Weekend Interview: Landsec Chief Executive Mark Allan
This series gets into the heads of the decision-makers of CRE, the people shaping the industry by setting investment strategy, workplace design, diversity initiatives and more.
In three days Mark Allan will present Landsec's annual results for the year to 31 March 2022. It will be a testing moment for a chief executive in the midst of a transition for an £11B property business that, whilst still one of the largest in the UK, has dropped out of the top-most reaches of the top tier.
His response has been to gently pivot away from London and retail, and toward Manchester and mixed-use regeneration.
It comes as Landsec buys into the much-prized Liberty of Southwark mixed-use site on London’s South Bank, but confesses that global capital piling into prime UK property makes it harder for the company to be competitive in the London markets it has always called home.
By turning to Manchester Allan has — for the time being — avoided a direct scrap with private equity giants like Blackstone. The worry is that Blackstone has signalled via a £185M UK regional office buy that it won’t be out of those markets for long.
For now the new strategy focuses on creating value, both financial and social, from three key areas: central London offices, major retail destinations and mixed-use urban neighbourhoods. A £2B gamble on diversification into Greater Manchester through the acquisition of regeneration specialist U+I alongside a 75% stake in Salford’s MediaCity was the final part of the plan.
The following has been lightly edited for style and grammar.
Bisnow: Tell us about your leadership philosophy and what experiences, words of advice or mentors shaped it along the way.
Allan: As a CEO, it’s important to create the right environment for others to succeed, judging when to push and when to stay out of the way. One of the big drivers to that is creating the right culture — one built around trust, empowerment and accountability. This approach really comes from seeing the different ways people handle different situations over the last 20 years or so rather than something that I’ve learnt from a single moment or person.
Bisnow: How has the role of CEO/business leader changed over time — especially when considering the early days of your career to now?
Allan: The pace of change is more rapid now than it was, say 10-15 years ago. Alongside that there are now a greater range of external factors, often competing, that need to be taken into account. Social value and corporate reputation are two areas that have risen up the agenda in recent years, and something that needs to be taken account of through the decision-making that an executive makes.
Bisnow: What will the role of CEO look like in 10 years?
Allan: The pace of change will continue to grow and become even faster, current trends around the slowing of globalisation means the geopolitical environment will remain unsettled for some time. That will have an impact on the future role of the CEO, broadening the range of issues that will need to be proactively handled, alongside a growing need to be agile and responsive to the changing external environment.
Bisnow: Was leading a company always a goal for you? If so, why?
Allan: When I started out, the simple answer is no, not particularly.
Bisnow: What has been your biggest mistake as a leader?
Allan: Moving too slowly when big changes were needed.
Bisnow: Has your thinking changed about the workplace between 2019 and today? How? What will your office strategy be moving forward?
Allan: Before joining Landsec, so up until the early part of 2020, I led multisite organisations where the focus was very much on how you get the best from a geographically dispersed business. Moving then to Landsec, my first business which is predominately a single location, the focus has been very much on bringing the outside world in, helping the business to have a less introspective view of the world.
In both scenarios though, it would be fair to say that the hybrid approach to working is very much here to stay, although I don’t think any of us can claim to understand how this will play out long-term. The office clearly has a crucial role to play in engendering culture, providing a place for colleagues to collaborate and develop as well as providing a central point for customer engagement and meetings, but the 9-5 desk working of old is definitely no longer the norm.
Bisnow: There is a massive conversation underway regarding advancing more people of colour and women into the C-suite. What are you doing to address those voices and that movement within your own organization?
Allan: If you look at our purpose, you’ll see that diversity and inclusivity are very much at the heart of Landsec. We have a number of initiatives underway to support diversity, which is championed by our affinity groups. They do a great job of flushing out areas of concern, building relationships with external organisations that can help us develop the right actions and ultimately be the voice of our people.
For me, it really has to start with understanding the data, and being able to measure diversity in multiple ways — by seniority, by levels of promotion, by department, by staff turnover. So really understanding the trends within a business, the real picture rather than relying on high-level data points. This allows for much more focused action planning.
Businesses also need to have clearer and stricter policies on selection, broadening out the recruitment pool. As a sector, we also need to think more clearly about how we encourage people from more diverse backgrounds into our industry, and therefore into more senior roles, and this has to start with young people.
Change takes time, and any approach must take a long-term perspective and be sustainable.
Bisnow: What do you think about the recent focus on sustainability and climate change? Is it overblown? Insufficient? Is your company tackling climate change in any way or taking it under consideration in your planning?
Allan: Sustainability is a fundamental part of our strategy with the industry now being at a tipping point where commitments need to become action. That’s why in November last year, we created a new £135M net-zero transition investment plan to help achieve our targets and drive forward our transition to net zero. You’ll continue to see us challenging both ourselves and the industry on this important issue.
Landsec was a leader in sustainability long before I joined the business, having been the first real estate company in the world to have its carbon emission target approved by the Science Based Targets Initiative in 2016. This ambition was further increased in 2019 when the business aligned its science-based targets with the 1.5 degrees global warming scenario — targeting a 70% reduction in carbon emissions by 2030 compared with a 2013/14 baseline.
Bisnow: What is something CRE gets wrong in your eyes?
Allan: Broadly speaking, the industry is slow to embrace change, and isn’t naturally a customer-focused sector. Something we’re focused on changing through the work that we’re doing with our customers, across our retail and office portfolios as well as the partnerships we’re building in the communities where we operate.
Bisnow: What asset class or location will perform best over the next five years? Why?
Allan: Those assets or locations that can anticipate and respond best to customer trends.