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PlaceEXPO: Place Tech: James Kingdom and Iain Jenkinson, GVA

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James Kingdom, senior researcher at GVA Property Consultancy, and Iain Jenkinson, senior director, GVA

James Kingdom, senior researcher at GVA Property Consultancy, and Iain Jenkinson, senior director, GVA

Published in: Real Estate

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  • Thank you David and Good morning and welcome everyone.

    As mentioned, I’m James Kingdom, principal researcher at GVA and today I’ll be talking to you all about our report Driving future growth: core cities and the knowledge economy.

    I will then hand over to my colleague Carl Potter, head of nat.offices at GVA who will present a more detailed local perspective on the real estate side of things
  • Thank you David and Good morning and welcome everyone.

    As mentioned, I’m James Kingdom, principal researcher at GVA and today I’ll be talking to you all about our report Driving future growth: core cities and the knowledge economy.

    I will then hand over to my colleague Carl Potter, head of nat.offices at GVA who will present a more detailed local perspective on the real estate side of things
  • Before we start, I’d just like to put the purpose of the report in context,
    There were 3 markets in UK where office rental values and investment in commercial property increased significantly between 2008 and 2013, whereas pretty much everywhere else saw declines in both measures.
    I’ve given you a clue as to what they are and easily recognisable as leading markets on the world stage for specialist knowledge based industries, with life sciences camb, tmt old street and energy sector aberdeen.

    What we wanted to do with our report was promote and raise awareness of the knowledge economy but not in these well established markets. Our focus is on promoting the opportunities in the regions and the core cities.
    Why is this important? Well, GVA believes the KE is key to driving growth and more importantly, rebalancing the economic make up of the core cities.
  • So, first of all, what are the core cities?
    As Map handily shows, they are the 8 largest cities in England outside of the capital.
    Between them, account for 430,000 businesses, 37 universities, 680,000 students and 27% of the English economy.

    As part of the City Deal in 2012, these cities have been given the task of creating a further 175,000 jobs and £8 billion of investment over the next 20 yrs.
    The knowledge economy has a pivotal role to play in helping unlock this potential and creating a more sustainable and mixed economy.
  • And there is a straight forward reason as to why our core cities need this support, which this chart shows quite simply.
    Compared to European counterparts, English regional cities lag behind the national average in terms of GDP per capita, by as much as 40% in Liverpool’s case.

    Evan Davies – mind the gap. Make case more eloquently 3hrs than I can in a few slides, essentially gist was,
    Economicially, London and SE soaring ahead at expense of the rest of UK.
    If all the core cities in England were to match the average output per capita, it would provide an additional £1.3bn to GDP.

    But what they need to do is not just break even, but go beyond that and become regional beacons, in a way German cities (RHS) in particular do so.
  • Here you can see just how the core cities became reliant upon the public sector and financial services during the boom times of the last decade, AND, the subsequent impact this reliance had in terms of employment once the economic downturn kicked in.

    In 2007, 1 in 3 jobs in the core cities were Finance or public sector based, compared to 24% for the UK. In Liverpool, the public sector accounted for over 30% of jobs alone.
    The combination of the crisis in the banking sector in 2008/9 and cuts to govt spending from 2010 meant that the core cities were over exposed, with 9,000 banking jobs and 24,000 local government jobs lost.

  • One of knock on effects of this is that many core cities weren’t providing the right conditions to support innovation and new business.
    All of them prospered and grew from the industrial revolution but in the era of globalisation and service based economy, they have fallen into various degrees of economic decline which many governments have tried to rectify in one way or another.

    And why is innovation important?
    Because 63% of private sector businesses are sole proprietorships…
    99% of businesses in UK are sme’s, accounting for 48% of private turnover. In time, it is these sme’s which grow and turn into larger companies.
    The core city average of net start ups per 100,000 between 2004-12 is 21.4, half the national average. In Birmingham, the rate of 3.1 is one of the lowest of the core cities. Only Bristol exceeds the national average.
    How? UWE has helped establish the highest number of student start-ups since 2008, with a combined turnover of £145m, while SETsquared incubator Temple Quay created over 650 jobs past 6yrs, hence its ranking as the 4th best incubator in the world.

    Silicon roundabout 16,000 new start-ups in 2013 for ec1v postcode.
  • So we have mentioned the knowledge economy and how important it is. But what is it?
    you can see the OECD definition on screen behind me.

    One of the key characteristics of the Knowledge Economy is the importance of the link between firms and other organisations as a way to acquire specialist knowledge.

    A significant part of a company’s value may comprise of intangible assets such as R&D, patents, branding or the value of its workers knowledge.
  • And what makes it so important? Well for the next four years, it is set to grow faster than the rest of the UK economy, including financial and business services. Revealed last week that the TMT sector at silicon roundabout is set to grow at 5.1% per annum for next decade.
    Even during the economic downturn, the KE held its own compared to other sectors and grew during a period of major economic adjustment and turbulence.

