Making it in the ‘graveyard of British business’
New York, with all its skyscraper glamour, has been the destination that British companies have longed to conquer for many years. But taking a bite out of the Big Apple should come with a word of warning for UK firms seeking the American dream.
Several high-profile companies have made equally high-profile failures while trying to tap up the market.
Marks & Spencer bought Brooks Brothers, headquartered in New York, in 1998 and acquired its 155 stores across the US. But the company made a swift exit just three years later, selling the clothing chain to Retail Brand Alliance, stating that it “was not a good fit with M&S’s core business or strategic priorities”.
New York, with all its skyscraper glamour, has been the destination that British companies have longed to conquer for many years. But taking a bite out of the Big Apple should come with a word of warning for UK firms seeking the American dream.
Several high-profile companies have made equally high-profile failures while trying to tap up the market.
Marks & Spencer bought Brooks Brothers, headquartered in New York, in 1998 and acquired its 155 stores across the US. But the company made a swift exit just three years later, selling the clothing chain to Retail Brand Alliance, stating that it “was not a good fit with M&S’s core business or strategic priorities”.
Topshop is the latest to fall short of its New York takeover plans. Sir Philip Green launched the first store in Manhattan with supermodel Kate Moss on his arm in 2009 but 10 years later he announced that he would be closing the flagship store – as well a further 10 branches – as part of his rescue plan to save the brand.
But flexible meeting space provider Etc.venues believes that it will not only buck this trend, but use New York as the springboard by which to grow the business into a global success.
Over 27 years, the business has grown from an idea borne by founder Sally Wilton, who spotted an opportunity in the market for more purpose-built venue spaces, to an organisation that now has 400,000 sq ft of space leased across 17 venues: 15 in London, one in Manchester and another in Birmingham.
Last year, the company set its sights on Manhattan, acquiring 75,000 sq ft across two venues and now managing director Alistair Stewart and chief operating officer Nick Hoare reveal how they plan to keep their American dream alive.
Replicating success
It has been the success of Etc.venues in the UK that was the “genesis for US expansion”, says Hoare.
Between 2006 and 2012 the firm doubled its footprint and secured a second round of investment with Growth Capital Partners, and in 2018, its revenue surpassed £50m for the first time.
US investors Benchmark Global Hospitality and Gencom formed a joint venture to support the firm in the US and, so far, progress looks promising. Last year saw the company announce its first 45,000 sq ft venue in New York at 360 Madison Avenue, which will open this year. In October, the company announced it had signed for 30,000 sq ft at Boston Properties’ 601 Lexington Avenue office.
Always take the weather with you
“The focus of our efforts in terms of growth is very much on the US right now,” Hoare says.
Crunching the numbers reveals just how many eggs the organisation is putting into its American basket.
The business is hoping to replicate its 2019 figures of 75,000 sq ft of leased space in New York this year. The aim for the global Etc.venues portfolio, Stewart says, is to hit 1m sq ft – and two-thirds of the extra space needed to hit this target will be US-based.
Stewart says there is a particular gap in the New York market, where there is a huge focus on the “hotelisation of office space”. This essentially means providing office space filled with the amenities and services you would typically find in a hotel.
“There is this expectation in New York of having amenities within buildings,” Stewart says. “Because of the climatic extremes in New York – it’s much colder in winter, much hotter in summer – the willingness of New Yorkers to travel outside of their own office buildings can be reduced.
“Therefore, the value of having a conference amenity or a restaurant, whatever it is within the building, is seen as very important. We have seen landlords more interested in bringing in amenities [inside office buildings] than in the UK. The deal we just announced with Boston properties is a very good example [of this].”
‘It’s been challenging’
The company has dipped its toe in the New York market, but this has not come without its challenges, Stewart says.
“New York has been difficult. It is challenging and different to London,” he adds. The main reason for this, he says, comes down to the difference in the leasing process and bureaucracy compared to the London market.
“In order to occupy a room with more than 75 people in New York, you need to have a place for assembly, and in order to have a place for assembly, you have to have floor loading of 100lb per sq ft,” he says. “That restriction does not exist in the UK, where floor loading in most office buildings is 50lb per sq ft.”
But despite its challenges, Hoare says it has been worth the effort. “The size of the total addressable market for us is enormous,” he says. “And, dare I say it, the competition is less overbearing.
“We think the quality of the [existing] meeting space in the main is not nearly as good as what we’re going to provide. We’re very happy to overcome obstacles, hurdles and challenges because we think the model will fit nicely into a grossly underserved market, which is huge. And that, I think, is where the real excitement comes from.”
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