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Big relocations from London are the life-blood of regional office markets? Maybe not, says David Thame, as Channel 4’s relocation to Leeds comes under the spotlight
Manchester, Birmingham, Liverpool, Bristol, Glasgow – last October all five cities lost out to Leeds in the battle to host Channel 4’s new national HQ.
The defeat sparked bewilderment in Manchester, sadness in Liverpool, anger in Birmingham. But all the defeated candidate cities agreed on one thing: Leeds had won a prize well worth winning.
But is that right? Does relocation from London really make regional office markets spin a little faster? Does it yield big outputs, supply chain jobs and stronger local economies? Or are relocations attempts to buck the market (and we know that market-bucking almost never works)?
Turn first to West Yorkshire, where Channel 4 plan to make their home. In April, the broadcaster announced that they would take 25,000 sq ft at Rushbond’s Majestic Building, off City Square. Channel 4’s aim is to take occupation by summer 2020. In the meantime they will occupy temporary space at Bruntwood’s Platform, next to City Station and, from September, Bruntwood’s West Gate scheme at Grace Street.
The defeat sparked bewilderment in Manchester, sadness in Liverpool, anger in Birmingham
Staff from a range of departments, including a heavy contingent from the news team and a newly-expanded digital content operation, will be in occupation by the end of this year. At least, that is the plan because, according to widely-publicised reports, relatively few staff will in fact be offered relocation from London, and most of those who are offered the chance to move to Leeds don’t intend to take it.
The 300-strong Leeds workforce is expected to include 200 relocations, of whom perhaps 80 already worked in outsourced units. Many of the rest will take redundancy, leading one national newspaper to speculate that perhaps only 20-40 staff will move from the capital. Redundancy is said to be the chosen fate of 80% of those offered it in some departments – and at the higher pay grades.
Channel 4 dispute the figures and say decisions have yet to be made by many staff.
Whatever the truth, large numbers of London-based staff refusing to move to a regional outpost is not unprecedented in the London-focused world of broadcasting. The BBC’s efforts to relocate staff to Media City in Salford saw roughly two-thirds of senior staff refuse to move, and the proportion was higher still when the BBC offered relocations to Birmingham. But even so it raises questions about the value of regional relocations.
Tom Stannard is Corporate Director Regeneration & Economic Growth at Wakefield Council, one of those West Yorkshire districts hoping to benefit from Channel 4 relocation spin-offs.
Tom says he expects to see real benefits, but hints that relocation efforts need to focus less on the property case, and more on winning round the staff.
‘We’re hoping to see significant growth due to the Channel 4 supply chain,’ says Tom. ‘We already have a significant digital and media sector, and we want to grow them. In Wakefield we’re strong on video gaming and on performing arts support services, so it will be exciting for us.’
There are already encouraging signs of others following in Channel 4’s wake. Following the announcement, production companies, including Endemol spin-out, Workerbee, and broadcaster, UKTV, have announced plans to expand in the region.
Yet Tom acknowledges relocations can go wrong. Like many in the sector he remembers the much-vaunted relocation of the British Council, the overseas cultural body, from London to Manchester. Grand new offices were built, but 30 years later the organisation has largely retreated back to London, and little trace is left in the local business infrastructure.
‘I’ve found, from working in Yorkshire, Manchester and London, that these things work best if you have a concerted effort to promote the economic benefits. Too often it can feel like everyone is acting is isolation, and that doesn’t work. You need co-ordination among government bodies,’ he says.
Any relocation founded on the idea that large numbers of staff will migrate from the capital is probably doomed, Tom suggests. ‘Pure relocations are a very small proportion,’ he says.
‘The single biggest task is not to convince the organisation that they want to move, but to convince the workforce with an offer that is about much more than economics.
‘We can show we have a well-qualified workforce – basically they were born to work in the office market – but if you don’t have high quality residential, good schools and so much else, you find it is much harder to get relocations to stick. Nine times out of ten the organisation has done its work on the property issues, but it is the liveability issues that undo all the good work – and the relocation does not work.’
The likelihood is that Channel 4 executives thought more seriously about the cost-benefits of cheaper property than some of the softer, harder to quantify, issues of staff happiness.
Research by Lambert Smith Hampton shows that a new build office of 30,000 sq ft would cost £11.66 million a year in Manchester, £10.96 million in Birmingham and just £9.35 million in Leeds.
Over a period of five years, the effective ‘saving’ from being located in one of the shortlisted cities as opposed to London’s Westminster amounts to £35.8 million in Manchester, £39.3 million in Birmingham and £48 million in Leeds.
Given that Channel 4’s total assets are barely £450 million, and cash reserves £190 million, these savings are worth having.
Relocation is never simple, and rarely cheap. But if the numbers work, it will always appeal to some occupiers.
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