UK business expansion hotspot locations

Some areas of the UK are bending over backwards to encourage business growth, be it relocation or expansion. GrowthBusiness investigates ten hotspots your company should consider.

Spotting the best geographical areas for business used to be easy – you just looked at the main urban centres. But there is less upside now and most of the best development opportunities have gone.

So for the first time in years, investors and developers are actively checking out what secondary markets across the UK have to offer. The answers they find are surprisingly positive, particularly as the domestic economy as a whole has held out better than the more internationally exposed south-east region alone.

In sizing up potential business locations, the first step, clearly, is to measure them against projected property returns. This is the combined return on the growth of property value and increases in rent. According to Experian’s latest forecasts for commercial property, the industrial market is expected to be the strongest performer up to 2008, with average returns of ten per cent a year across the UK, but with better results where manufacturing activity is recovering. Office returns are close behind on 9.8 per cent with retail further back on 8.7 per cent.

Other considerations are also necessary before committing to an expansion project or opening a new unit. What is the rate of economic change in a location? How young and affluent is the population? And what is the impact of planning and regeneration in setting the property market on a new course? So, alongside any projected figures, master plans, major events, city living and new transport can all have an influence on whether you decide a hotspot is for real or not.


In the run-up to Liverpool’s year as European city of culture in 2008, returns on retail property are expected to be 13.9 per cent a year, 48 per cent ahead of the UK average, according to a recent forecast from Experian. On office space, returns of 13.6 per cent are expected, which is 56 per cent more than for the UK as a whole.

‘The Liverpool skyline is currently littered with cranes, as significant residential and commercial property goes up to house those being attracted by the business and lifestyle opportunities that Merseyside now offers,’ says Neil Sturmey, partner at Grant Thornton in Liverpool.

The average take-up of office space is currently 400,000 sq ft a year in the prime core and the focus is moving towards creating Grade A space for large occupiers. In retail, Grosvenor and Land Securities are squaring up with their Paradise and St Johns/Clayton Square projects.

‘As long as planning policy, process and delivery can keep pace, we should be in for exciting times in Liverpool,’ says Sturmey. ‘While there is 1.1 million sq ft of office accommodation available in central Liverpool, the number of quality Grade A developments is very limited.’

See also: Liverpool, Birmingham and Manchester lead entrepreneurial cities list


Private funds are flowing back into Sheffield after 25 years of concentrated regeneration and development. ‘There is now more activity here than in almost any other regional centre in the UK,’ reports Stephen Hodgson at Knight Frank in the city. ‘The economy has regained its balance and has become more bullet-proof.’

In the last year, office rents have risen from £15 per sq ft to £18. Sheffield’s flagship project is St Paul’s Place, developed by CTP St James, where the first building has just been completed at a cost of £23 million with two more to follow, giving a total of 200,000 sq ft of A grade office space with an additional 50,000 sq ft of leisure space and 300 apartments.

City living is an important part of Sheffield’s revival, with low-cost residential sites just outside the centre being snapped up by buy-to-let investors. New bars and restaurants are attracting people to the centre in the evenings. Sheffield’s credentials as a prime location are being strengthened by Hammerson’s development of a new 600,000 sq ft retail quarter with John Lewis as its anchor tenant.


When athletes arrive in London for the Olympics, most will be staying next door to the main stadiums in a new £3.5 billion scheme at Stratford City. Developed by Westfield, Stanhope and LCR on the site of derelict rail sidings, 5,000 new homes are being built alongside five million sq ft of offices and 1.5 million sq ft of retail and leisure.

‘Stratford City will transform this area of east London into a thriving new urban community,’ said Ken Livingstone, the Mayor of London, launching the scheme in October last year. ‘The homes, jobs, retail and transport planned for the site will substantially improve the facilities on offer to visitors to the London Olympics.’

Situated three miles east of the City and two miles north of Docklands, Stratford is already a location waiting to happen, thinks Jonathon Saxon, who covers the Thames Gateway and Docklands for Knight Frank. ‘During the Olympic bid, the market has been dominated by shortage of supply, even though there is healthy demand at £18 per sq ft. Only two significant developments have gone ahead. We might start to see developers looking at off-plan pre-lets, although the built environment probably has to improve before we see too many large occupiers.’

