Derby Needs to ΓÇ£Reach OutΓÇ¥ for its Economic Future
The emptying of DerbyΓÇÖs office space by major employers could leave the CityΓÇÖs wider economy particularly vulnerable to the Governments Spending Review according to a report by Centre for Cities ΓÇô but if the role of the CityΓÇÖs largest employers is to change, does the serviced office space industry within Derby, a traditional birthing pool for start-ups and SMEs, show any signs of the business growth which could help to make-up this coming shortfall?
Highlighted within the Report is a need for Derby to ΓÇ£reach outΓÇ¥ beyond its traditional industrial base in order to cope with the reduction in public spending laid out by Whitehall in the Spending Review. But with three of DerbyΓÇÖs six largest employers linked directly to the public purse (Derby City Council, Derby NHS Trust &University of Derby), the reduction in funding and efficiency cuts will undoubtedly leave a lasting impact on the economic make-up of the East Midlands city.
But as the list of DerbyΓÇÖs other major employers shows (Rolls Royce, Bombardier & Egg/Citibank), the city can and does attract large, private sector employers to its office space and industrial units. While it is entirely possible that other large-scale employers such as these may look to locate offices in Derby in the future, it is unlikely to plug the jobs market deficit that looks set to unfold during the next 3-4 years while the spending cuts are rolled-out.
ΓÇ£It is absolutely essential that Derby reaches out in the difficult years ahead – recognising that the government spending squeeze is likely to put pressure on public sector employers and private sector contractors.ΓÇ¥ explains Andrew Carter, Director of Policy & Research at Centre for Cities.
ΓÇ£This means building on existing assets like advanced manufacturing, but also encouraging firms to diversify their products and markets and helping them connect with universities and other businesses beyond the cityΓÇÖs borders.ΓÇ¥
As mentioned in the opening paragraph of this blog, serviced office space has and continues to be a traditional birthing pool for start-up businesses and SMEs ΓÇô as well as attracting an increasing number of corporate firms. Offering flexibility, cost effective per workstation packages and minimum risk, it is perhaps no surprise that serviced office space has made its presence increasingly felt within the wider commercial office market.
So has the serviced office market in Derby shown any signs of business growth that could help to counter the reduction in employment arising from the Government cuts? It would appear the answer is yes.
Comparing month-on-month postcode data from officebroker.com, the UKΓÇÖs largest independent broker of serviced office space, it is shown that the number of new businesses entering serviced office space has increased by 25%*. During this same period, the average workstation requirement of new businesses entering this form of flexible office space has also increased, rising from 3.1 workstations in 2009 to 3.5 workstations in 2010.
Looking at this data independently, it could be assumed that not only are a greater number of businesses actively locating and securing new work space, but also that the space required – and even that the number of employees needed to be accommodated by each business ΓÇô has also grown within the DE postcode.
While this activity may appear minimal in terms of the grand scale of DerbyΓÇÖs economy, the positive activity shown within the CityΓÇÖs serviced offices during the last 11 months is just that ΓÇô positive. Something that will need to be replicated many times in order to re-adjust DerbyΓÇÖs economy and ΓÇ£reach outΓÇ¥ beyond its traditional industrial base as called for in the Centre for Cities report.
*Source: officebroker.com, comparing Jan-Nov 2009 to Jan-Nov 2010.