Brand recognition: the power of big-name occupiers

Occupiers wield almost unrivalled power to boost city economies, attract talent and capture the hearts – and wallets – of investors. The bigger the brand, the bigger the impact. Pui-Guan Man takes a look at how the UK’s urban hubs can harness that power, and what they can offer to bring in the big names. When it comes to turbocharging local economies, big-name occupiers have the power to add a significant boost. In Manchester, leasing deals such as Cloud Imperium Games’ new 87,000 sq ft studio at Enterprise City and US streaming platform Roku’s 115,066 sq ft offices at Bruntwood SciTech’s Circle Square (pictured) played a major part in creating 5,080 new jobs last year, according to inward investment agency Midas, marking its highest annual number and a 41% leap year-on-year. Those lettings helped add £314m GVA to the city’s economy in 2021. With rising costs, economic woes and political turmoil prompting businesses to reassess their priorities and look further afield for head office locations, the opportunity for urban hubs to level up by attracting them is growing. But the competition for those occupiers is fierce. So, what are the key characteristics that investors seek? What do big-name occupiers want from urban locations? And, crucially, how can cities work towards achieving these? Catering to all sizes Adding to the appeal of up-and-coming regional cities is the price differential that it offers compared with London. For example, grade-A rents stood at £35 per sq ft in Glasgow during H1 2022 and £38 per sq ft in Edinburgh, according to Savills, while prime rents in Cardiff – where the BBC recently invested in a new local HQ – stood at £25 per sq ft. Those compared with grade-A rents averaging circa £80 per sq ft across West End offices at the end of May. In that respect, cities are well positioned to take advantage. But the cost saving alone is not enough to attract big names to cities. Jessica Bowles, director of strategy at developer and owner Bruntwood, says that cost differential goes hand-in-hand with “great housing, liveable cities, brilliant transport, infrastructure and connections to a major international airport” as key factors that attract workers and strengthen city profiles. “We do our business in cities that have a clear brand, an attractive proposition, so there is the workforce there and there is the opportunity to attract customers to it,” says Bowles. A growing faction of businesses may already have their headquarters in another capital city but are seeking a UK location outside of London – Roku and Cloud Imperium are among the cohort making those decisions. But it is not just about getting major corporates into the building – ensuring a development can accommodate a mix of occupier sizes is crucial. At Circle Square, which also counts HP as a tenant, the scheme’s line-up includes national digital skills college Ada. “We had an opportunity to create spaces that were different within the buildings, which allowed us to have some very large lettings… as well as smaller customers and community activities,” says Bowles. “Part of Circle Square’s offer is about having smaller businesses and skills providers. There is a whole mix, an ecosystem of businesses, that creates vibrancy.” Providing an ‘ecosystem’ Bowles adds that a mix of businesses is always preferable because it “reflects what the city’s economy looks like”. “The brands will come if that’s where they can find talent, if that’s where they think they can really make an impact in the place, from the perspective of being able to get the right mix of skills to grow their businesses effectively there,” she says. “We are finding that progressive businesses want to be located with other progressive businesses. Businesses want to provide their teams with a brilliant place to work with other businesses around. They choose those spaces and you find these communities start building real depth to them.” Offering the right amenities is also critical for brands to feel as if they are “part of a place where things are happening”. Bowles cites street food shipping container village Hatch, on Oxford Road in Manchester, as an aspect that “really sold Circle Square to some of our customers”. Andrea George, director for town centre and consumer brands at Bruntwood, says “best-in-class” retail and leisure, and “interesting concepts”, are a fundamental part of the owner’s strategy. A hospitality model also forms a core part of the offer – George highlights Bruntwood’s £50m Pioneer programme as an example, which includes redesigning ground floors to create hospitality-style arrival spaces for customers. A common vision A strong shared vision between public and private sector partners is also essential. For George, appointing a visionary leader to head a city’s transformation programme is a key part of this. She highlights Sir Howard Bernstein, former chief executive of Manchester City Council, as the exemplar for driving a city centre strategy from both public and private perspectives. “Working together for a shared goal is really important because that can bring together all the stakeholders,” says George. “There’s also the social impact point of view – [factoring in] civic uses like hospitals and education… [ensures that] a place is inclusive for everybody.” Much of the work that Bruntwood is