Where Saxon expects to see most demand in the next three to five years is from smaller companies working for the Olympics and he is confident that rents will soon start to push through £20 per sq ft.


For those looking for amazing offices with fantastic views of the sea and a great nightlife, then try Newquay in Cornwall. The entrepreneurs who helped build Britain’s surf capital are looking to widen Newquay’s commercial appeal and draw in young, creative enterprises, says Danielle Atkins, investment manager at Cornwall Pure Business.

A new growth area has been set up next to the airport. The site is mixed-use, with both exclusive and affordable housing, targeting product designers in the leisure industry. For the more traditionally minded, the Duchy of Cornwall is applying to build a follow-up to its model village of Poundbury in Dorset, which locals have already dubbed ‘Surfbury’.

There is money behind the town’s efforts to make itself an all-year round attraction for business. Along with the rest of Cornwall, Newquay qualifies for Objective 1 EU funding. A £360 million programme is running up to 2006 and is likely to be renewed for a further five years. The funds are not being used on direct grants, but on building up Cornwall’s infrastructure, ensuring, for instance, 98 per cent broadband coverage.

One company that has seen the attraction of Newquay is Infoteam, which repairs Sony Playstations in Europe. The CEO, Glen Coffey, was originally going to move the business from Uxbridge to Slovakia. Instead he chose Newquay. ‘From a pure numbers point of view we should have gone to Eastern Europe, however there was an emotional pull. Since relocating we have realised an 18 per cent efficiency gain. The productivity we get is exceptional here.’


The Millennium Stadium and the new opera house have brought an influx of visitors to Cardiff. ‘If you want to get a hotel next Monday, you can forget it,’ says Robert Hales at EJ Hales, property agents for Tesco in Wales. ‘Even a few years ago with half the capacity, you would not have had a problem.’

The next major project for Cardiff is the tripling in size of the St David’s shopping centre to 1.4 million sq ft in a development by Land Securities and CSC. ‘It is a huge project,’ says Hales. ‘It’s as big as any city centre development in the UK. The extension alone is nearly as big as the Bull Ring.’

Rental prospects look promising. Last year, Scottish Widows backed a 125,000 sq ft development in Queen St, which attracted retailers such as HMV, Dixons and River Island at £275-£300 per sq ft, which are the highest rents ever achieved in Cardiff.

The city is also bidding for a 100,000 sq ft supercasino in partnership with Aspinalls. It is part of a £535 million redevelopment of an 80-acre peninsula in Cardiff Bay by Orion Land & Leisure. The site includes two hotels, a 50-metre swimming pool and a snow box, as well as housing, which will all go ahead even if permission for the supercasino is not given.


If you measure locations by levels of economic activity, then the London borough of Camden scores consistently well. According to The UK Competitive Index 2005, it is more competitive than anywhere else in the country, apart from the City of London and Westminister, where the figures are skewed by low local populations. The author of the report, Robert Huggins, director of the enterprise unit at Sheffield University’s management school, takes into account measures such as R&D, skills, productivity and exports in calculating the wealth-generating potential of any area.

Camden also does well for enterprise. For every thousand people, it has 9.2 start-ups, compared to 3.2 for the UK as a whole. Significantly, these enterprises turn into knowledge-based business. In Camden, 36 per cent of companies can be classified in this way, contrasted with 20 per cent for the UK in general. This explains Camden’s high capacity to create wealth, says Huggins. At £60,000 per head, gross value added is four times more than the national average.

In property terms, there are two sides of Camden, says Matthew Maddox, a director of Churston Heard the property agents. ‘The high street always trails the bohemian quarter around Camden Lock, where there are lots of small creative businesses on short leases. But watch out for the development of Camden tube and the Electric Ballroom. It will create a lot of opportunities.’


The police station in the centre of Leicester is about to be knocked down and replaced by a new 100,000 sq ft business district. The first 50,000 sq ft is being developed by Akeler on a speculative basis and is the first of a series of projects designed to modernise Leicester’s commercial property.

This master plan will be building on a position of strength, according to Experian’s forecasts. From 2005 to 2008, Leicester is expected to post some of the best returns on office space in Britain, averaging 11 per cent a year.

Although it has a buoyant local economy, healthy investment flows and a young demographic profile, the city is starting from a lower base than its geography might warrant. Leicester sits next to the M1 and is only 70 minutes from London by train, but has remained a city of small manufacturers, failing to attract leading occupiers of office space.