    In our analysis of what sectors compose the KE, we have included the creative economy, often referred to as the TMT (tech, med, tele), the science, the medical and advanced manufacturing sectors.
    Combined, these sectors are set to grow by 16% by 2018, compared to 12% for the overall economy.
  • Consequently, the government has taken a keen interest in the knowledge economy and how the UK is well positioned to benefit from it.
    In a recent report looking at how to encourage growth through invention, Lord Witty recognised the major role that universities have in supporting growth and economic activity , likening them to the tip of an arrow for untold innovation potential.

    And he has good cause to do so.
    The UK is 2nd only to USA for no. unis in the top 200 worldwide with 30, producing 7% of research worldwide and 14% of research with the highest impact.
  • Each of the core cities has its own speciality.
    Manchester home graphene & a new influx of media,
    Birmingham has become a leading medical centre for military trauma and life sciences,
    Newcastle energy and marine biology,
    There’s Pharmaceuticals in Liverpool, Nuclear engineering in Sheffield as well as Technology, Media and Telecoms pretty much everywhere.

    each city also has its own leading university, and in most cases, several - all offering different fields of expertise.

    And it is the universities that have a key role to play in supporting the knowledge economy as it grows, evolves and creates new opportunities



  • And talking of the necessary infrastructure
    In less than three decades, the number of tenant firms in science parks has increased by almost 600%.
    Because of the universities, Oxford and Cambridge are the main locations for science parks. Between them they account for 20% of all science parks in terms of floorspace, with a further 26% in the south east.

    If the knowledge economy is to grow in the core cities, then the supportive environment that science parks provide by supporting start-ups, offering technical expertise and encouraging innovation, is an essential element.

  • But the problem with the broad range of occupiers within the knowledge economy is that there is no one size fits all type of property that can be easily provided.
    The specialist nature of many firms means that their requirements are very particular and so access to specialist equipment or lab is essential for some occupiers, but of no use to others.
    Bio-related industries account for a third of floorspace but only 18% of tenants, whereas computer and telecoms occupiers account for 27% of tenants but just 19% of floorspace.

    Over two thirds of science park occupiers have less than 15 staff. Some firms, and start-ups in particular merely require somewhere to work, meet and be alongside like minded people at an affordable rate. One CEO like minded firms plus coffee, fridge & wifi.
    However, most traditional investors would rather have a multinational bluechip firm as tenant rather than some graduates with beards, skinny jeans and a new idea for using an iphone….





  • Each core city has an established science park and these have all been identified by the council and local partners as key development sites to help encourage firms to locate and invest locally.
    - just outside Liverpool is Daresbury, one of the leading big science centres in the UK, and now an EZ.
    There are also plans for the £500m biocampus around the new Royal Liverpool hospital.
    Nottingham has BioCity, the largest healthcare and bioscience park in Europe, now an EZ.
    Aston science park in Birmingham, also an EZ, is looking to deliver another 30,000 sq ft in the pictured scheme to go with the 350,000 sq ft already in place.
    - As these developments come forward and create these hubs, they will have a revitalising effect on their local markets and should encourage further development.
    - But, as my colleague Carl will explain in a minute, there are some major obstacles to overcome.
    Whether it’s a public body such as a council or university covering the risk, or a major private backer such as a Cisco or Astra Zeneca providing the covenant strength, provison of the type of space to support SMEs and the KE will struggle unless this type of support is in place.



  • Our report and discussion today is a call to arms for a greater focus on growing the knowledge economy in each of our core cities.
    Each city has something different to offer but those that can enable knowledge and creativity combine to the greatest effect will produce the best results.

    Providing the right type of real estate opportunities is crucial to allowing this growth to be nurtured. As small firms and start-ups prosper, they will need somewhere to expand, grow and strengthen.

    Investors and developers need to be made aware of the potential each city has and what relationships can be made on the back of that skill in order to retain more investment locally, rather than seeing that knowledge exported somewhere else.

    In turn, those cities which understand the interaction between the knowledge economy, occupiers and what the property industry can do will be the ones which benefit the most. Each city has the assets and skills in place to do it, the real challenge is making sure it gets delivered.

    Thank you, I’ll now hand you back to Dave and our panelists.

  • Thank you James.

