2009 might not have been the obvious time to start a commercial property business – right in the middle of a global recession. But that’s just what Steve Baker and his co-Director Daniel Wheble did when they set up their boutique serviced offices company, Ventia Ltd.
Fortune favours the brave, as the saying goes, and it certainly did in this case. With a little luck and a lot of strategic genius, over 6 years Ventia’s founders grew the company from a feisty start-up to a highly profitable and award-winning class-act in the realms of serviced office space.
Cornering a niche that catered to clients who no longer wanted lengthy leases in bog standard offices, Ventia blazed the trail in flexible, boutique office space and have accrued a stunning portfolio of over twenty period properties in central London.
The company were voted in at no.32 in the Virgin Fast Track 100 in 2014 and then again at no.43 in 2015, acknowledging their status as one of the fastest growing companies in the UK. And in November 2015, Ventia won the Nectar Small Business award which recognized their outstanding performance and practices within the SME landscape.
So, when Steve and Daniel sold the company in December 2015 to the aptly named Boutique Workplace Company, they really rode out on the crest of a wave. As a keen surfer, Steve Baker – who also runs a boutique wedding and holiday lettings business in his home county of Devon – would like the analogy.
We caught up with Steve, as he plans his next moves (which will involve an expansion of his ongoing charity work and passion for social enterprise) and asked him about the Ventia journey….
How did Ventia come about?
We started Ventia in 2009 and the strategy was all about providing flexible office space in Central London. At that time, people didn’t really want to sign long leases and, whilst there wasn’t an abundance of tenants, those that needed office space wanted flexibility. They were happy to move into short-term accommodation, instead of signing 5 or 10 year leases – because in an uncertain climate that isn’t what you want to do.
So Ventia’s growth actually benefitted from the recession?
Yes – we started off the business by managing assets for landlords who were struggling to fill their buildings. When the market is very buoyant, landlords can let the building easily but when the economy is in a recession, and unemployment rises, vacancy rates go up and landlords will look at more creative, flexible solutions. So, by 2010 we had 5 or 6 management contracts, where we shared the risk, and that was really how we established ourselves in the first year or two.
What were your initial acquisitions?
Our first building was Chancery House in Chancery Lane – we were very lucky to get that under a management agreement – and our second building was in Mayfair. We also opened a couple of futher sites in High Wycombe and Marlow. We almost immediately started pursuing this niche around period properties which were a certain size – up to about ten thousand square feet. The reason for that was that we could fill them very quickly which meant we got good references that we could pass on to the next landlord.
What was your core business strategy?
It’s always been about getting the right building, in the right location at the right price. So, if you start a business in a recession, you make very careful decisions – particularly when it comes to risk. The banks wouldn’t lend us money so we were happy to put other money in and re-invest any cash generated from the business, but we had limited resources really.
However, the benefit of acquiring period buildings in central London was that we could also mitigate some of the downsides of paying rates. You don’t pay rates on listed buildings so we could split one up into lots of rateable units. And, if it was empty (fortunately we haven’t had to do this too much), we could claim rate relief which really gave us a lot of protection in case the market didn’t recover.
How did you become so profitable, so quickly?
We slowly but surely built the business over 2010-11 and in 2012 we noticed that our product was becoming a lot more popular so we were able to harden our pricing. The economy was starting to take off, although very far from being in recovery, and more and more people were wanting flexible office space.
There were a couple of reasons behind that. One was that asset prices in the West End generally started to go up in commercial property and residential property, so lots of landlords of commercial buildings were converting quite a few of the old period buildings. Many were redeveloped into residential accommodation and the ones in Westminster and the West End were the ones that housed small businesses… so those small businesses were being driven out of their listed office spaces when the leases came up. So the market really played into our hands.
And the other thing was that lots of people who became unemployed during the recession began to start up on their own and by 2012/2013, started becoming 2,3 or 4 man bands needing flexible office space. So, we’ve been quite fortunate.
We expanded the business by 25-30% year-on year by sticking to our core principles.
Tell us a bit about the ‘boutique’ element?
In terms of niche offices, it’s important to understand that people want spaces that look good, feel good, give a sense of aspiration and have a really contemporary feel…and it doesn’t actually cost that much more to kit out an office with really nice interiors than it does with more standard fittings. My wife Susannah is an interior designer and she started doing the interiors and really opened our eyes and helped us take some risks in terms of design, which then changed the whole direction of the business.
In terms of pricing, we were then able to achieve about 15-20% more per work space and we were also filling buildings faster as people got a sense of our brand being ‘one off’.
What were the major challenges of the business?
When you start up a business, it’s about keeping the plates spinning in all the different areas: recruiting staff at the right time, or taking on new assets etc. It’s always the chicken and egg thing – especially when you are starting up. But that’s the nature of risk and entrepreneurs generally have an optimistic outlook when they take stuff on!
One of the challenges we’ve identified over the last few years has been access to new buildings as the market has tightened. Vacancy rates have been at 3-4% in the West End so we’ve really invested in key strategic relationships with commercial property agents who we see very much as a gateway to finding buildings for us.
That’s been something we’ve needed to work hard at.
And your high points?
When we got on the Fast Track 100 for the first time – that was a real landmark for us. That was recognition that we’d got the company into the top percentile of our kind of business nationally.
And the Nectar Small Business Award was a real affirmation of the strategy we pursued and the success we’ve had.
Success is a funny word, but when you’ve worked really hard to build something good and right and that connects with people, it’s nice to have that objective recognition on some of the measurables. The Small Business Award wasn’t just about our financial performance; it looked at different aspects of the business – like having a really good team and doing things ethically, which has been one of our core values.
Do you have any advice for anyone venturing into the world of boutique office rental?
It’s quite a hot sector right now…quite a lot of players are trying to expand into it, so obviously, the strategy of getting the right property, in the right location at the right price is still important.
But there are some nuances to the business which you need to get right…things like the tech provision and the way you create a sense of community for the occupants. And getting the right design and level of aspiration are becoming increasingly important to clients.
The other thing is just the configuration of space…making sure that you are managing your yield well – i.e. the return from your space is all about bespoke design, the layout of workstations and getting that right.
How do you feel about parting with the business?
It’s been a great journey and when you exit a business, you can find yourself looking in the rear–view mirror wondering was it the right time. I’m sad in some ways to be moving on…mostly because of my wonderful team.
When you entrust something you’ve built to someone else you wonder if your legacy will carry on. But the people who bought it are great – I'm confident they’re going to take it to the next level.