How cities are using the power of the brand

A city’s image can be made or broken by the calibre of the occupiers it attracts. As global hubs adopt marketing techniques to lure big names from around the world, the battle for the brands is on. The City of London is a 500-year-old super-brand whose status and success is based on the big names that operate within its boundaries. The Royal Exchange was founded in 1565 by Sir Thomas Gresham as the hub of commerce for London’s merchants and from that corner of Cornhill and Threadneedle Street the UK’s powerful banking sector grew. In uncertain times, it’s vital that the Square Mile continues to attract big-name companies from around the world. The City of London Corporation – the local authority for the district – has offices in Bangkok, Shanghai, Mumbai and Brussels and is scouring the US for its next overseas base. “We have a global network of offices so we can sell the City and its benefits internationally,” says City of London Corporation chairman Chris Hayward. Despite the threat from cities such as Frankfurt and Dublin, posturing to pinch businesses from the City in post-Brexit Britain, Hayward has some recent wins under his belt. Deustche Bank has recommitted to the City, signing up to 580,000 sq ft of office space, and Bloomberg opened its European headquarters in Cannon Street. The Foster + Partners building won the Stirling Prize for architecture last year – an accolade that reaffirmed to the world that the US media conglomerate chose London. With that, the brand, building and place become synonymous. Battle for the brands The race is on and being more fiercely contested than ever before, but how can a global city attract and retain international mega-brands? “Cities increasingly adopt marketing techniques and promote themselves to different target groups,” says Richard Crook, chief marketing officer at Colliers International. “Marketing and particularly branding have become part of the range of contemporary urban policies. This is hardly surprising considering the growing competition between cities around the world for talent, investors, visitors and students.” When Amazon announced its intention to build a second headquarters it drew 238 proposals from US cities before narrowing it down to 20 finalists last June. Queens, New York, and Arlington, Virginia, were expected to reap the benefits of the national beauty parade and looked set to house two sites respectively with 25,000 employees in each, until Amazon announced in February it would not be moving forward with the New York headquarters due to lack of support from local and state politicians. There had been a backlash since the announcement in November over the tax gift used to entice the giant retailer. New York had agreed to kick in $1.5bn in subsidies. That included a tax credit worth up to $1.2bn, and a cash grant of $325m from the economic development agency Empire State Development. “This is the largest economic development initiative that has ever been done by the city or the state,” said New York’s governor Andrew Cuomo, before Amazon announced it would not progress with the New York plan. “Either you are creating jobs, or you are losing jobs. Either you are part of the economy of tomorrow, or you’re part of the economy of yesterday. This is a competition.” He has a point and was simply weighing up the tax giveaway against the far-reaching and positive impact that winning the digital company would have had. “These global tech companies are so large and significant in size, if you can attract a HQ it becomes a real economic prize,” says Knight Frank’s Liam Bailey. “Cities fall over each other to appeal to them and there’s a hinterland of other companies [often part of the supply chain] that will follow.” However, there are plenty of other incentives that brand New York offered brand Amazon. The US city topped the Savills Tech Cities index published in February because of its deep talent pool and position as a global centre of commerce, and venture capital investment hit $26bn in 2018, up 23% year-on-year. According to the study, San Francisco was knocked off the top spot as a result of obscenely high co-working costs. State strategy The success for New York was a direct result of a state strategy: to encourage economic development in impoverished areas. New York state officials identified 21 special new enterprise zones, including four in New York City, to receive tax breaks and other incentives aimed at attracting business to distressed neighbourhoods. “In order to compete for brands, cities must first compete for talent,” says PwC’s global head of real estate, Craig Hughes. “A global company will bring a workforce with it but also wants to tap into the one that is already there.” The Colliers International Cities of Influence report reveals that the top cities have the right balance of workers in modern professions: information and communications, technology, financial business services and science. This results in the highest levels of economic productivity per capita. The study shows Zurich, Dublin, London and Edinburgh as the best European cities for skills. Warsaw appeared in the top five for the first time “courtesy of a healthy mix of employees working in IT, professional services and technical roles”. This is