The property sector in Birmingham and the Midlands must be prepared to adapt to the shorter-term, flexible requirements of SMEs and start-up companies if the region is to unlock its potential to support the knowledge economy.
This was one of the key outcomes at the regional launch of the latest research report from GVA, the UK’s largest independent property advisor. First presented at the MIPIM property conference in Cannes earlier this year, ‘Driving future growth: Core cities and the knowledge economy’ highlights how the development of the UK’s regional cities is tied to the progress of the country’s world-class knowledge economy.
Defined as a trend towards greater dependence on knowledge, information and high-level skills, the knowledge economy encompasses sectors including TMT (technology, media and telecoms), IT, Medical, Advanced Manufacturing and Science.
Chaired by Birmingham Science Park Aston’s chief executive, David Hardman, the event – which was attended by some 40 property professionals – included a panel discussion featuring Birmingham City Council Leader Sir Albert Bore; GVA’s National Head of Offices, Carl Potter; Dr James Wilkie from the University of Birmingham; and David Roberts from payment start-up company, Droplet.
One of the key points raised at the event was that in order to support the small businesses that form the core of the knowledge economy sectors, the property industry needs to be less averse to the potential risks associated with their short-term leases and support them by understanding their requirements and finding the most suitable locations.
Carl Potter, National Head of Offices at GVA, said: “The knowledge industry, although categorised as higher risk due to the shorter-term timescales, can provide a good balance between risk and reward as investors seek opportunities away from central London.
“The core cities, together with their LEPs, can use policy levers to shift the incentives for investment in this area, ensuring that the right infrastructure is in place to incubate and grow SMEs, laying the groundwork to ensure that they are home to future blue chip companies.
“Each city’s knowledge economy is uniquely different but the common thread that binds them all is that these are the places where knowledge, creativity and vibrancy combine to greatest effect and will produce the best results.
“Providing the right real estate opportunities and environment is crucial to enable the knowledge economy to be nurtured and expanded. As firms within the sector prosper, grow and strengthen they will be key to the success of economic diversification and expansion and both the private and public sector have a role to play in this, whether through site provision or investment and development.”
The eight UK regional cities defined as ‘core cities’ and those with the highest make-up of commodities of knowledge generation are Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle upon Tyne, Nottingham and Sheffield. Combined they:
-employ over 6.5 million people across the Local Enterprise Partnership areas in over 430,000 VAT registered businesses.
-deliver 27% of the UK economy
-have 37 universities with over 680,000 student and a research score which rivals that of Oxford, Cambridge and London combined
-have increasing direct connections to emerging markets for the 50 million passengers who pass through their airports.
According to the report, the Midlands’ strongest knowledge economy sectors include its historic links to the automotive industry, which supports advanced manufacturing; three key universities with over 60,000 students; two science parks including the planned 30,000 sq ft digital plaza at Birmingham Science Park Aston; and the UK’s largest advanced manufacturing employer in Jaguar Land Rover.
James Kingdom, Senior Researcher at GVA, said: “The Knowledge Economy has a significant role to play in the rebalancing of the UK’s local economies. Unlike regional cities in other western economies, the UK’s regional cities’ GDP per capita tends to lag behind the national average. Closing this gap would yield an extra £222 billion for the economy as well as 1.3 million jobs by 2030.
“Birmingham’s legacy of advanced manufacturing, experience in the life sciences sector and burgeoning creative and digital offering has put the city in a strong position to meet the growing needs of the Knowledge Economy. However, while these sectors are active, we believe that there is a fundamental lack of understanding of the dynamics of the knowledge economy in each of the core cities, stymying growth and preventing them from reaching their true potential.”