's UK asset management team, also joins our conversation.
Luke Le Brun 01:25
Sustainability is absolutely key part of how we asset manage Westcott, and our strategy and our approach has always been about making sure that sustainability is at the very heart of, of what we do.
Ed Whittaker 01:35
With the UK space sector generating some 16.5 billion pounds of income in 2020, the demands have never been higher for high quality real estate to support the industry's growth. But just how did Westcott Venutre Park become such an established centre of excellence on the UK's space scene?
Let's start by taking a look at the park's fascinating history with Colin, who explores how Westcott's military roots have helped it grow into the space propulsion powerhouse that it is.
Colin Theobald 02:03
So back in 1941 it was known as RAF Westcott. Uh, the original airfield was built for the RAF in 1941/42 at the height of the second world war. RAF Westcott, as it was known then, trained Wellington bomber crews. In 1945 at the cessation of hostilities, Westcott became a clearing centre where some 35,000 allied prisoners of war were repatriated in operation Exodus. In 1947, it became the guided projectile establishment, which was, funnily enough, a Naval research establishment, uh, later transferring under to the RAF as the rocket propulsion department. So you can see Westcott's path to being a centre of excellence for rocket propulsion was set back in 1947. Jump forward to more modern times, in 1984 Westcott was sold to British aerospace, becoming Westcott venture park in 1995 and then laterally in 1999, the Hanover Property Unit Trust, which is now the PATRIZIA Hanover Property Unit Trust acquired the site.
Ed Whittaker 03:18
So can you tell us about the park's journey to becoming a centre of excellence in the space sector?
Colin Theobald 03:23
Yeah. So as the rocket propulsion establishment, the motors on Britain's first space rocket known as Skylark were developed at Westcott. The project launched 441 missions into space between 1957 and the year 2000 becoming a leading platform for space astronomy, earth resources and microgravity experiments. A number of the propulsion test facilities were created here at Westcott. These are now listed structures, they're still in use.
And some of them are being brought back into use by the existing and new space sector companies that we have at Westcott.
Ed Whittaker 04:04
And from your perspective, how does the park foster so much innovation among its tenants?
Colin Theobald 04:10
So the key here is communication. We actively seek to understand our tenants, their businesses, and we look to cross-sell services and expertise to other park businesses and tenants.
The diverse range of tenants and businesses we have at Westcott is testament to this. We have a lot of space sector businesses, but if you look at the website, we also have a large number of other businesses, and we spend a lot of time on the park, linking together the diverse businesses to encourage collaboration.
Ed Whittaker 04:47
And can you tell us a bit more about the enterprise zone at the park?
Colin Theobald 04:51
So the Westcott enterprise zone was created in 2016, as part of the Buckinghamshire enterprise zone. It's unusual in that it's shared with other sites at Silverstone and Arla Woodlands. The reason for Westcott inclusion in the enterprise zone was due to our ambition to recapture our space propulsion heritage.
At Westcott the enterprise zone covers about 75 acres on the park and encompasses areas that were previously used for solid and liquid rocket motor development and testing. The enterprise zone runs for a further 19 years during which the enterprise zone will collect business rates from enterprise zone occupiers.
And our current development focus is within the enterprise zone, collaborating with the local enterprise partnership to maximise the benefit to Westcott Venutre Park, with the expectation that the rates income will be reinvested in infrastructure and other facilities needed to support the enterprise zone.
Ed Whittaker 05:59
So from an ESG perspective, how is the park reducing its impact on the environment?
