© The Financial Times Ltd 2013 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
November 20, 2012 8:50 pm
Amid the fanfare for London 2012, the building of the Olympic Park was trumpeted not only as a chance for the UK capital to show its mettle on the world stage but also as an opportunity to provide funding for much-needed regeneration in a somewhat depressed part of east London. Dubbed the “Regeneration Games” by Sir John Armitt, who chaired the Olympic Delivery Authority, the event was touted as a catalyst to revive the whole area, and to provide a boost to British businesses that would supply and work on the infrastructure.
As it turned out, the country’s present economic circumstances have made the commercial prospects created by London 2012 even more welcome than could have been predicted back in 2005 when the city won the contract to host the games.
With the economy struggling, projects such as the £1.45bn Westfield shopping centre in Stratford, the £1.3bn development of the International Quarter and the £200m investment in Stratford station have proved a fillip for many companies.
Yet while such large urban regeneration initiatives can offer opportunities for businesses, there is still much work to be done to ensure that companies take full advantage over the longer term.
Mid-sized companies in particular are in need of growth stimuli. While they punch above their weight in terms of their contribution to the economy – accounting for 20 per cent of private sector turnover and employment but representing just 0.2 per cent of British companies – mid-sized companies have yet to realise their full potential when it comes to exports.
In London, the work around the 2012 Games has been the capital’s largest regeneration project since the Docklands development of the 1980s and 1990s, which gave the city Canary Wharf and the Docklands Light Railway. Similarly transformative schemes elsewhere in the UK include Manchester’s Salford Quays, on the site of the old Manchester Docks; and Liverpool One, the shopping centre close to the city’s waterfront.
“Thousands, if not tens of thousands, of UK-based mid-sized companies have been involved in the Olympic Park and the regeneration work that is going on in east London around it,” says Adam Marshall, director of policy and external affairs at the British Chambers of Commerce (BCC). “That extends far beyond companies in London, and the project has definitely injected some confidence into business.”
But he stresses that businesses need to ensure that the momentum generated by such regeneration initiatives is not lost. “Companies need to use that success,” he says. “There is an opportunity for them to export their experience and products to other markets that are engaged in similar projects.”
Mr Marshall also highlights a divide between regeneration projects in the London area and those in other parts of the country.
“We have definitely noticed a gap between projects inside and outside the M25,” he adds. “There has been a big slowdown in projects in regional towns and cities. Regional projects are important to mid-sized companies. We need to reinvigorate regeneration in these areas.”
One of the larger regeneration projects outside London is in Birmingham, where the “Big City Plan” aims to expand the size of the city centre by 25 per cent, and includes the £600m redevelopment of New Street train station.
James Payne, design director of Nikal, which is developing the Masshouse site in the east of the city centre, says: “Development has been stifled in the past few years by the economy, but the Big City Plan has delivered in terms of transport and infrastructure, which is so important for the connectivity of the city. The strategic approach that Birmingham has taken is very welcome for private developers like us.”
Part of Birmingham’s regeneration has included establishing a hub for digital businesses in the Digbeth area of the city, much in the same way that Salford Quays gave rise to the MediaCityUK development.
Lucan Gray, who runs the Fazeley Studios site in Digbeth, also lauds the advantages of working under the umbrella of the Big City Plan. “[It] provides a clear vision for the area, which helps in marketing and attracting people and businesses,” he says.
Fazeley Studios opened in 2008 and includes businesses specialising in video, web design and digital marketing. However, Mr Gray also runs the nearby Custard Factory Arts Complex project, home to a thriving community of artistic and media businesses. The Custard Factory opened in 1993, long before the Big City Plan was conceived, and has built a community of creative industry enterprises on the site of the old Alfred Bird and Son factory, once home to the venerable Bird’s custard powder brand.
Mace, the privately owned consultancy and construction company, has been involved in both Birmingham New Street and the east London regeneration.
Mark Reynolds, deputy chief executive, says: “It’s easy to identify the sites for regeneration projects but much harder to come up with a viable proposition and make it work. There aren’t the subsidies available that made projects like Canary Wharf a success.”
Mr Reynolds believes one of the government’s challenges is to develop a long-term strategic plan for urban regeneration. “We need to be thinking about where we want to be in 2050 at a minimum,” he says. “I recognise that the government is beginning to take action, but it needs to be bold in its plans to move forward.”
A point echoed by Mr Marshall at the BCC, who says: “Major regeneration projects have huge potential benefits for mid-sized companies in the UK because supply chains tend to be local, so the projects mean UK jobs and UK sales. This huge benefit is often overlooked.
“The problem is that they are often held back by issues like financing, planning and empty property rates. What we need to see from the government is maximum effort to unlock projects that have stalled and get them going again.”
Copyright The Financial Times Limited 2013. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.