UK Cities DNA | A Tale of 10 Cities
3 minutes to read
- Every town and city in the UK has its own unique DNA. This DNA is also subject to constant evolution and mutation.
- Nationally, the two fastest growth industries over the next 25 years are forecast to be Information & Communications (+111.2%) and Utilities (+94.9%) and this will impact over a wide geography.
- By 2050, the dominant industries by UK city are forecast to be: Finance & Insurance (Edinburgh, Cardiff), Human Health & Social Work (Birmingham, Newcastle, Aberdeen), Information & Communications (Leeds, Glasgow, Sheffield) and Professional, Scientific & Tech (Manchester, Bristol).
- UK cities DNA will dictate the direction of real estate markets, which likewise need to evolve to stay in step.
The economic "DNA" of UK cities is constantly evolving, reflecting shifts in local industries and global trends. This change is as diverse as the cities themselves, where economies transition from old industries to new drivers like technology and life sciences. Real estate markets must do more than react; they must anticipate and adapt to support this evolution.
Historically, the UK moved from being a manufacturing powerhouse post-World War II to a service-driven economy, with finance, retail, and real estate taking center stage. The narrative that the UK simply transitioned from manufacturing to financial services undersells the complexity of these shifts, which have shaped cities’ identities and growth paths. Today, real estate is the largest contributor to the UK's Gross Value Added (GVA), underscoring its crucial role in the economy.
Surprisingly, retail remains the second-largest component of the UK economy, despite often receiving negative press. The sector’s resilience is powered by population growth and consumer spending. Manufacturing, although diminished from its historical dominance, remains a key sector, now focusing more on light manufacturing for future economic growth.
The financial services sector, despite London’s prominence, contributes only 8.4% to the economy, much of it concentrated in the largest cities. Cities have developed unique economic compositions, with some sectors growing significantly and others shrinking. A notable trend is the rapid rise of the Information & Communications sector, projected to grow from 0.8% of GVA in 1991 to 11.1% by 2050, reflecting the increasing importance of technology in the UK’s economy.
Regional growth rates vary significantly. Manchester, for example, is set to see explosive growth in utilities, while Leeds will be driven by sectors like Information & Communications and Professional Services. Sheffield is projected to excel in technology, emphasizing the diverse economic paths UK cities will take.
This evolving DNA underscores the importance of aligning real estate development with future economic needs. As sectors like tech and professional services grow, they will demand specific types of spaces, such as high-tech office buildings and industrial facilities. Real estate must not only meet these needs but anticipate them, ensuring that cities continue to thrive.
While macroeconomic trends paint an overarching picture, the key to understanding a city’s future lies in a granular, bottom-up approach. This means looking at local dynamics and aligning real estate to not just reflect but drive future economic activity. Cities are complex ecosystems where different sectors, like logistics and housing, work in synergy. Understanding and supporting this interplay will be crucial in shaping the future landscape of UK cities.
In short, the economic DNA of UK cities is as complex as it is dynamic, with real estate playing a central role in supporting and guiding these changes. By understanding the unique paths of different cities and sectors, real estate markets can proactively meet future demand, ensuring sustained growth across the UK.