Rachel Dickie 24 June 2019

Innovation is the new regeneration

Innovation is the new regeneration image

Cities are always looking at each other and contemplating what can be learnt from elsewhere. In the UK, that has often meant drawing on the progress of other global cities. But over the last 10 years attention has shifted closer to home. Manchester, in particular, has blazed a trail in economic regeneration and the question of how and where its approach can be replicated continues to generate debate.

As a region Greater Manchester is home to more than 2.8 million people, with a GVA of £62.8bn - an economy bigger than Wales or Northern Ireland. According to business advisors EY, Manchester is forecast to remain one of the UK’s strongest performing cities to 2021. Its employment growth is expected to lead the city league tables at 1.2% a year, equivalent to 16,300 new jobs.

One of the major drivers of this growth is a large creative, digital and tech sector that spans high growth areas. These include med tech, e-commerce, software development, IoT, cyber security and data analytics at one end of spectrum, through to broadcast and media production, animation, gaming, VFX, AR and VR at the other.

The business community features start-ups, SMEs and large scale home-grown successes such as AO.com and Boohoo.com. The global players include Cisco and Hewlett Packard Enterprise, the latter recently announcing plans to establish a new Manchester base.

Along the way to becoming one of Europe’s top 20 digital cities, Manchester has managed to address fundamental issues - graduate attraction and retention, business start-up activity, inward investment, skills and employment opportunities, and the physical renewal of places that need recasting for the 21st world.

Manchester is part of a global trend described by the Brookings Institute, one of America’s prominent think tanks, as a ‘shift in the geography of innovation’. It talks of us moving from an era dominated by places such as Silicon Valley which are essentially ‘suburban corridors of spatially isolated corporate campuses, accessible only by car, with little emphasis on the quality of life or on integrating work, housing and recreation”’to the rise of innovation districts.

These districts have leading-edge anchor institutions and large scale companies which cluster and connect with start-ups through incubators and accelerator programmes. They are physically compact and easily accessible, highly connected digitally, and offering mixed-use housing, office, and retail. Globally, innovation districts are forming in cities as diverse as Barcelona, Medellin, and Seoul. In Manchester the innovation district is focused around the Oxford Road Corridor. Its defining feature is the success public and private stakeholders have had in collaborating to deliver regeneration.

Legal & General is a major investor in the UK regions. We knew that Bruntwood was looking for a partner to take this Manchester model and apply it to other UK regions and our expertise and market connections made us an obvious partner. That resulted in us forming a 50-50 joint venture which was launched in October 2018 – Bruntwood SciTech. We’ve collectively committed £360m of capital, property and intellectual assets into the new company. Our business plan seeks to support the creation of 20,000 high value jobs in the next 10 years in the UK regions.

The model is about building ecosystems, not simply developing real estate. An ecosystem is a combination of everything and it has interdependence; smaller businesses that want close proximity to bigger corporates so that they have people to work for and alongside; large organisations that want to co-locate with the SMEs and start-ups because that’s sometimes where the fire of innovation burns brightest - and they will outsource.

You need spaces that mould everything together – and an underlying operational and business services platform that takes all of the admin away. These businesses can then focus on what they do best - changing lives, developing lifesaving technologies, shaking up and disrupting. A state of the art innovation district should take away all of the hassle from a real estate perspective.

The model is also about having a support function that really can help nurture a business start and scale. There’s also a question of facilities. Life science companies of any size need a lot of investment up front and access to a lot of kit, whereas tech is a little more nimble and can acquire more of what they need as they go along. For any UK region to be successful in science and tech you have to recognise both.

At the core of Bruntwood SciTech is a partnership approach. One which we believe can be replicated across the UK, particularly in those areas with research-intensive Russell Group universities. For each area the solution will look different, but it’s about building a dynamic business environment around innovation.

Birmingham is a major focus for 2019, but wherever the partnership approach is applied, the starting point is making sure all stakeholders have an alignment of interests and shared vision.

It is a collaborative process. Ultimately, we are not going into cities and telling them what they want – we need a dialogue to understand the drivers for the city as these will inevitably vary. We bring the benefit of experience in other places and the ability to invest our patient capital. We are not just sitting back, waiting for something to happen.

We are driving it, pushing to do things differently, better, and to make sure that the benefit of the opportunity in science and technology is made real in the regions.

The UK is not the only country wanting to develop a highly skilled, high value economy. The UK is at the beginning of its journey but we believe that by forming these partnerships there’s a real opportunity to start coordinating within and across cities to create a network of innovation districts across the country. Delivering that over the next 10 years will be a game changer for the UK regions, creating thousands of jobs and driving inclusive growth.

Rachel Dickie is head of urban regeneration at Legal & General

This feature first appeared in Public Property magazine. Email l.sharman@hgluk.com to register for your free quarterly digital copy.

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