Well at Westcott, we have a particular focus on the sustainability part. So the E, the environment. In 2011, we utilised one of the former runways to build a 1.6 megawat solar park covering an area of about 10 acres. The solar park on average produces a third of the electricity, so the energy that we're consuming at Westcott, and to date we've saved about 7,000 tons of CO2 emissions. PATRIZIA have recently committed to constructing a further solar park, which will actually make Westcott carbon negative. So Westcott has the most fascinating ecology, biodiversity habitats and diverse wildlife, encouraging species such as newts, butterflies, hares, and owls, to name a few, to thrive. Working with the Woodland Trust, a few years ago we planted 10,000 trees and shrubs. During lockdown we installed a public facing EV car charger at the entrance to Westcott Venture Park, and all recent developments at Westcott have a provision for EV chargers, which of course during daylight hours, much of the electricity used by them will be from our solar park, current and future. And one of the recent things we did was working very closely with a company called TherapBEE, we installed a number of beehives at Westcott, which as part of the Pollination for the Nation initiative is working to reverse the decline in bee numbers. The aim for us at Westcott is to reach 16 hives and have a million bees. And the honey I can confirm tastes fantastic. Importantly for us at Westcott the tenants really do appreciate being able to work in such a natural environment.
Ed Whittaker 08:02
Innovation needs space to thrive. Excellent real estate is essential to the growth of these sectors. After all, for work like this, you need much more than just bricks and mortar. So let's find out exactly how Wescott is delivering impact and value on the ground for its tenants. Here's Lucy...
Lucy Edge 08:19
I'm the Chief Operating Officer at the Satellite Applications Catapult and our catapult is one of nine that were set up by the government about 10 years ago now, in order to make sure that all the brilliant R&D that happens in the UK can be accelerated through to commercial benefit more effectively.
And at the Satellite Applications Catapult specifically, as the name suggests, we focus on satellite applications. That means using space technology for many different benefits. The most obvious one that we'll all know about is in our cars and in our phones, satellite navigation systems, that's driven entirely from, location based system that's in orbit around the Earth. There are a number of them that exist and the most well known one is the American GPS system.
Ed Whittaker 09:11
Do you operate globally or just in the UK?
Lucy Edge 09:15
The Satellite Applications Catapult is focused on UK growth. So we work with UK companies, UK government, UK universities, and education organisations.
But we want to create global change and the really important thing about space that sets it apart from anything else that we talk about is that there really are no boundaries. There aren't any borders. There's no national limits in space. And also to an extent, you can't really decide where you are in space. Physics decides it for you.
Ed Whittaker 09:48
Space is a hard thing to comprehend for many people. And when you think about space and innovation, you often think about out-of-this-world things like firing rockets into Mars, but actually space has such an integral role to play in our daily lives, especially satellites.
Do you think people realise just how fundamental space is to what we do on a daily basis? You know, even including simple things like tapping our card on a card machine, in a shop.
Lucy Edge 10:14
I don't think we do, to be honest, even with the sat nav example that I gave you, quite often I have conversations with people who say they didn't know the sat was for satellite, and, you know, why would they, because in a really effectively working technical addition to our lives, we shouldn't really have to know the details. And that's the same for space. And in a future where space is really, really embedded in everything we do, I don't think we all need to know about it. But right now I think it is important that people understand more the value of space in their lives.
And that's because we're on a learning curve. We're going from space being, as you say, sort of deep space, exploratory way of understanding what's out there and perhaps trying to get a better measure of the Big Bang, to really using it to solve huge global challenges and real national border challenges as well.
The obvious example of course is reaching some approach towards Net Zero. We wouldn't know there was a climate problem at all if we didn't have space imagery, space measurements, and we won't be able to solve the problem without space technology. More than two thirds of the measurements that have been identified internationally as essential for us to control and fix the climate challenges, have to be, or are best measured from space. And you've talked about using cash machines that, you know, there's a lot of the banking sector now which relies on the timing precision from space technology. But also, you know, much closer to home and perhaps sort of community ways of being and working, we can connect our ambulances better to make them more like a, a mobile hospital. We can think of different ways of applying treatments and support and surgery to people who are located remotely. We can find better ways of creating communities that are really separated. There's all sorts of ways that space technology is starting to make a huge difference in the way that we lead our everyday lives.
Ed Whittaker 12:35
And Lucy, can you touch on some other challenges that the space sector is seeing globally at the moment?