Part of the problem, says John Nicholls at Leicester Regeneration, has been a poorly designed stock of buildings, which have depressed demand and deterred speculative investment. The new business district is designed to break this cycle.

He also wants to ensure that shoppers are not lost to Birmingham, Nottingham and Peterborough. So, alongside the business district, Hammerson have the go-ahead to carry out a major extension to the city’s covered shopping centre, The Shires. ‘Once these two projects have been completed, we will have effectively rebalanced the whole economy,’ says Nicholls.


In one of Europe’s biggest commercial developments, Land Securities is planning to build 4.8 million sq ft of new offices around the new international station for the Channel Tunnel at Ebbsfleet, four miles from the M25 in north Kent. The space will be equivalent, says Ian Lindsay, deputy chief executive of Kent Thameside, to four Canary Wharf towers, although with significantly lower rents.

Ebbsfleet will be the Eurostar’s first stop out of London on the way to Paris and is expected to open at Easter 2007, transforming the transport geography of Kent. ‘Once the international station opens, we will be looking at growth on the scale of a new town,’ believes Lindsay. ‘Instead of taking 55 minutes to reach London, journey times to King’s Cross will be 17 minutes, or eight minutes to Stratford for the Olympics.’

For Land Securities, the aim will be to create a major new centre at Ebbsfleet for financial and business services. For Lindsay, the hope is that these developments will result in 50,000 extra local jobs within 20 years. He also expects 30,000 more homes to be built. In Eastern Quarry, next door to Ebbsfleet, a huge single application for ‘a sustainable community’ of 7,250 of those new homes is currently being made.


Based on the cost of running a business, Stoke-on-Trent emerges as the most competitive location in Britain, according to a study of 121 cities in 11 countries by KPMG last year.

Lying halfway between Manchester and Birmingham on the M6, Stoke is learning to compete on more than price. A complete redevelopment of the city centre is being undertaken with the support of the West Midlands Development Agency, which channels 70 per cent of its £300 million budget into six priority areas, of which Stoke is one.

An eyesore office block has been demolished and 300,000 sq ft of modern space is being developed in the city centre. ‘Even though we are the second largest centre for professional services in the West Midlands, outside Birmingham, we have never had a formal business district before,’ says John De Kanter, chief executive of Instaffs, who is expecting office rents to rise from their present level of £12-£15 per sq ft.

Housing renewal is also a priority 14,000 old terraced properties have been knocked down and are being replaced by 10,000 modern homes. Stoke is one of the last cities without any urban living and its regeneration zone is a mixed-use site, combining homes with a new educational quarter.

Alongside its continuing strength in ceramics, Stoke is building a reputation for itself in medical science through Keele University and North Staffs Hospital, which has just become a teaching institution. ‘One 30,000 sq ft science park for incubating medical ventures is full and a second one is now in development,’ says De Kanter. ‘The local economy is on the way to transforming itself.’


Plymouth has a vision to push itself up into the same firmament as cities like Liverpool, Glasgow and Newcastle. In a plan put forward by David Mackay, an international architect best known for his work at the Barcelona Olympics, the priorities are for Plymouth to rediscover its waterfront, increase its population by 100,000 and become a centre for growth in the south-west.

This vision is now at the heart of the planning process, says Peter Ford of the city’s design team, giving developers a clear indication of how Plymouth will evolve into ‘a European city of the future’. With a centre the size of Manchester, there are several strategic sites earmarked for large-scale regeneration.

Next year, a 700,000 sq ft shopping centre, Drake Circus, opens in the middle of the city. Developed by P&O, it already has New Look, Virgin, Zara, Mothercare and Ottakar’s signed up as tenants. In 2007, a new arts centre will open at Royal William Yard, the former vitalling station for the Royal Navy, which will also have commercial and residential space.

The impact of these efforts to revive Plymouth is already being felt on property returns. For the four years to 2008, Experian expects the city to be the top-performing retail location in the country, with returns averaging 11 per cent a year.

Oli Haill

Oliver Haill

Oliver worked for Vitesse Media, the original publisher of GrowthBusiness, from 2003 to 2010, as a writer, editor, and Head of Research for the editorial team.

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