The legacy of the events of the Financial Crises in 2008 are still evident today, with many arguing this as the root of the cost-of-living crisis and slowdown in UK productivity. In this blog, our colleague Tom Dunn looks at the positives, and the opportunities ahead as we embrace innovation – creating great places in which prominent new industries can thrive.
This blog is not about picking apart the UK economy and debating our woes – it’s a chance for me to share my own (and others) fresh and incomplete thoughts and insight on the remarkable things driving our economy forward, hopefully it’ll lead to a conversation with you – I’d love to hear your thoughts.
But first, a bit of context
Source: ONS (2023)
Successive economic shocks have stunted UK economic growth in recent years. Figures published earlier this year by the ONS (Office for National Statistics) reveal that whether through recent turmoil through lockdowns during covid, or increased red tape from Brexit, UK Productivity never been able to recover fully since the 2008 crises. Some have called this the decade of lost growth.
Read any party manifesto these days and you’ll be hastily reminded that Britain has led numerous ground-breaking advancements throughout history, most notably serving as the birthplace of the Industrial Revolution.
Now, a fresh revolution is emerging, with developments in fields like AI, BioTech, quantum and future telecoms, and more, catalysing profound changes in our economic and social structures.
This revolution is moving at a blistering pace:
- 20 years – In 2003 the cost of sequencing the human genome was £100,000,000, its now less than £100.
- 10 years – Lithium batteries, that power laptops and EVs now cost 90% less to produce.
- 1 year – AI (MidJourney), giving the AI identical input, this shows an astonishing leap in quality in the space of 12 months of refinement of the AI in these two generated images:
- 1 week – ChatGPT to 1 million users (100m users in 2 months)
This rapid tech-driven transformation presents its own set of risks alongside its numerous opportunities. Energy company Octopus now employs AI to do the job of 200 people in its customer care department – and the AI is setting record customer satisfaction feedback scores – particularly when it comes to showing empathy. Given nobody actually knows how Chat-GPT works, you’d be forgiven for thinking an AI-fuelled Mad-Max style breakdown of society is just around the corner.
The Government is paying attention
A strategic vision for the future of UK Science and Technology now sits at the heart of Government Policy. This year DSIT (Department for Science, Innovation and Technology) set an ambitious target of enabling the UK to become a “science and technology superpower” by 2030. DSIT is looking achieve this by creating a number of frameworks, strategies and funding pots for what it defines as “Critical Technologies”:
- Artificial Intelligence (AI) – machines that perform tasks normally performed by human intelligence, especially when the machines learn from data how to do those tasks.
- Engineering biology – the application of rigorous engineering principles to the design of biological systems.
- Future telecommunications – evolutions of the infrastructure for digitalised data and communications.
- Semiconductors – a class of electronic materials with unique properties that sit at the heart of the devices and technology we use every day.
- Quantum technologies – devices and systems which rely on quantum mechanics, to provide capabilities that ‘classical’ machines cannot.
Things are already moving, on AI for example DSIT released a much-needed White Paper on regulation earlier this month. The Government is looking to follow these up with updated release strategies for semiconductors and quantum technologies, as well as a Wireless Infrastructure Strategy that outlines research and development priorities for future telecommunications, including 6G.
Britain already punches well above its weight (relative to population) – we are a main challenger nation to the US and China in many areas, including biotech, quantum, AI and more. We have 4 of the world’s top 10 universities and a technology sector worth over £1 trillion.
Efforts will be made to ensure that emerging technologies like AI can be effectively utilised to support a more innovative public sector. The Institute for Global Change also believe that a Government-led development of general-purpose AI systems could revolutionise the public sector, and through use of the latest biometric breakthroughs could lead to a quicker, leaner NHS. A bit like what Estonia has been doing for decades.
All this could enable the UK to become the next Silicon Valley, that’s the Governments ambition anyway. But will it take longer than we think? The first history book on Silicon Valley was written in 1993 (Accidental Empires) – quite a lot has happened since! Should we instead tread our own path? And will we get there by just writing long strategies?
Some might say it’s best to just embrace the natural chaos of these industries and provide regulatory breathing space and turbo charge early stage companies with investment key to facilitate growth. The £250m funding for the Advanced Research and Invention Agency (ARIA) to fund high-risk, high-reward R&D is a signal DSIT are very much alive to this. Channel 4’s recent documentary on the rapid expansion of the UK’s fledgling lab grown human-sourced meat industry gives a glimpse what this future could look like.
So the money and the ambition is there, but will that be enough? What role do the private sector, academia and early / growth stage companies have to play?
It’s all about the community
Real Estate is not an industry synonymous with innovation, but there’s a huge opportunity right now for us to be the facilitators and accelerants to these exciting growth sectors.
Whether it’s an established “Innovation District” like Kendall Square, a flourishing “Start-up Campus” like Maria 01, or a small fledgling “Start-up Community”, all describe a concentration of unique, remarkable examples of industry, start-up culture, academia and human capital – and by extension the presence of the real estate that helps cluster them.
Wouldn’t it be great if you could spot a Start-up Community just at the moment before it grew into something big? Brad Feld, who helped coin the phrase Start-up Community with his 2012 book, reminds us that there is no playbook for creating these communities. In the same way that every start-up is unique, unpredictable, and unstable – and the communities that they inhabit are no different. But there are a few things for us to look for.
To judge a successful existing/future Innovation District with growth potential is not straightforward – that is a different blog post / book – Brad has his Boulder Thesis and then Brooking’s tried to extend this out to Innovation Districts a few years later. You might say all of which sounds a little academic; shouldn’t it be more straightforward?
I pay attention to its speciality: what makes it unique, how fast is it growing, how many start-ups are being created and do they stick around, what does ecosystem’s culture feel like, are there links to academia and policymakers, and the diversity and depth of the occupier market. By exploring these communities with these principles in mind, you can quickly get under the skin of what is going on, and you may get an insight into the growth potential of the cluster.
Luckily at HBD we don’t need to worry about creating Startup Communities; we’re joining them instead!
Gloucestershire has the second largest number of cybersecurity firms in the country, with only London home to more cluster of talent. However it’s not just cyber that powers the region – other complimentary sectors such as AI, Communications, Quantum Computing and more are thriving here.
Cheltenham has been a technology hub for decades, which is why we’ve partnered with Cheltenham Borough Council and Factory to deliver our £1bn Golden Valley project. This will be the UK’s newest, greenest tech Innovation District.
At Golden Valley, we’re creating a diverse Innovation District that will establish a sustainable and inspirational place to live and work, with thousands of sustainable homes and over 1.5M sqft of commercial floorspace. Our first building is Factory Cheltenham, the National Cyber Innovation Centre, a facility surrounded by revolutionary new workspaces, community and amenity spaces, as well as energy efficient homes – all in a unique natural setting.
Planning will go in later this year for the Innovation Centre, opening its doors in 2026. The design process for this building has involved an enormous amount of research into changes in occupier trends. We welcome that occupiers are now demanding more from their workspace and have witnessed a seismic shift towards a sustainable, technology-enabled and hospitality-led product. Island is another pioneering example from our portfolio; HBD’s net zero office building in Manchester opens doors next year with these principles in mind.
I’d love to continue this conversation – what’s your take on the innovation sector in the UK at the moment? Will DSIT’s pipeline of strategies and funding announcements be enough to make the UK a technology superpower in 7 years time? What nuances should we in the real estate sector pay attention to?
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