Property must bridge divide to reach tech sector

There is a gulf between the commercial property and creative industries in the North West that could lead to missed opportunities on both sides, delegates at Place Tech 3 heard. Heather Butler writes.

A lack of flexibility in the commercial rental market could prevent the growth of the collaborative hubs that would help make Manchester a global player in the digital sector.

That was the worst case scenario spelled out by speakers at the latest Place Tech conference held at The Sharp Project.

Will Lewis, director of OBI Property, said there was a disconnect between the demands of the property sector and the needs of technology, media and telecommunications (TMT) companies, in particular the small start-ups on whose shoulders the sector is growing.

"Landlords want prime assets, big buildings, central location, maximum rents, long leases," Lewis said.

"TMT wants connectivity, affordability, flexibility. Small, new businesses can't afford big rents, they may work on project basis so can't commit to long leases."

Corporate office buildings may also be out, with TMTs looking for vibrant and stimulating workspaces where creatives can interact with their contemporaries, competitors and service providers – the so-called collaborative hubs.

Lewis continued: "There are pockets of technology clusters forming; in Media City, the Northern Quarter, The Sharp Project, parts of Portland Street, TechHub. But without Sharp and TechHub there is nowhere for these micro-companies to go.

"There is a big opportunity in TMT, it is a growth sector. There is huge pressure on developers to fill their buildings with maximum rents, we know that, but is there a way for them to become more aligned with this exciting sector or could they miss the opportunity and see the TMTs doing it themselves, perhaps clubbing together and creating their own building? Landlords need to rework their buildings and their business models to make the most of this opportunity."

Also speaking at Place Tech 3 was Doug Ward, founder of TechHub Manchester, the community and workspace for software entrepreneurs in Carvers Warehouse, Piccadilly. The collective is already home to 52 individual businesses and is turning potential occupiers away every week. With space available by the desk and the shared knowledge of the collective in such demand, TechHub is looking to expand and investigations are underway to find up to 50,000 sq ft elsewhere in the Northern Quarter.

Evangelical about the value of these hubs, Ward spoke of the Boulder Thesis, referring to the Colorado city where demand from new businesses outstrips office space. The density of successful entrepreneurial practice was supported by the combined efforts of local authority support, higher education feeders and a service sector which provides all of the practical help to allow the business brains to do their thing. Above all was the commitment of those firms to staying in the area, providing security for all stakeholders to make their investments with confidence.

Such aspirational models are springing up globally and attracting the attention of the venture capitalists, Manchester can be part of it, he argued.

"Things need to change, we're working in silos but there is so much potential to come together. We're completely open to collaboration, with a shared vision we could be one of Europe's top five start-up destinations.

See slides and photos from the event

"There is no clear return on investment in the short term so I understand it is difficult but there needs to be a longer term approach, a 20-year commitment. The businesses that make this bold proposition a reality will be the winners."

Manchester's potential to compete on a world stage in this sector is clear, according to Farooq Ansari, director of Reading Room, a digital agency with offices in London, Singapore, Australia and Manchester's Northern Quarter.

Ansari said Manchester was well placed to take advantage of the changing business landscape. He said: "The digital sector is no nonsense, pragmatic, cost effective, and that reflects Manchester well.

"It has a strong B2B community, arts, higher education, heritage, and has been bubbling as the largest digital hub outside London in Europe, with both established agencies and microbusinesses based here. It feels like there is more dynamism in Manchester than London, and others are starting to notice.

"In terms of property we are reasonably well served but creative businesses don't want to be isolated, they want to be together as the way to be successful is to link up, to create a fluid environment.

"Great buildings are one thing, great connectivity is another. We're well placed to be 4G pioneers, we've ultrafast broadband, masses of dark fibre under our feet that needs to be lit. Manchester represents a perfect storm of opportunity, community and technology, and is becoming accepted as being a global player."

Henry James, co-founder of inventid, a design and innovation agency, has occupies one of The Sharp Project's two-desk converted shipping containers. Along with business partner Bryn Morgan, James chose to leave Leeds and set up in Manchester and they have seen their business go from strength to strength.

He said: "Manchester is the seat of the industrial revolution, it has heritage and is a brand with global resonance. London is an incredible city but it is so big and can be a lonely place to set up a business, and it's very expensive. Manchester has a sense of community that London doesn't, it is very welcoming.

"We couldn't have done it without this space, and the £50 a week rent that has allowed us to grow at our own pace. This place is nurturing and the collaboration really has worked for us and has allowed us to access other areas of expertise without taking on staff."

The Sharp Project is the 250,000 sq ft former electronics manufacturing facility just off Oldham Road purchased by Manchester City Council in order to provide a new employment base in the city. Home to everyone from start-ups to film sets, the building will soon be putting its size and energy capacity – 4MW – to good use with a new 20,000 sq ft data centre.

Rose Marley, managing director of SharpFutures social enterprise and part of the management team at The Sharp Project, reiterated the hub message. She said: "Collaboration is why this building works. The creative digital sector is on an upwards trajectory, it's a growing sector and there are major opportunities. But people are turning away work as we don't have the skills in the supply chain and we to stimulate people to fill those buildings with businesses and we the threat we face is global, from Abu Dhabi, Dubai and Eastern Europe."

The Sharp Project is playing its part in tackling that gap, with the Sharp Futures social enterprise project, supporting young people into employment through internships and school programmes.

Marley said: "It's a creative digital agency with a double bottom line, it's financially sustainable and grows the talent and skills for the creative and digital industries. We don't want to see work going abroad because that's where the skills are. It will be pointless to design buildings if there are no businesses to fill them. So what are you doing about stimulating growing the people, growing the skills?"

Place Tech 3 was sponsored by OBI Property and organised by Place North West and Active Profile.