doing in town centres is with education, to understand where gaps in opportunities may be and how institutions can be relevant for residents. From that point on, the town can build homes that people want to live in for the long-term. “It’s a whole array of different things that all need to work together in order for that place to be successful,” George says. Transported away Occupiers are prioritising transport links in their search for new head offices. In the capital, law firm Forsters embarked on a “pan-London search” for offices along the Elizabeth Line for its relocation on the off-chance it would find an opportunity that was “off the radar”. The 500-person law firm eventually landed on Lazari Investments’ 22 Baker Street, W1, exiting its Mayfair premises after more than two decades. Notably, the firm was not tied to its branding as a “Mayfair law firm”, as described on its own website. “Law firms are, by their nature, traditional and conservative and often have clustered together. As other firms have moved out of the West End, we have been left as the biggest law firm. And we have found that differential has been helpful to our brand,” says Glenn Dunn, head of the corporate occupier group in Forsters’ real estate team. Dunn adds: “People who have made moves like Kingsley Napley going to Shoreditch, are an example of people thinking outside the box and getting the right building in locations that are not necessarily known for law firms.” Outside London, cities face the challenge of enticing progressive occupiers into widening their search towards regional locations. While certain parts of a business are easily located outside of the capital, such as manufacturing and warehousing, providing a compelling proposition for a brand’s front office is trickier. Katrina Kostic Samen, head of workplace strategy and design at KKS Savills, says cities will struggle to compete without a vibrant offering for young people that aligns with their interests. Using a fashion brand client as an example, which has not been named, she says the client only wants a foothold in London, as a city that can compete with Paris or Berlin in attracting fashion buyers during buying seasons. Those buyers will not only choose to visit if they know the city can “offer a good time”, but also because they want to watch people on the street and what they are wearing. “Those brands are going to have to come to a big city,” says Kostic Samen. “If it’s a lifestyle brand focusing on watches, or whiskey and expensive things, they are probably going to have to come to a city that can afford it. “If it’s a lifestyle brand or something more mainstream, there are some great things happening in Manchester, Birmingham and other places – and people would love to do Edinburgh because it has the history and the trip there. But the cities that don’t have a draw – what else would they do there? That’s what we would have to think about. “It’s one thing to draw the big brand for the office, but what else are they going to do, where are they going to stay, or eat? Who are they going to see on the street?” Vintage in vogue Leaning into nostalgia and sustainability – two principles that especially resonate with younger generations, particularly Gen Z – is one way that cities could boost their attractiveness, according to Kostic Samen. By bringing heritage to the fore, cities can promote unique identities. And on a bricks-and-mortar level, if office buildings are designed with more modular aspects and less floor-to-ceiling glass, those spaces can be broken down to become more “humane, palatable, community-driven and tactile”. “There is a feeling of wanting to be tactile, vintage, reliving the past,” says Kostic Samen. “That is why people like the brick of buildings, why people are starting to write letters and want vintage vinyl records or old clothes. There is a nostalgia for something we have missed.” Engage with policymakers To ensure buildings have the right designs for their end users – and tailoring that offer for users of the future – Kostic Samen recommends engaging with parties involved in making the policies, from councils and planners to government entities with funding powers, as well as the people on the street. “Communication is fundamentally the best part and people are often afraid to ask the question because they don’t want the answer,” she says. “But… so long as you circle back with people, it doesn’t mean that you have to do everything they have asked for. “What people want is to be asked and to be recognised, and people want to have a follow-up or closure. Sometimes there won’t be realistic views of what can be achieved, so you have to balance it, but having those conversations is important.” In terms of composition, Kostic Samen says cities must ensure they can offer enough strategically located homes near workplaces to offset the cost of commuting, so they can retain their talent. “The number one reason people don’t come back is transport cost,” says Kostic Samen. “You could also flip that to question why they come back – it could be because they want to be socially connected to their friends and meet new people. Having housing in cities is really important, as well as having a variety of housing models in that offer.”   To send feedback, e-mail pui-guan.man@eg.co.uk or tweet @PuiGuanM or @EGPropertyNews Photo from Bruntwood SciTech