UK Cities DNA | Discovering Dynamos
Identifying high-growth sub-sectors, emerging fields and their geographic footprint is key whne looking at how real assets can be shaped to deliver long-term performance.
3 minutes to read
- Taking a holistic approach to understanding the economic DNA of UK cities—combining broad macroeconomic analysis with a closer look at local and sub-sector nuances—yields valuable insights, particularly when examining the Information and Communications sector, projected to be the fastest-growing UK industry over the next 25 years:
- Uneven growth dynamics – The Information and Communications SIC code includes rapidly expanding sub-sectors such as video distribution, artificial intelligence (AI) and computer game publishing – alongside more established areas like IT consultancy services.
- One size doesn't fit all - although the Information and Communications sector predominantly comprises small enterprises, business sizes vary considerably across sub-sectors and emerging fields.
- Growth beyond London - Growth is not confined to London. For example, AI clusters can be found in cities such as Cambridge, Manchester, and Edinburgh, with notable clusters emerging in Bristol, Leeds, Guildford and Newcastle.
Many of the UK's most dynamic sectors, such as tech and media, are thriving beyond London, driven by regional academic and industrial strengths. These sectors require appropriate real estate and associated operational support, funding, access to skilled talent, and robust infrastructure to sustain their growth. However, gaining a comprehensive understanding of these industries can be challenging, as the UK's Standard Industry Classification (SIC) codes, commonly used for economic analysis, lack the granularity needed to capture their complexities.
This is particularly evident in the Information and Communications sector (TMT: tech, media, and telecommunications), encompassing 32 diverse sub-sectors, ranging from TV production to software development and AI. Growth rates within these sub-sectors vary, as do their real estate requirements.
A deeper analysis of the Information and Communications sub-sectors and emerging fields reveals which areas are experiencing the fastest growth, their geographic distribution, and key characteristics of the companies within them, such as average headcount and level of maturity.
At the sub-sector level, video distribution has experienced remarkable growth, with the number of active companies increasing by 196% over the past five years, fuelled by the rise of streaming services and new content platforms. Similarly, the number of active gaming companies has grown by 188% over the same period, demonstrating resilience despite industry restructuring. Notable leaders such as Frontier in Cambridge and Cloud Imperium in Manchester highlight the emergence of key players outside the capital.
IT consultancy is one of the largest sub-sectors within the Information and Communications sector, encompassing nearly 94,000 active companies that collectively employ over 346,000 people. Growth in this area is driven by increasing demand for IT services, particularly those related to AI and data needs. However, the sector's scale reflects its maturity, with established firms like Computacenter (Hatfield) and Sage (Newcastle) standing out as key players.
The operational scale within the Information and Communications sector varies significantly. For example, software publishing companies typically average over 100 employees, whereas smaller sub-sectors like music publishing are often composed of micro-businesses with only a handful of employees.
Sub-sector growth varies across regions, with clusters forming in areas that provide access to specialised talent, academic institutions, and strong infrastructure. For example, cities like Cambridge, Manchester, and Edinburgh are leaders in AI growth, each home to over 50 high-growth AI companies. These cities benefit from strong academic links, such as the University of Edinburgh, one of Europe's largest AI research hubs, and Cambridge, recognised globally for its excellence in computer science. Beyond these established hubs, emerging AI growth centres like Bristol, Glasgow, Guildford, Leeds, and Newcastle are developing unique strengths, enriching the broader UK tech ecosystem.
Combining broad economic analysis with detailed insights reveals that the UK's economic growth is fuelled by a diverse range of sub-sectors and emerging fields, many anchored by smaller, high-growth firms. For real estate markets, understanding these sectors in greater depth and recognising their unique needs will be crucial to supporting and sustaining future growth. Identifying and nurturing clusters will unlock opportunities to develop business environments that drive innovation and scalability. Success in these fast-evolving industries will require attention to detail, adaptability, and a forward-looking approach that aligns real estate strategies with the demands of modern, dynamic economies.
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