The puzzle that is the Liverpool economy was no better illustrated than during the recession that emerged in 2007, writes Alastair Carmichael of GVA.
Unemployment in the city region fell for 18 of the 19 months that the country was in recession, the legacy of major infrastructure completions such as Liverpool ONE, the arena and convention centre and its refurbished and expanded airport.
For possibly the first time in its history the city’s economy was counter-cyclical, yet it was caught up in the national bolt away from property. Wider weaknesses in its capital and investment markets meant the city was hit harder than most, as bank funding and institutional activity dried up.
A response was forthcoming in 2012 with the formation of the £39m Chrysalis Fund, designed to kick-start regeneration in the Liverpool city region. Continued contraction of the debt markets, however, saw the Fund become one of the few sources of investment available for any real estate development.
Other aspects of the economy continued to function well with output growing 8.3% in the five years to the end of 2014. But it was the return of confidence in the autumn of 2013 that put the spring back in Liverpool’s property market. Away from the rhetoric of the Northern Powerhouse, the on-the-ground transformation of Liverpool speaks for itself. One well-known Liverpool property agent commented last week that he’d “never seen such a sustained period of commercial property transactions” in his 30-year career.
Interestingly, the city has now started to understand where its competitive advantage lies: not in trying to emulate Manchester or Birmingham but by being different and interesting, which is what Liverpool does best. The new story of Liverpool talks about things other cities cannot offer – ‘superports’, cruise liners and its unique culture and leisure offer. The surge in hotel development and investment to match the growth in visitor numbers is but one of a number of indicators of the market’s enthusiastic response to this new narrative; occupancy is up from 71.2% in 2013 to 77.8% last year, despite a growth in city centre room stock from 3,481 in 2008 to 7,847 in 2016.
In addition, there is now a focus on high value industries and life sciences around the Knowledge Quarter as stakeholders have coalesced around its potential to create the well-paid jobs in the sort of numbers that are capable of transforming an economy. Chrysalis was the catalyst for some of the early projects – notably the Accelerator project – and that success, as well as better-functioning debt markets, has seen the Fund evolve once more and turn its hand to different opportunities.
Regeneration is never simply about monetary investment. For Liverpool’s regeneration to continue, it is important for investment to be strategic, innovative and commercially well-founded.
In partnership with local authorities who provide pipeline projects and political willpower, The Chrysalis Fund is focusing on those emerging industries and development areas which will become the future success stories for the city region. As the city region’s economy continues to strengthen, such partnerships look set to come in to their own.
- Alastair Carmichael is head of real estate finance at GVA and advises Chrysalis as part of the firm’s remit to the Fund