another aim for the City of London Corporation, which is appealing to other sectors apart from financial services – for example, advertising agency Saatchi & Saatchi is moving into Chancery Lane and Deliveroo to Cannon Street. ARM, the multinational semiconductor and software company, is headquartered in Cambridge to tap into the stream of talent and start-ups that come out of Oxbridge. It is well placed to soak up the skilled workforce in the well-established Cambridge Science Park. A city must also meet employee aspirations: “Beyond university and work, overall quality of life has become more relevant and important to many, especially those in the millennial-plus generations,” the Colliers report reads. Crime and safety, access to healthcare, climate, traffic, commute and pollution are all factors. Munich, Zurich, Stuttgart, Vienna and Utrecht score well for quality of life. So, who comes first: the giants, the unicorns or the fledglings? London is the European tech capital, having produced the highest number of billion-dollar digital firms (unicorns) in the region. “The UK is home to the highest concentration of ambitious tech entrepreneurs in Europe,” a recent report by consultancy GP Bulldog reads. “With 102 tech start-ups fast approaching a billion-dollar valuation, it looks like the prospect for Brexit Britain is strong.” [caption id="attachment_965954" align="aligncenter" width="847"] Photo: WU HONG/EPA-EFE/REX/Shutterstock[/caption] Digital flood The world’s digital darlings are flooding in: Apple is expected to amalgamate its multiple sites into one campus at Battersea Power Station in 2021. All 1,400 staff will be spread over six floors within the Grade II listed building on the banks of the Thames. Facebook is now in residence in Rathbone Square in Fitzrovia, close to Snapchat, Instagram and Netflix. Google is in discussion with Camden Council about plans for an 11-floor European headquarters. Dubbed the Verge, the new office will hold 4,000 employees, with a running track on the roof overlooking King’s Cross station. As for the unicorns, the artificial intelligence company BenevolentAI has made Bloomsbury its home and digital bank OakNorth is in Soho. JLL’s Nick Whitten argues that the mega-brands also land in London to be close to the UK’s home-grown unicorns and burgeoning start-up scene. “Around Silicon Roundabout [in EC1V] there are 3,000 tech firms per square kilometre, compared with a national average of one. Both big brands and small feed off each other in such a hub and need each other to grow,” he says. This can already been seen at Battersea Power Station. Business members’ club No18 has leased the rest of the office space next to Apple and will provide resident entrepreneurs with meeting rooms, co-working spaces and business lounges. Global cities can be victims of their own success. One of the major threats to the world’s leading locations is affordability. Brands pull in more brands, increasing the population and demand for homes, and in turn pushing up house prices. [caption id="attachment_965955" align="aligncenter" width="847"] Photo: Yichuan Cao/Sipa USA/REX/Shutterstock[/caption] “The reason Amazon decided to spread out its workforce from its Seattle base was because the city’s construction could not keep pace with the tech boom there. There wasn’t sufficient volume of homes or affordability,” says Knight Frank’s Liam Bailey. Microsoft is addressing the issue itself, having pledged $500m to build reasonably priced homes for its staff and Seattle’s key workers. Despite high average property prices, both New York and London offer something that Seattle doesn’t – variation of price and product, and transport links that ferry workers to cheaper areas. They also have a large footprint for an expanding office market and can make space for brand-new headquarters, explains Savills’ Paul Bennett. The role of real estate The City of London Corporation is assessing the housing estates that it owns dotted across the UK capital in boroughs such as Hackney, Southwark and Tower Hamlets. Again it is concerned about housing its city workers as the Square Mile has limited space for residential development. But it is also mindful that real estate is the physical embodiment of its brand. The City’s skyline has long represented progress and innovation on the ground, hence Hayward is consulting on plans for the Eastern Cluster – a group of tall towers that will house 12,000 each. Landmarks attract companies, be they tech conglomerates such as Apple or cultural brands such as Cape Town’s Museum of Contemporary Art Africa, which is housed in an old flour mill. “Clearly a major urban brand development really helps to change the perception of a city brand,” says Crook, “and helps it to be seen as a centre of innovation.”   The theory: city branding Richard Crook, chief marketing officer, Colliers International City marketeers often believe the city brand is controllable and fully manageable and that they can deploy a one-size-fits-all strategy. However, they will be trying to reach different audiences with different perceptions of their city. The academic underpinning of place branding is still poor and is a relatively young field of research. Place branding is now cities trying to garner positive associations in the consumer’s mind.