Hurtling down the track at 100mph on his way to Stanstead Airport, David Biggs was struck with a sudden realisation.
Biggs, a former accountant and a short time into a stint as finance director for Network Rail, was in the train cab with the driver – and had no way of steering the train. Of course, Biggs knew this was how it worked, but for the first time he felt it. He had a taste of the intensity and danger of working on the railway. “I remember that journey,” he says. “I was thinking about the role of the driver and what her life was like.”
Biggs recalls the trip as one of his earliest and most important memories in what has ended up being a 23-year career at Network Rail. It’s one that saw him move from the finance division into real estate, and eventually become managing director of Network Rail Property.
That moment left him with a lasting impression of just how crucial the railway itself is to the company’s real estate portfolio – and helped guide him as he moved from finance to property. Now, in his final week at the company, he reflects on how its approach to real estate has changed over the years – and how it will need to be tackled by those that lead the next leg of the journey.
Changing tracks
Before Biggs joined Network Rail, previously British Rail and Railtrack, the company’s property strategy was straightforward: sell easy development sites for quick cash. But the asset disposal programme evolved as available sites dried up.
“Although we have a lot of land today, actually it’s all being used by the railway,” Biggs says. “We don’t have a development landbank or space that we can freely rent out. Our task is to release it from the railway. We have to create more land.”
This means working ever more closely with the railway. Four years in that part of the group gave Biggs the grounding and tools to lead a shift in the business model. In 2009, he took control of the 460-strong property division, and started to shake things up.
“On the strategy side, it was clear to me that we were doing what we’d always done,” he says. “It seemed that we were lacking clarity of direction.”
The new strategy focused on two priorities: opening the railway to the community – not just its passengers – and investing to bring space back into productive use. The first saw Network Rail introduce a wider range of uses, for instance adding extended-hours M&S Simply Foods to stations, alongside wider development opportunities. The second saw the company plough the proceeds into opening up disused buildings and derelict arches.
Biggs calls it a “sustainable revenue model”. Working in partnership with the private sector, it allowed Network Rail to deliver major station upgrades to its 20 managed stations, including London Bridge and Birmingham New Street, alongside ongoing improvements to its 5,500 commercial properties in the railway arches.
Overarching ambition
“What I noticed walking around the stations and speaking to tenants was that there was a huge opportunity to create the right space and bring more of the arches portfolio and other spare buildings into use, but it did need investment,” recalls Biggs.
There were old scrap car yards and fly-tipping that could be a danger to the railway, although Biggs could see that bringing the land back to commercial would not take a lot. Secure storage, amenities and Wi-Fi would open these spaces as homes for small businesses.
“It is a dynamic space and we recognised that our business model was very much based around SMEs, so we needed to put time and effort into serving them,” Biggs says. But the 2015 Hendy Review into Network Rail’s investment programme recommended an asset disposal programme as projected infrastructure costs surged by £2.5bn. Biggs was tasked with raising capital and the arches were in focus.
“We looked at everything we did in property and there was one thing that jumped out,” says Biggs. “There was a real recognition that because of our approach to investing in the arches portfolio over the six years before, we had created something of real value.”
In 2017, Network Rail Property appointed Rothschild to manage competitive bidding for the portfolio. The business completed a £1.46bn sale of the 150-year asset leases to Blackstone and Telereal Trillium in February 2019, handing over the commercial business with 100 employees and retaining just 1,000 assets predominately needed for operational use of surrounding infrastructure.
“The sale enabled us at a very senior level to put an even greater focus on releasing land for housing, and to actually be more ambitious,” says Biggs.
All aboard
On another trip down memory lane, Biggs recalls being geared up in full PPE for a guided walk down the railways. You cannot talk to developers convincingly about working around critical infrastructure if you have spent your career tied to a desk, he reasons.
“You realise the environment and how dangerous it is close to the railway,” he says. “When I sit down and talk to developers about working next to or above the railway, I was able to do it from a point of experience.”
Development has become more complex and the public-private partnerships built up around a site reflect that. Network Rail has various housing-led joint ventures and strategies with private developers, local authorities, and also other rail providers, including High Speed 2, London and Continental Railways and the Greater Manchester Stations Alliance.
“We moved over time to not worry so much about our own machine, but more about how we engage with wider areas and how we could play a part in a much bigger scheme.”
Earlier this month, NRP, Muse Developments and Manchester City Council agreed a £120m deal with investor Pension Insurance Corporation to deliver 520 build-to-rent flats at New Victoria, with further backing from a £10m HIF grant from Homes England. Construction will begin this month, well over a decade after development was initially planned. (If that seems like a long time, consider the York Central project, which started in 1939.)
Biggs had been involved in the Manchester project even before he took on the leadership role back in 2009. Manchester City Council wanted a tram, the station needed rebuilding and the car park was identified as a source of finance. “There’s been a whole range of hiccups all the way through because of the recession, funding issues and some really difficult site complexities, with a culvert running under the middle of the site,” he says.
Future schemes will further incorporate the railway through decking over the track and station. At Euston, this approach aims to permeate the station and remove the barrier that splits Camden.
“We have to recognise that our stations play a really key role in many towns and cities across the country,” says Biggs. “What the railway needs to do, instead of splitting communities, is to join up communities.”
Please alight here
Stations will play a vital role in the future of the country and communities, Biggs says. And in a final drive to fully align the railway and the property, NRP will devolve on 14 September to create regional divisions in line with Network Rail’s split of five areas: Eastern, North West & Central, Scotland, Southern and Wales & Western.
Those teams feed into Network Rail regional finance heads and are designed to work even more closely with developers “to actually understand their issues, but also to help them understand the railway’s issues”, says Biggs.
Biggs says that if he could do it all again, the one thing he would do differently would be to adopt that proactive approach with developers earlier in his leadership.
Perhaps this is epitomised in the Living Stations project, where in partnership with Arup, Network Rail called on the industry to consider the stations of 2050. “The idea was not to say this is the answer, but to provoke,” says Biggs. “We hadn’t set a roadmap.”
As Biggs steps down after more than a decade in the front seat, he hopes this approach will steer the organisation over the next decades.
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