Lucy Edge 12:41
Well, I mean, of course there have been a number of really horrible crises for the world over the last few years. And space technology has some really positive and powerful imagery it can provide to the world, but it can also provide some imagery of some not so nice situations.
And, you know, I think probably from a lot of the coverage that has been provided around the war in Ukraine, that Maxar, among other organisations, are demonstrating the use of space imagery to evidence some truths that perhaps would be harder to come by. And also space technology is a way that, when there are global challenges like we're seeing in many parts of the world at the moment, we can provide the necessary connection and support and backhaul infrastructure to remote forces, remote support organisations as well, the NGOs that are trying to help in region. And when there are big national disasters, quite often, the fastest way that you can get communications into a community is by using space based comms.
Ed Whittaker 13:50
If we turn to Westcott Venture Park now. You guys could have chosen anywhere in the UK to base yourselves. Why would you say Wescott is particularly important to you?
Lucy Edge 14:01
The first thing is Westcott is located really centrally to some enormous powerhouses of skills. So across the Oxford to Cambridge arc, there are many universities, not just Oxford and Cambridge, that all provide an enormous skill base for great engineers, great scientists, great manufacturing experts that can help feed what we want to do at Westcott in the long term. But I think probably the most important one for the longer term continuation of us working at Westcott is the collaborations, the partnerships that we have on the site. So with PATRIZIA as the landlord, with the companies that help run the site, with the space companies that are already present there, but also with other tech companies that are in Westcott already.
And then looking slightly more politically, but looking to the local authority and the local enterprise partnership, Westcott has got everything in very innovative style. It's got strong leadership in all of those piece .I've just mentioned, which means that it allows us to do great things, and really promote fantastically exciting ideas that in other places might not get a listen.
Ed Whittaker 15:23
When it comes to the physical real estate, what does the space sector need to thrive?
Lucy Edge 15:29
First of all, we need really adaptable spaces and we need more of them and we need them spread across the country. We have to be able to create an environment where startups can come into the sector without using all of their hard earned funds on building their own facility.
You know, if you've gone out to the market and you've used blood and sweat and tears to gain your first million pound of investment, you really don't want to spend all of that on a building, or on a single facility. And a lot of the equipment in the UK, in the space sector, requires probably a million pounds around for some of the, for some of the procurements.
So the space sector really needs environments where those high cost equipments, hard to access equipments, can be reached in a way that makes sense for startups. So they probably don't want to, for example, rent them out for six months. They probably want them, you know, every Monday for a few months, just to test out their ideas and develop what they're doing.
And the kind of equipments I'm talking about are enormous thermal vacuum chambers that, you know, allow you to pump the pressure down to, down to a vacuum and then cycle through temperatures, so you can see what's happening to your equipment. Or really, really high end, what we would call 3D printers, metal fabrication facilities.
So using really clever metal powders, we can develop very clever three dimensional structures from very tiny dimensions, up to much larger dimensions, which are really important for things like a rocket engine, creating the correct nozzle structure and complicated lattice structures which have got really high integrity.
So all of the equipment that is required to develop that kind of product and then test it and measure it and confirm that it does what the designers want it to do, that's expensive, it's expensive to buy, it's expensive to house, it's expensive to run. And sometimes it's really hard to operate as well.
So the space sector needs to be able to access that kind of technology without having to go out and buy it as a startup.
Ed Whittaker 17:44
Can you just tell us a bit more about the tenant mix at Wescott, and how you kind of rub shoulders with other companies in the park?
Lucy Edge 17:52
The history that Westcott's space environment is built on is very much around that propulsion, that engine test that I mentioned, and there are many companies involved in that, and it's a really growing sector. And it's growing for lots of different reasons, including climate decisions.
We want to be creating propulsion systems that are sustainable, good for the planet, good for the atmosphere. And so things like water-based propulsion systems are being designed, which is hugely exciting, and that's happening at Westcott. But that centre of innovation has attracted lots and lots of other space related organisations as well, including the Catapult, the European Space Agency, the UK space agency.