    Why Did We Produce This Report:
    Our Research and Economic Development teams were seeing a huge growth in micro-enterprises / SMEs – throughout the country. Live/work becoming an important feature
    Our Agency teams were reporting marked increase in spin-outs from universities and corporates / industry – new firm formation
    Our Funding and Finance team (eg Chrysalis fund) were increasingly finding projects and demand for finance from such “newco’s” with the public sector increasingly seeking to deliver new accommodation for them

    Our Response:
    Engage the Core Cities Group
    Produce this report for MIPIM 14
    Further engage Core Cities and other interested stakeholders

    The Response:
    Remarkable from public and private sectors – UKTI, LEPs, City authorities, developers, landlords
    Such so, that we have to now dedicate some serious time to it all…

    What Are We Doing About It:
    We are developing a toolkit with our partners at Impact Science for a more refined view of what we think the knowledge economy landscape will look like over the next ten years across our Cities and regions
    We wanted something a bit more than the usual econometric forecasts can give us (ie usually straight lines)
    We wanted something that could allow us and our clients to make more informed investment decisions – whether public sector in forming policy or private sector in developing floorspace that is fit for purpose in the right location
    (every City has a Life Sciences strategy; but what does that actually mean)
    We wanted to play our small part in delivering a step change of inward / FDI investment into our Cities and regions. GVA is a company that grew out of the regions and into London; the Core Cities and city regions are in our DNA.

    Today I would like to present where we have got to in developing this toolkit as part of Planning for the Knowledge Economy

    This is not the sum total of the mapped UK knowledge economy, bit it’s a start
  • Before I do….
  • There is a big push on big data, but what does that really mean for us? Do we invest in Big Data projects, or do we use what we can to better understand what we have and how we use it. Consider the trade missions you receive….most other regions and cities visit and tell you they have great economies and are strong across the board. They have the world’s best drug companies and cobblers. Can this be true? Are you experts at everything?

    These are the questions businesses ask. So how do you know what you are really good at?

    You could ask people, but you may well get an answer that reflects what they want to be good at next. This is particularly true in the research communities in your cities and indeed around the world. So, we look at what they are good at, but do not necessarily ask them directly. We use data on their research outputs and we create a picture of the real knowledge assets within a city using data.

    Overload happens:

    We need to be cautious, as we can take on too much data and reach overload. Which is a fruitless exercise, but if we reduce the amount of data we use, we potentially see less and can create a biased view. The solution is to be able to take in a lot of data, process it understanding its context and to step back from it to identify patterns and strengths. Linking strengths to industry players will define a target list. Identified strengths will help you to position yourselves in a global inward investment marketplace and enable you to decide where should devote your limited resources.

  • Publications - independently reviewed and are a record of what the international community considers to be meeting quality standards. They are a record of what a city is good at. This is what you are doing and from a marketing perspective, you have the data to prove it.

    Patents - They protect your innovations and ideas. They need to be used to create new commercial opportunities. They tell you a lot about a business, organisation or city. They are tangible assets for business.
  • We ingest information from over 10,000 journal sources and patents databases to create the initial views of areas. We are able to search the data we collect by industrial area or by a more fine-grained view of the individuals. We can see what each researcher has been publishing or patents, who they work with and the industrial relevance. We can use this information to see which areas are most active which is an excellent indicator of how good they, how well-resourced they are and where the skills are. This is used to map against known industry information to create a shortlist of target companies to determine whether they are likely targets for inward investment, and even if they are not right now, to create the relationship to make them aware of your strengths. Choosing an approach of this nature, will enable you to not only decide where you will focus your own resources for growth, but also what policy work will need to be undertaken so as to support the growth of those industries, to establish forward looking plans for investment and capacity building, and to aid in the master planning of infrastructure to accomodate current and future growth in those chosen areas.

    The flexibility of the system is such that it can be reviewed again, and again in order for you to see what is changing, what else is happening and to be able to announce to, through your marketing groups, what your city is doing.
  • Each core city is different
  • Core City and Grouped Research Themes
    For example, Clinical Sciences – disaggregated research
    This is High Quality, High impact research
    This is internationally regarded
    Recall previous slide that Clinical Genetics and Hepatology stood out for Liverpool
    Economic Sectors
    Core City Economic Modelling and Forecasts
    FDI and Inward Investment Intelligenve
    UKTI and UNCTAD
    ONS
    Conclusions: General picture is that Liverpool is very pre-disposed towards FDI flows – has some great, global facing businesses. The only real worry is that it might have made more of its position than it seemingly has (market failure in their somewhere)
    What we are looking for is relationships here: the so-what question. How do we turn this into a tool for targeting industry and occupiers
  • Looking for relationships
    For example, ICT/Software and Clinical Sciences
    Example 1: Medical software: very broad sector but what does Liverpool do well
    Medical image analysis
    Phillips, Toshiba, Siemens, GE Healthcare
    Basically the manufacturers of imaging equipment (ultrasound, MRIs etc)
    USD$ 17bn industry growing by almost 8% year-on-year
    Example 2: Medical Management and Information Software
    GP surgeries, dentists, hospital Trusts – real time information, apps etc
    Market is worth USD$55bn in 2014, growing by 14% y-o-y
    Why isn’t Google and Apple in Liverpool yet?
    From a real estate perspective, where should such businesses be located

