Brompton is gearing up for a move out of London, its home for the past 50 years, as surging rental costs push the UK’s biggest bicycle maker to seek a new home where it can meet ever growing demand for its folding bikes.
Will Butler-Adams, managing director, said rents at its Greenford base had risen from £11 per square foot when they moved in six years ago to about £30 in their latest tenancy agreement.
“Anything that is a potential distribution hub is going to get more and more expensive,” he told the Financial Times. “We will need to grow and we need more space.”
The company will seek planning permission to build a new factory in Ashford in Kent, where it plans to move in about 2027 at an estimated cost of about £75mn — equivalent to the company’s turnover in the year ending March 2021. It will continue manufacturing in west London until at least 2030.
The bicycle manufacturer has grown at an average annual rate of 17 per cent for the past 18 years, the time Butler-Adams has been at the company. He expects the promotion of city cycling to keep powering annual sales growth of 15-20 per cent.
Brompton produced about 80,000 bikes last year, about three-quarters of which were exported. The new factory would be close to the Channel Tunnel and Dover port, potentially helping to transport its bikes to continental Europe.
The pandemic gave a big boost to the bicycle industry as consumers with fewer options for spending their cash sought to avoid public transport.
Rents for industrial sites have surged after the pandemic triggered accelerated growth in online shopping, increasing demand for warehouses close to consumers for quick fulfilment of orders. The vacancy rate for UK logistics properties hit a record low of 1.53 per cent in the third quarter of last year, according to developer CBRE.
The company hopes the new site will allow it to keep tapping into London’s talent pool of marketing, IT and social media professionals.
Brompton bikes are known for being handmade but Butler-Adams said the factory move would bring opportunities to “evolve” and introduce more automation. It expects to employ 1,500 people by the time of the move, up from the roughly 800 on the payroll now.
The company recently launched a bicycle made of titanium, supplies of which are heavily reliant on production from Ukraine and Russia. Butler-Adams said that prices would inevitably rise but the invasion of Ukraine by Russia would not derail the plan to expand its product range.
Although the relocation would bring an end to Brompton being headquartered in the UK capital, Butler-Adams backed the city as a manufacturing hub.
“London has made us who we are but we’ve got too big,” he said. “There’s a lot more manufacturing going on in London than people realise.”