And the organisations that have gathered are concentrating on multiple different things. So we have, for example, Healthy Living Lab in Westcott, and that is all about using space technology to improve the health and social care capability, back here on Earth for everybody. And that means two things of course. It means trying to do it for a price point that is achievable by local authorities. Many of us I'm sure know that social care is an enormous part of the local authority costs. But also, so the experience is better for the user of the support. You know, we want people to be able to benefit from space technology in ways that we don't really anticipate.
And we can have the same conversation about agritechnology. There's an a agritech living lab at Westcott. There are plans to develop all sorts of follow on activities across a hectare of land where we can demonstrate this remote and autonomous approach to agri improvements. So not only is it more effective for the farmers, but also a much more sustainable way of working much better for the environment.
I think probably the most exciting thing for me at the moment is the drone port that's being put in place, that's going to be a test environment for drones. And that's really important. We all know drones are coming into our lives, we can see it happening already. And the uses really are endless.
But the ability to test it in a safe environment where we've got the space, where we've got the capacity, where we've got the really good connectivity to be able to do the testing properly, is quite unusual. So Westcott's really powerful for that.
Ed Whittaker 20:26
So everyone loves to talk about space. Can you talk about some of the other things you do to engage with the community at Wescott and more broadly?
Lucy Edge 20:35
Well, we've only very recently had the skills show where an enormous number of students visited Westcott to see what the opportunities were in the space sector. And I think that's really important because although I've been in the space sector for more decades than I care to mention, the people joining the space sector now are seeing it in a very different light and we really want to make that light as bright as possible.
Because the space sector doesn't just need engineers and mathematicians and scientists like myself, it needs really strong creatives, it needs designers, it needs mechanical experts. It needs people who are really passionate about creating the most perfect soldiering environment, so that they can create the best product possible and send it to space.
So bringing people in to see what the possibilities are for their careers and knowing that you can be in the space sector and also be a farmer, or a nurse, or a teacher, or an artist is really, really important. Because that, of course, as we all know, is where the innovation comes from, when we get all those different brains in a room together.
Ed Whittaker 21:40
Could you just give us just some facts and figures about the UK space sector, just to give some broader context on the sector in the UK?
Lucy Edge 21:48
So the growth is continuous. We have just had released our annual survey, which is commissioned by government on the sector because it's such an important sector to the UK.
And that showed that on average it's over 20% per annum of growth in space organisations since 2012, when they, the government really took the initiative and said, we want this to be a growing sector. So it's absolutely massive. It contributes several billions to the GVA of the UK, and that's by direct GVA.
And then across the broader supply chain, it's over 15 billion. So it's a huge possibility sector. It's growing very fast, it's growing from a small base. But as you've noticed in this conversation today, it really is absolutely everywhere. Just over five years ago, the space infrastructure was classified as a critical national infrastructure.
And I think that's becoming more and more obvious all the time. We must have an ability to manage our own systems in space because they are so critical to absolutely everything we do. And when we move towards autonomous cars, that just becomes even more obvious.
Ed Whittaker 23:07
And can you tell us an interesting fact about the UK space sector?
Lucy Edge 23:11
What if I was to say to you that in my working life, we will definitely be transmitting from space to Earth solar power so that we can use it as an ongoing sustainable power source? So we won't need to have our solar panels on the ground anymore, we'll have our solar panels in space, effectively gathering all the sun's rays and then distributing it on earth to power our systems.
Is that, is that a good enough fact?
Ed Whittaker 23:39
That's perfect. No, that's great. I mean, I love the sound of that.
From our conversation with Lucy, it's clear that Wescott is a genuine centre of excellence in the space sector, but how do you create a successful asset management strategy for a property that has such a unique set of requirements?
Earlier this year, PATRIZIA's Hanover fund unveiled plans for a fresh CapEx program to make the park even more sustainable for tenants and investors. Here's Luke to explain more about PATRIZIA's approach to driving value through asset management.
