The impact of public spending on corporate relocation and inward investment.
While the new British government is working hard to cut back public spending, there can be no doubt that the UK’s cities have benefited from a commitment to large-scale projects over the last decade. This policy transformed many, placing them in a strong position in terms of corporate relocation and inward investment. Aside from the local skills base, many occupiers put a high priority on good international air links. And in deciding not to allow further runway expansion at Heathrow airport, the new government has handed a huge opportunity to cities outside London. In response, regional city airports are pressing ahead with improvements, in an effort to position themselves as the solution to the ‘Heathrow problem’. Birmingham’s airport has room to grow, and its ambitious plans include a runway extension. Moreover, £13m has been spent on terminal upgrades and the airport intends to double its current 10 million passengers a year. “The development will attract new carriers wanting to fly direct to the world’s growing economies, such as China and India,” says airport CEO Paul Kehoe.
Manchester airport is controlled by a consortium of local authorities and is the busiest outside the London region, offering direct flights to 220 destinations. Emirates now operates a daily Airbus A380 flight out of Manchester to Dubai, while a fourth daily scheduled flight to New York is about to start. “We are lucky in that we have very strong civic leadership and there is a strong sense of partnership,” says Manchester airport’s managing director, Andrew Harrison. He adds that his airport works closely with airlines to deliver the international links that local businesses need. “It’s a very symbiotic relationship,” he says. At Leeds Bradford airport, private – equity owners Bridgepoint have committed £28m to an expansion and upgrade of an airport that saw 11% passenger growth in the last year and now serves 76 destinations. Birmingham is also making much of its proximity to the capital, which is just an 80-minute journey away — or less when proposed rail improvements take place. Last year saw the launch of the Big City Plan, a template for the next 20 years of development in the city, which gives developers and occupiers a steer on how 800 ha of urban space will be developed, along with Birmingham’s key infrastructure aspirations.
Improvements are already taking place, with a £600m private-public project to transform Birmingham’s central New Street railway station under way. The last decade has seen the Bullring retail centre transformed, and developer Argent carry through its Brindleyplace mixed-use scheme. Having shrugged off the demise of vehicle manufacturing in its region, Birmingham is setting out its stall as destination for entrepreneurs, and boasts a high quality of life for those living and working in its vicinity. At the heart of the country’s motorway network, it is also a convenient location from which to reach UK consumers. Among new arrivals in Birmingham are Deutsche Bank, which has opened a support office in the city, and Microsoft’s Rare Games, which is opening a new facility in Fazeley Studios.
Manchester’s recent transformation is an illustration of how to turn adversity into advantage. The 1996 IRA bomb blast that tore through the city centre was followed by a swift commitment to rebuild something bigger and better. Meanwhile, the city’s successful bid to host the Commonwealth Games in 2002 was used as a catalyst for the regeneration of an area east of the city centre.
Manchester’s Metrolink tram system, which opened in 1992, has three lines linking the city’s suburbs to its centre. In 2009, a £1.5bn fund was established by local authorities to further expand the Metrolink, which currently carries 20 million passengers a year. The aim is to cut congestion substantially, with tram use displacing five million car journeys a year.
The Spinningfields business district is the fruit of a public-private initiative by developer Allied London and Manchester City Council. A 8.9 ha site immediately to the west of the city centre, Spinningfields’ transformation over the last 10 years has delivered 427,354 sq m of commercial space. The district features trophy architecture, and major public buildings alongside international-standard office space. Among the A-list banking and professional- services occupiers that have been attracted to Spinningfields are RBS, HSBC and BNY Mellon.
The UK’s national broadcaster, the BBC, provided a further boost to Manchester’s economy with its decision in 2006 to move a substantial part of its operations to the city. Under pressure to become less focused on London, the BBC committed to MediaCityUK, a £650m development alongside Salford Docks, moving not just local staff but also major production departments from London. The first phases of the media hub are now opening up and drawing in other TV and broadcast businesses, creating a national centre of expertise.
The strength of Leeds lies in its financial, legal and professional services, which comprise the largest cluster outside of London and help to generate a wealth that is evident in the style of the city’s retail offer. In summer 2010, developer Land Securities showed confidence in the city by starting work on its 100,000 sq m Trinity Leeds retail development. With retailers committed to almost half the 120 shops in the £350m scheme, work has begun towards a completion date of spring 2013. Leeds also boasts a value tag on its office stock, offering high specification space and room to grow . MEPC’s 241,500-sq m Wellington Place epitomises the city’s appeal to major incoming employers.
For investors, there are interesting development opportunities immediately south of the city centre, where the Carlsberg Tetley brewery is scheduled to close this year, releasing a 8.9 ha site, alongside other adjacent postindustrial sites, for development. Public investment includes a new 13,500-seat arena, which is scheduled to open in 2012 and will be operated by SMG Europe. And there are hopes that a new high-speed rail line could open in 2017, cutting travel time to London dramatically.
Across the water in Northern Ireland, Belfast is distancing itself from the financial problems of its southern neighbours, pointing to a decade of investment as it puts its troubled history behind it. From the days when it was in the headlines for all the wrong reasons, Belfast now offers investors a young population of one of the most highly qualified workforces in Europe, in a dramatically improved environment. Leading Belfast’s into its post-industrial future is the Titanic Quarter, an ambitious development of 75 ha of former shipyards. Europe’s largest waterside regeneration, it is expected to create 25,000 jobs. The site is already home to 400 people, a new campus for Belfast Metropolitan College, a new Public Record Office and a hotel. A visitor attraction will tell the story of the former shipyard and its most famous output, RMS Titanic.
Spinningfields was the winner of MIPIM 2011’s Investor Quest.
Top image credit : Photobank gallery