The British government’s ‘Levelling Up’ agenda has been widely talked about since they won the General Election in 2019. It was a key part of their election manifesto but the agenda ended up taking a back seat in the past couple of years due to the COVID-19 pandemic. As we begin to come out of the pandemic, however, we are beginning to see the issue of ‘Levelling Up’ coming to the fore again.
In this article, we take a look at the impact of ‘Levelling Up’ on commercial property in the UK, how it’s going, and how it looks like it might affect commercial property in the future.
What is Levelling Up?
The main idea behind the government’s ‘levelling up’ election promise is that the places that have been ‘left behind’ will be given the investment that they need to catch up with those areas that have had investment over the years. This means investment in infrastructures such as transport, the building of homes, healthcare, and job creation.
It is agreed that the UK has a greater gap than many countries, between the haves and the have-nots in terms of geographical location, and the ‘Levelling Up’ agenda is the way that the government hopes to address this disparity. In more specific terms, London and the south east of the country have a higher amount of money spent by the government per head than cities in the rest of the country, and far more job and money-making opportunities.
Some of the more specific ‘levelling up’ strategies that the government has cited include:
- Giving more power to local government about where money is spent
- More support for farming and fishing communities
- Increased investment in towns, cities, coastal, and rural areas
- Encouraging more apprenticeships and boosting the National Skills Fund
- Creating 10 new freeports around the country
The Impact on Commercial Property
There are several aspects of the ‘levelling up’ strategy that can have an impact on the commercial property in the local area.
To begin with, the fact that we may be seeing a movement away from London and the south east in terms of business locations means that in theory, there could be a reduction in the number of businesses basing themselves in the area, thus creating less of a demand for commercial property. In practice, however, there is not likely to be a massive migration away from London and the south east, just, perhaps, less growth. This means that the higher demand that there currently is in London and the south east is set to stay.
Another impact that we are likely to see is increased demand in the places that are being levelled up. ‘Levelling up’ involves the encouragement of more industry, which in turn can lead to a higher demand for commercial property. This could be in terms of demand for warehouse space and office space, but also other infrastructural property such as public buildings (schools, hospitals, doctors’ surgeries), and retail, for example.
At the moment, there is a common agreement that there are insufficient quantities of commercial property available in these places that are benefitting from ‘levelling up’, and this means that we will need to see even more investment made into commercial property in these areas, as well as private and residential property.
Ultimately, the concept of ‘levelling up’ is to ensure a more balanced, nationwide approach to investment in business, infrastructure, and opportunities. In recent years, we have seen several larger businesses or government departments relocating away from London and the south east, more towards northern cities such as Manchester (Salford Media City, for example) and Liverpool.
We have seen the planned implementation of a greater number of city mayors and plans for transport systems similar to those in London. This can be essential for people who hail from these areas that are traditionally rather deprived, with little or no opportunities. It can change mindsets, create jobs, local economies, and encourage movement away from and towards the area. This is all a good thing for commercial properties.
A thriving commercial property market relies on a good local and national economy. And if ‘levelling up’ instigates this in areas that have once struggled, we will also be seeing a more balanced demand across the whole country.
Another factor that could also have an impact is the increased movement that we are seeing towards e-businesses and local delivery. We are seeing more and more businesses operating through a combination of online ordering, with local delivery depots taking goods a shorter distance, directly to their customers.
Here at Boxpod, we have noticed that this more dispersed setup has created a more balanced spread for demand for commercial properties such as industrial and warehouses across the country (albeit in well-connected transport locations).
The ‘levelling up’ agenda is only likely to strengthen this, as the population is more widely scattered around the country instead of being densely populated around big cities.
With the cost of living crisis that is just beginning to hit us, along with other external factors affecting the British economy, it has never been more important to help the traditionally struggling areas of the country to attract new business, create opportunities, and create a more balanced country.
We often see that the state of the commercial property reflects the state of the economy in general, and, therefore, it follows that if the economy is healthy, so will the commercial property market be.
It is clear to see that the concept of ‘levelling up’ is a good one for the entire country, but part of the challenge is also to ensure that the government sticks by these promises and makes the investments that they have promised, for a brighter future for all of us.
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