Luke Le Brun 24:11
The approach that we have relies upon several different pillars.
First and foremost, it is all about continuing to invest in the existing stock on the park. There are historic buildings on there, so we need to continue to invest in upgrading the existing stock, making sure that it is appropriate for the requirements that are climate change goals, our ambitions around sustainability.
All of those buildings need to fit in with that plan. So first and foremost, we've got to invest in the existing infrastructure. We need to also though bring forward new development. So we need to introduce new occupiers onto the park, but allow our existing occupiers space to grow and deliver the buildings and the infrastructure that allows them to do that.
Sustainability is absolutely key part of how we asset manage Westcott, and our strategy and our approach has always been about making sure that sustainability is at the very heart of what we do. So that is delivering sustainable power to our occupiers via things like our solar farm. But it's also making sure that all of the new developments we do have extremely ambitious goals in terms of our Net Zero carbon and construction, BREEAM certification, making sure we're capturing all of the data about energy usage, so that we can optimise that and reduce our carbon footprint as a park. Asset managing at Westcott is also all about building relationships and building partnerships. So clearly partnerships with our occupiers is extremely important, but at Westcott because of its location and because of its history, partnerships with research institutions like Oxford, like Cambridge, like what they're doing up at Harwell is incredibly important. Partnerships with the local enterprise partnership and the local authority is extremely important as well. And you can't put a strategy together to asset manage a park like Westcott, without acknowledging that you sit in a sort of pretty dense network of other people that you need to bring along with you in order to achieve the goals that you're setting out to do.
And finally, you're trying to set all of that strategy, you know, investing in the existing infrastructure, developing new infrastructure to allow people to grow, building those partnerships, becoming a national exemplar for sustainability. The only way that we can deliver all of that as a coherent strategy is to have a much longer term view than you might do for a typical real estate asset.
So if I think about a master plan, or an asset management strategy for Westcott, I'm thinking 20 years ahead. Whereas typically for real estate investment, you might be putting a business plan together which is deliverable in three to five years.
Ed Whittaker 26:49
I guess the space sector could be seen as somewhat niche compared to other sectors such as life sciences.
But I read that total income generated by the sector is growing at nearly 3% a year. Do you see the space sector as a growth market for UK real estate?
Luke Le Brun 27:05
I do. It has been the focus of significant amount of government investment. I think there's been a realisation that the UK needs to support industries where it has already demonstrated global leadership, and the space sector is one of those industries.
And as a result, it is getting the attention and the support that it needs. And therefore it is a growth area for UK real estate. But what I think is really interesting about the space sector is it's easy to describe it as one homogenous sector, but actually it's bringing in expertise, research skills from all kinds of other parts of the industry.
And so separating it out from high tech engineering, from aerospace, from all of the various other industries that we've been working with across the country, is getting increasingly, increasingly difficult. But without question, it's a sector that's gonna continue to grow.
Ed Whittaker 28:00
From PATRIZIA's perspective, you know, why's Westcott such a significant asset for us in the UK?
Luke Le Brun 28:06
There are so many opportunities at Westcott, not just for its growth in a rather narrow senses of real estate investment and as a contributor towards a performance of a fund, but because of the land that's available, the kind of relationships that we have, the partnerships that we've built up around the park, the work that we have done with the solar farm, with other technologies and businesses that we've spoken to on the park, it is significant for us because we are learning every day with Westcott.
There are projects that are possible on Westcott that are a lot harder to deliver in other parts of the portfolio across the UK. And so as an institution, everything that we do on Westcott can inform the strategies that we can take with other parks across the UK. A very good example of that is the solar park.
You know, ESG or sustainability is a huge focus for PATRIZIA at the moment across the portfolio. And it's a huge focus for our attention from our investors and from our occupiers as well. And at Westcott, we can actually deliver real projects that have genuine outcomes. You know, we are developing another phase of a solar farm at Westcott that is going to go a long way towards making the park completely energy independant. And it's that experience and the ability to deliver that, that makes Westcott a significant asset for us.
