by Bill Deddis and Stanley McGreal
This article summarises the findings of a research investigation(1) into urban regeneration initiatives in Great Britain. The analysis is based on field appraisal and detailed discussions with local authorities, central government departments, urban development corporations, inner-city partnerships, development agencies, private sector investors and developers in several major urban areas — London’s Docklands, Liverpool, Salford, Newcastle upon Tyne, Gateshead, Glasgow, Greenock, Dundee, Leith, Swansea, Cardiff and Stoke. While the conclusions emanating from this research were specifically orientated towards the attraction of development opportunities to Northern Ireland, several key issues appropriate to investment in any region of the UK emerged. Indeed, the relevance of these factors, which are considered below, are even more poignant given the Government’s latest initiative.
The Action for Cities(2) package proposes strengthened city action teams, more urban development corporations (UDCs), including mini-UDCs’ continued bypassing where appropriate of obstructive local authorities, national land registers to highlight the ownership of unused land and the merger of the former urban development grant and urban regeneration grant into a new streamlined city grant. In reality, however, little is new, and it appears in many respects merely to underpin and supplement the already existing plethora of initiatives.
The relevant factors highlighted by this investigation as prerequisites for successful regeneration of an inner-urban area, are grouped within the following categories: organisational structure, marketing, information and incentives.
Organisational structure
Investment opportunities appear to be maximised where a unitary body exists to promote development. When responsibility is split between central government (possibly several different departments) and one or more local authorities, the potential for mismanagement and delays in the decision-making process are increased. The organisations which best fit this structure are either the urban development corporation or the development agency. The former, as in the case of the LDDC, has designated powers in a delineated area, while the latter, for example the SDA, has a much wider remit both geographically and operationally. There are clear indicators that within a single body the public sector input can be maximised, leading to a better co-ordination of activities and, in consequence, speed in the delivery of service — a fundamental requirement of the investor and developer alike.
However, the mere establishment of a single development organisation does not ensure success: the field investigation clearly demonstrates that the personnel, both at the top and within the team, are critical in terms of promoting an investment image. The organisation needs to be commercially orientated, exhibiting good business management and acumen; capable of positive and speedy reaction to development opportunities; and ideally at arm’s length from government but adequately financed with a continuity of funding. In addition it must have broad executive powers in relation to land acquisition, site assembly, planning and infrastructure provision. The board should be structured to bring together businessmen, financiers and property experts with entrepreneurial skill and vision to complement the public sector personnel. This is considered to be criticial if the development organisation is to act effectively as both an initiator and catalyst to lever private sector funding, consolidate public sector expenditure, ensure an optimum return and maximise benefit to the wider community.
Marketing
A key mechanism in the process of image creation — and ultimately the attraction of investment — is effective marketing. The need to develop a dynamic investment image is paramount, particularly in regions or inner cities which have been tarnished by a poor or negative image. Perceptions are very important. The process of image building needs to be long term and sustained, and above all requires political goodwill and a unity of purpose. Where possible, local/regional talents and enthusiasm should also be harnessed to the marketing wagon.
Marketing techniques need to be varied in terms of approach and media: furthermore, they need to be backed up by a coherent marketing strategy and not carried out in isolation. The most successful marketing is based on positive achievements rather than on intention: merely to market an intention and not deliver can be fatal. The marketing package needs to be high quality, high profile, vigorous and targeted.
Information
In terms of economic regeneration and urban renewal, knowledge of market conditions is critical. As the institutions are over-endowed with investment opportunities they are able to adopt a conservative policy, and hence only invest in locations and market sectors that they understand and for which good performance indicators are available. In terms of property investment, information systems such as IPD are now providing hard data to enable property performance to be evaluated. Key indicators are rental growth and capital appreciation. In essence, investors do not have to look beyond the South East to achieve good long-term property investments; however, prompted by central government action the institutions are willing to invest in less prosperous areas including the inner cities. Certainly performance indicators show that retail developments are doing well in the provinces, but generally only strong regional centres — Glasgow for example — are capable of attracting major office developments.
Incentives
Generally in the form of grant aid, these include the regional grant assistance package for industrial and certain service-sector activity and the new city grant orientated towards commercial and residential development. The availability of grant assistance is undoubtedly beneficial in the development process, the lack of incentives in an already disadvantaged area can severely hamper development. Grants have greater appeal to developers, in particular where enterprise zone status leads to the tax holiday and rating advantages offered to both developers and the eventual occupiers of buildings. In direct contrast, investors adopt a very cautious attitude to the existence of grant aid, and several of them are of the opinion that grants are indicative of a potentially weak investment market. For this reason, in a marketing strategy incentives should be portrayed as a support mechanism or “enabler” within a wider investment framework.
Summary
In the attraction of property investment and development four key issues have been identified — organisational structure of the development authority, a coherent marketing strategy, information on property performance, and incentives. These are issues that decision-makers in the UK must address, particularly in a region such as Northern Ireland where investment potential is stifled by a poor media image. Yet Northern Ireland, Belfast in particular, offers good investment opportunities. Prime retail rents in Belfast went through the £100 per sq ft (zone A) barrier in 1987 and a major development opportunity focus now exists in Belfast’s Laganside(3) — a waterfront scheme with a £250m commitment from central government.
References
(1) Property Investment and Urban Regeneration — The British Experience. Report commissioned by The Department of the Environment for Northern Ireland from the University of Ulster, Jordanstown, 1987.
(2) Action for Cities, Cabinet Office, 1988.
(3) Laganside, Shepheard, Epstein & Hunter (London) and Building Design Partnership (Belfast), 1987.