  • Healthcare and Pharma Biotech – sectors that Liverpool does particularly well in

    Healthcare
    Coronory and vascular
    Palliative care
    Respiriroty
    Rhematology – particularly in children and young adults
    Drug formation and safety
    Pharma-co-genetics
    Infectious diseases (Malaria, HIV, TB etc)
    School of Tropical medicne
    Wellcome Trust, Gates Foundation
    Pharma / Biotech
    Drug formation and saftey
    USD$6.8bn industry in 2012; growth over 10% y-o-y
    Drug monitoring and disease diagnostics
    USD$6.2bn in 2012; growth over 10% y-o-y
    Toxicology and drug saftey
    USD$150bn spent on R&D globally

    Up until this year, Liverpool didn’t have any commercial lab space in the city

  • Please keep checking….

    Thank you
  • Transcript

    • 1. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 A Bilfinger Real Estate company Driving future growth: core cities and the knowledge economy James Kingdom, Principal Researcher Iain Jenkinson, Senior Director International Festival for Business July 2014
    • 2. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Overview • Driving Future Growth: Core Cities and the Knowledge Economy • Overview of GVA Thought Leadership Report • Planning for the Knowledge Economy • Developing the Toolkit – A Liverpool Case Study
    • 3. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Driving future growth: core cities and the knowledge economy International Festival for Business July 2014
    • 4. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Driving future growth: core cities and the knowledge economy
    • 5. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 What are the core cities
    • 6. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Lag behind compared to other nations Except Bristol, English cities underperform compared to national average
    • 7. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 The need for an economic rebalancing historical reliance on financial and public sectors in the core cities
    • 8. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Supporting innovation Small and medium size enterprises catalyst for growth
    • 9. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 The knowledge economy What is it… “The trend in advanced economies towards greater dependence on knowledge, information and high skill levels.” OECD
    • 10. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 The knowledge economy … and why is it important
    • 11. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 The knowledge economy What is it… “Universities generating cutting edge research and resulting insights can be likened to the tip of an arrow, with the arrowhead behind it representing the economic activity enabled by research led innovation.” Witty Report, July 2013
    • 12. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Building on the existing knowledge base Each city has it’s own offering
    • 13. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Property and the knowledge economy Significant growth in science parks
    • 14. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Property requirements No one size fits all – different sectors have different needs
    • 15. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Catalyst for growth v Risk • Each city has plans to increase provision. • SMEs and start-ups need hubs. • Revitalise fringe markets. • Need head tenant • Public or private?
    • 16. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 • Knowledge economy vital for growth in core cities but potential still to be reached; • Each city has own strengths and leading university to support innovation; • Need to support SMEs and start-ups as well as attract global corporates; • Providing right real estate opportunities vital to creating environment for growth; • approaches needed to investment, utilise public assets. Conclusions
    • 17. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Planning for the Knowledge Economy: Developing the Toolkit – A Liverpool Case Study International Festival for Business July 2014
    • 18. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 http://www.gva.co.uk/supporting-our-cities-and-regions/
    • 19. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Leveraging Knowledge Assets
    • 20. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Where is the data?
    • 21. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Our Knowledge Economy Platform GVA and Impact Science are investing in a core cities knowledge economy platform
    • 22. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Making Sense from Large Data Sets
    • 23. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Generating Results Adding Detail Reveals Strengths: This example indicates that: • Clinical Genetics • Materials Chemistry • Nuclear & High Energy Physics • Hepatology • Geophysics • Physics and Astronomy Are all good areas to develop bespoke investment strategies. Some of this research will become very high value business activity.
    • 24. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014
    • 25. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014
    • 26. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014
    • 27. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014
    • 28. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014
    • 29. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Recognise distinctiveness: Each city is different Sell our strengths: Select areas of high impact Back winners: Global impact of knowledge impact Think global; act local: Target investment partners Plan for your knowledge economy: People, Finance, Facilities, Technology, ‘Place’ Have vision: Make our cities the best places to grow businesses What does all this mean for our cities
    • 30. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 What does this mean for investment real estate and regeneration Relationships: know your businesses (particularly those with the smart ideas) Needs based: not build it and they will come Real estate: right type in the right location Whole economic development approach: VCs and strategic asset management Regeneration: connect capital with ideas and take risks
    • 31. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 http://www.gva.co.uk/supporting-our-cities-and-regions/
    • 32. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 Thank you International Festival for Business July 2014
    • 33. gva.co.ukShort presentation title here / November 2010 PlaceEXPO: Place Tech UK July 2014 A Bilfinger Real Estate company Driving future growth: core cities and the knowledge economy James Kingdom, Principal Researcher Iain Jenkinson, Senior Director International Festival for Business July 2014