For the past 20 years, Leicester’s office market has withered to almost nothing, having been crushed under the weight of some of the ugliest and most useless 1970s office blocks ever built in the UK.
In the meantime, rival locations such as Nottingham have powered ahead and now dominate the East Midlands office scene.
For the past four years, Leicester’s urban regeneration cheerleaders have been working on plans to build 500,000 sq ft of new office space. This autumn, those plans will come to fruition when a preferred developer will be chosen for the first 100,000 sq ft office scheme.
This in turn could be the catalyst for a major relocation of civil service jobs to Leicester as part of the Lyons review into ways to spread government departments around the regions.
If development of the one-acre site takes place in the way that regeneration bosses expect, it will be a tribute to a “predict and provide” approach to property development rarely seen since the 1970s.
The saga begins in the time-honoured fashion – with a consultant’s report. John Nicholls, chief executive of the Leicester Regeneration Company, the government-backed urban regeneration company overseeing the strategy, was involved in the first key meetings.
“The mission was to review the whole of Leicester, and examine how regenerating the core could contribute to the city’s needs,” he recalls. “And the problem was that Leicester was one of the first cities outside the South East to see largescale office development in the 1970s. By the 1990s, it was clear that we had a lot of unsuitable office space.”
Development director Peter Conboy puts it even more starkly: “The city has had a bad reputation for a long time for its offices because mistakes were made in the 1960s and 1970s,” he says.
“We saw a lot of speculative office space built in the 1970s adjoining the inner ring road. Much of that is now vacant, much was never let, and much is unsuitable for modern requirements — it’s unlettable at any price. That surplus has deterred developers.”
A report prepared in 2002 by Roger Tym & Partners demonstrated that the lack of good-quality supply also deters occupiers and funders.
Compared with its nearest comparable rivals, not least Nottingham, Leicester had fallen far behind.
Nora Galley, partner at Roger Tym and author of the original consultant’s report, says she discovered a city that hadn’t kept pace.
“The major source of jobs and income growth is from office and shop-based occupations,” she says.
“The city couldn’t diversify away from manufacturing because office occupiers and developers wouldn’t touch it. We discovered that rates of re-build were low for the size of sub-regional economy Leicester ought to have been serving.”
At the same time, evidence was mounting throughout the urban regeneration world that city centres could act as engines for the sub-regional economy. And, simply put, Leicester didn’t have an engine.
Recalls Galley: “We decided that the city could be doing more for the sub-regional economy if its centre could overcome some substantial constraints, and not least constraints in its office market.”
The answer is to build more
The answer was to build more offices and lots of them. By 2016, at least 500,000 sq ft and ultimately as much as 1.1m sq ft of mostly speculative, office space would be required.
Galley says the numbers are not as large as they look. “500,000 sq ft is not large if based on the annual build rates for the sub-regional economy that Leicester ought to be serving,” she insists.
Fortunately, the paymasters at Leicester Regeneration Company thought Galley’s bold thinking was right. The publication of the report in July 2003 caused ripples — some were surprised by the scale of the building plan. But the key players were impressed.
“It was obvious that we needed at least 500,000 sq ft of new office space in the city core if we were to make a significant change to the city’s performance,” says Conboy.
Nicholls adds: “Leicester has had comparative over-dependence on manufacturing in sectors that are under threat like knitwear, while the business services are grossly under-developed. A major re-balancing was needed.”
And Nicholls, Conboy and Galley all agree that there was no sense is waiting for demand. They would wait forever for that. They had to take the plunge and provide new office supply first.
“It was need, rather than demand, that was driving our office development plans at that point,” says Nicholls, “but the city is extraordinarily well placed as an office location. We have high-quality, but relatively low-wage labour and we’re just one hour and 10 minutes from London. The conclusion we came to was that supply had been artificially suppressed by the large overhang of 1970s office blocks, and that if a decent supply was created, demand would follow.”
Now the plan is being transformed from a vision into something approaching reality. Developers interested in the one-acre former police station site on Charles Street were being interviewed at the time of writing. The scheme could see around 100,000 sq ft of office space and a small number of apartments.
Securing funding
A second phase will follow, but it will take time. First, funding of around £20m must be secured to cut a swathe through the city centre’s concrete collar of ring roads. Once that has been done, and when the land has been assembled, a development partner will be selected for another 350,000 sq ft development around the railway station.
A development with a “very urban feel” is promised, probably with mixed uses to supplement the office element.
The hope is that the decentralisation of the civil service away from Whitehall could provide the first big prelets. Leicester came top in a preparatory study conducted by King Sturge for Sir Michael Lyons’ review into plans for the relocation of civil servants to the regions. Leicester could be in line for 100,000 sq ft or more of new government office requirements.
Says Nicholls: “We’re interested in the outcome of the Lyons review. We are lobbying hard, but we’re not putting all our eggs in that basket, and we’re interested in end users of all sorts.
“But we won’t get 500,000 sq ft developed immediately. It’ll be incremental.”
Galley thinks that LRC’s bosses have grasped that the only way to escape from Leicester’s spiralling economic decline is to take one mighty leap.
“The city does need a decent supply side offer,” she says. “That means big comprehensive sites, a good public realm and everything that goes with it. They have to make a big pitch all the time because little piecemeal schemes won’t create the confidence needed for occupiers and investors to move into the city.”
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Leicester Regeneration Company’s vision of a Science and Technology Park at Abbey Meadows has come a step closer with the start of clearance work on site. Bulldozers have moved in to demolish the 8-acre former council depot, now owned by the East Midlands Development Agency (EMDA). The depot site forms part of more than 20 acres earmarked for the Science and Technology Park, which will be focused around the National Space Centre. The aim of the project is to bring new science-based jobs to the city. |