Ed Whittaker 29:32
So Westcott was acquired by PATRIZIA and the Hanover fund in 1999. How has it evolved since then?
Luke Le Brun 29:38
It was bought in many ways as a traditional multi-let industrial estate.
So it's evolved a huge amount. I think the plan, the business plan, has evolved. It's become much, much more ambitious. So if I take it back to 1999, there was a lot of land from a former aerodrome. We had very clear runways, old hangers, you know, the concrete pads for turning around of planes and the rocket testing facilities on site.
It looked like Greenfields, with battered old hangers hidden in the trees. And if you compare to what you see now, if you drive onto site, it almost couldn't be more different. So as we started to upgrade the buildings, develop that occupier mix and that gravity that the mix of occupiers brings, we were able then to not just focus on upgrading the existing buildings, we were able to focus on developing new buildings.
And developing those new buildings, bringing more occupiers, more employees to the site, enabled us to focus on infrastructure. So building an access road straight through the middle of the site, upgrading all of the roadways throughout the rest of the site, building the roundabouts at the top. So infrastructure became a key focus.
Then the solar park, introducing that, meant that we were able to offer renewable energy to occupiers on site and to generate an income stream from there. And so we started to see the opportunities at Westcott multiply far beyond what was initially thought when it was bought in 1999.
Ed Whittaker 31:16
What's the one thing that excites you most about Westcott?
Luke Le Brun 31:19
My view on this changes all the time because I think you might have got a sense from how I've been talking to you about the sheer number of, and different type of opportunities that we've got over the next few years. At the moment it's all about the renewable energy that we're providing on the site.
You know, the grid, the national grid is under increasing pressure and it's becoming a major, major concern for occupiers across the country, trying to grow and develop their businesses. Where am I gonna get my power from? At Westcott, we've got the opportunity to deliver power for our occupiers in a sustainable way that reduces their carbon footprint and our carbon footprint as a landlord.
And we've got the land to do more and more of that and to do it in different ways. Why, you know, why does it just have to be solar panels? We've got a waste to energy facility on site. So the chance for Westcott to become a real national exemplar for good practices in sustainability and ESG is the thing that is exciting me at the moment.
But if you ask me again in the years' time, it might be something completely different.
Ed Whittaker 32:26
Great. And the CapEx fundraise that we're currently underway with, or in discussions with, with investors, what will those funds go towards? Will it be just the solar park, or are there any other elements that that capital will be spent on?
Luke Le Brun 32:40
As always with Westcott, there is a vast number of different projects going on at any one time, and a vast number of different opportunities. So, no, the CapEx will be split over a number of different projects. The key projects are the solar farm, that is number one. We are building out the first phase of that, phase 3A will come along first.
There is a second phase, phase 3B to follow. There is also the development of buildings for tenants that have grown on the park. We're very excited to be delivering building 6,000 for our tenant Green Retreats, which we'll be PCing very shortly. And there is a second phase to that development as well, another 55,000 square foot building for a tenant that we have grown on the park that we're all very proud of.
We want to develop more speculative units in the enterprise zone area that we have on the park to deliver a wider range of really high quality facilities, servicing tenants that have smaller requirements from 2,500-5,000 square feet, all the way up to larger requirements for manufacturing or distribution facilities.
Ed Whittaker 33:51
Thank you to our guests, Colin Theobald, Lucy edge and Luke Le Brun, and thank you for listening. I'm Ed Whittaker and you've been listening to the PAT Cast from PATRIZIA. You can subscribe to the show on Apple Podcast and Spotify or wherever you listen to your podcasts. And don't forget to head over to our website PATRIZIA.ag to find out more. Stay safe and healthy, until next time.
Producer Credit 34:14
This podcast is produced by OG podcasts. Find out more at ogpodcasts.co.uk.