M25 Report: The importance of corporate occupier clusters
Around the time Margaret Thatcher was cutting the ribbon to finally realise the long-held vision of a London orbital motorway, a Harvard academic was busy popularising the idea of clustering.
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Professor Michael Porter maintained that corporates could achieve competitive advantage by locating in close proximity to one another and creating formal and informal adjacencies in a distinct commercial ecosystem. Put another way - safety in numbers for corporates. The commercial benefits of being within such clusters were said to be three-fold:
- An uplift in the productivity
- An exposure and speedier route to industry specific innovation
- The stimulation of new business opportunities
Roll forward a quarter of a century or so and I would make two observations:
First, growth, innovation and productivity remain highly prized by business. The last two in particular have been central to the business narrative in recent years as occupiers seek to respond to technological disruption within their operating environment. In this context, clusters are significant.
Secondly, the sizeable real estate market that has evolved around the M25 over this period ticks all the boxes as a business cluster – or perhaps more accurately a collection of clusters – of international significance.
Indeed, research for our latest M25 Report has identified almost 70 companies operating within the M25 market and occupying a single site which employs in excess of 1,000 people. More significantly, the research has shown that many of these big businesses are often located within well-defined clusters alongside their competitor peer group. For example, the cluster that evolved around the software and hardware companies taking root in the business parks of the M4 and M3 corridors since the early 1990s is well known. But it has now been supplemented by a strong cluster of media companies – those who use increasingly use technology to distribute content. Twenty three TMT companies call the M25 market home as a consequence. But there are others. Sizeable firms from the energy, utilities and engineering sectors have also located with close proximity to one another around the M25 market in order to draw out the benefits of agglomeration noted above.
This clustering of activity is good news. It represents a source of resilience within the M25 market – with the on-going benefits of the cluster constituting persuasive arguments for remaining in situ. But it also points towards continuing market vitality. At a time when collaboration and innovation is seen as essential for corporate growth, and when industry sectors are converging, the enduring qualities of the cluster are brought firmly into focus and are highly sought-after.
Click here to view the full report, which further examines the evolution of occupier clusters within striking distance of the M25 orbital. If you would like to be sent a copy of the report, please contact Emma Goodford.