An urban ecosystem is crucial for the formation of a cluster. The traditional model of a business park no longer works.

Creative clusters key to post-Brexit success

As the UK strikes out into the post-Brexit world, exploiting its competitive strengths will be crucial to its success. Fostering the country’s creative and tech industries – where the UK is a recognised world leader – will be high on the list.

The UK’s creative industries are worth over £100 billion a year and employ more than 2 million people. It is also a world leader in technology and life sciences. Research by Atomico shows the UK far outstrips the rest of Europe by number of tech ‘unicorns’ (start-ups valued at over $1 billion), while London has the largest tech community, ahead of Berlin and Paris.


The challenge will be to strengthen the talent pipeline and foster creative clusters that can develop the technologies and content of the future.


Cluster foundations

Michael Davis, Head of London Unlimited at real estate agent JLL, said creative clusters tend to form around three components: access to higher education talent, proximity to high levels of commerce and good transport links. London scores well on all three.


For its Innovation Geographies research report, JLL analysed the innovation and talent attributes of 109 cities. London emerged as the leading global talent hub, thanks to its world-class universities and highly educated workforce. It also ranked as fifth most innovative city, with nearly 15% of the workforce employed in high-tech sectors.


The Shoreditch tech cluster in east London is a notable success story. Another is the “Knowledge Corridor” from the King’s Cross station area to the Imperial College London West Campus at White City, with the Francis Crick Institute for biomedical research and a number of higher education bodies and pharma companies running along it, Davis said. Google is also building its new London HQ at King’s Cross.


London’s big drawback though is cost, for both office space and living expenses. “The key to thriving as creative and tech hubs is an ability to sustain a company from start-up through scale-up to maturity,” Mike Gedye, Executive Director, EMEA with real estate agent CBRE, said. “London can seed an idea, but many scale-up companies can’t afford to stay.”


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Growth in UK’s tech regions

Gedye points to Manchester, which ranked as the UK’s top tech hub outside London in CBRE’s Tech Cities study. Glasgow and Edinburgh came second and third, Birmingham fourth.


“In a knowledge economy, the number one requirement is talent,” Gedye said. Greater Manchester, he noted, has more graduates going into technology jobs than the universities of Oxford or Cambridge.


Universities are often critical to developing a creative and tech ecosystem, serving as seed beds of both talent and ideas. The Scottish city of Dundee is a prime example. Since its Abertay University began offering a computer games degree in 1997, the city has become an important cluster for the video gaming industry. A £9 million Games and Media Enterprise centre aims to further this success by bringing researchers, students and business leaders together to foster innovation.


Placemaking is essential

Oxford and Cambridge have likewise become bioscience and biotech clusters because they produce some of the world’s brightest minds in the fields, Davis said. “People then tend to stay because the quality of life is good, and they can do what they love with people they can affiliate with.”


“Placemaking” – the network of fundamental components such as community, vibe, experience and authenticity that cities, campuses and buildings aspire to curate – is critical here to attracting and retaining talent … something Manchester has been highly successful at, Gedye said.


“Graduates coming out of Manchester’s universities stay longer than pretty much any other because they like the city and it’s affordable, while around 60% of local students who graduate elsewhere return to start their careers in Manchester.”


Anchor tenants trigger growth

Securing a game-changing anchor tenant is often another key factor to building a cluster. The BBC’s relocation of 2,500 jobs to Salford Quays was critical in accelerating the media and creative hub around Manchester’s MediaCityUK. ITV followed, as have numerous media and digital businesses doing or wanting to do business with the BBC.


Hanover House Manchester
Amazon

Amazon’s new central Manchester corporate office is a further coup for the city. The office will be home to 600 employees, including software development engineers, solutions architects and applied scientists.


As the fight to be Amazon’s second HQ in the United States showed, policymakers can be integral in attracting anchor tenants, Gedye observed. “Location decisions are often influenced by local tax rates and incentives.”


Delivering the right ecosystem

A conducive ecosystem is also critical to the formation of clusters. The old model of building an out-of-town business park with large boxes for big multinationals won’t attract the talent or companies needed to sustain a vibrant tech and creative sector, Gedye said. “You need to mix it up and curate the experience and placemaking to support start-ups and scale-ups. Having a thriving ecosystem of start-ups is more likely to attract a game-changing corporate because they want to be part of it.”


That may include offering flexible commercial arrangements, such as discounted workspace to companies in their early growth phases. Occupiers also expect a service and amenity-rich workplace that appeals to the talent they want to attract, with a merging of hospitality and offices, and more onus on community-type activities. And increasingly those employees want it in a dynamic urban setting that offers a rich live-work-play environment.


The upside for developers and operators is that high volumes of tech activity tend to result in premium rents. “Tech and media companies see the workplace as a critical employment tool or part of their brand, not just as a real estate transaction,” Gedye said. “So they may be willing to pay a premium for the right service-rich environment.”


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