McLaren set for £60m Piccadilly scheme as firm returns to the black

McLaren is set to be awarded its second major deal in a week with the firm due to sign on the dotted line for a scheme in London’s Piccadilly worth more than £60m.

It comes as the firm’s latest accounts, filed last week, show that it returned to the black last year after the failure of concrete frame subcontractor O’Keefe on a project it is building in Brighton helped blow a hole in its 2021 numbers.

Last week, McLaren confirmed it had signed a PCSA deal with Landsec for a £130m scheme to overhaul a 1960s tower in London’s Victoria called Portland House while it is one of two in the frame for a £90m refurbishment and new build scheme in Islington, north London, called Angel Square.

And this week it will sign up for a £63m scheme from Aviva to redevelop Pegasus House on Sackville Street and neighbouring Nuffield House on Piccadilly, which will see the grade II listed façade of the latter retained. The firm is understood to have beaten Multiplex and Wates to the job.

Work, which is being project managed by Third London Wall, is expected to start this May and take two years to complete. Deconstruct is already on site carrying out demolition and façade retention work while others on the job include QS Alinea, structures firm Heyne Tillett Steel and heritage architect Donald Insall.

Speaking about its latest results, McLaren group managing director Paul Heather, who celebrates a year with the business next month after joining from Sir Robert McAlpine, said the firm was still seeing plenty of jobs come up for grabs despite worries about a recession. He added: “We’re not seeing a slowdown. A lot of the consultants we are talking to are in recruitment mode. There is a lot work still out there.”

In its latest accounts for the year to July 2022, McLaren said income was up 39% to £752m with the firm posting a pre-tax profit of £2m from a £12.4m loss in 2021 which the firm has previously blamed on the impact of covid and O’Keefe’s collapse last summer.

The firm is about to hand over the £75m Brighton deal for First Base and chairman Kevin Taylor said it had chosen the more expensive O’Keefe over others because of its reputation and history – the firm which is now part of Byrne Group dates back to 1970 – but he admitted: “A lot of our supply chain is tried and tested but you never know what can happen. I think they got hit by a housing job.”

He said McLaren was looking at turnover this year of around £880m but cautioned that rising interest rates, which hit a 14 year high last week, were making clients think twice about jobs: “Interest rates going up makes it harder for developers and inflation puts pressure on budgets.”

Heather said around 80% of this year’s income had already been secured and includes a £100m scheme to refurbish and reclad four residential towers at the Chalcots Estate in Camden for the local council.

The firm said it expected more work to come from this sector as more and more high-rise blocks need to be brought up to scratch under the government’s £2.5bn cladding pledge which requires developers and housebuilders to undertake fire safety repairs on historic buildings.

McLaren is also looking at breaking into the growing life sciences sector and Taylor said: “We are having conversations with existing customers about that area.”

The number of staff at the year-end was up 10% to 733 although the figure has gone up again and is now around 800. The amount of cash the firm had in the bank at the year-end was up as well – from £44m to £69m.