UK Cities DNA
A Tale of 10 Cities
- 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.
Discovering Dynamos
- Adopting a holistic approach to UK Cities DNA —one that marries the "big picture" macro-economic analysis with a deeper dive into local and sector-specific nuances - provides a number of telling insights.
- Uneven growth dynamics - the Information & Communications sector includes a mix of rapidly expanding sub-sectors and emergent fields, such as video distribution, artificial intelligence (AI), and computer game publishing, as well as more mature growth areas like IT consultancy services.
- One size doesn’t fit all - although the Information & Communications sub-sector predominantly comprises small enterprises, business sizes vary considerably across sub-sectors and fields.
- Growth beyond London and the big regional cities - using AI as an example, growth is not limited to London but varies across different regions. Furthermore, clustering extends beyond the largest cities.
A Tale of 10 Cities
- 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.
Discovering Dynamos
- Adopting a holistic approach to UK Cities DNA —one that marries the "big picture" macro-economic analysis with a deeper dive into local and sector-specific nuances - provides a number of telling insights.
- Uneven growth dynamics - the Information & Communications sector includes a mix of rapidly expanding sub-sectors and emergent fields, such as video distribution, artificial intelligence (AI), and computer game publishing, as well as more mature growth areas like IT consultancy services.
- One size doesn’t fit all - although the Information & Communications sub-sector predominantly comprises small enterprises, business sizes vary considerably across sub-sectors and fields.
- Growth beyond London and the big regional cities - using AI as an example, growth is not limited to London but varies across different regions. Furthermore, clustering extends beyond the largest cities.
A Tale of 10 Cities
Author: Stephen Springham
Every town and city in the UK has its own unique DNA, which is constantly evolving and mutating. We look at the key UK cities and what their DNA looks like over the next 25 years.
A Tale of 10 Cities
Author: Stephen Springham
Every town and city in the UK has its own unique DNA, which is constantly evolving and mutating. We look at the key UK cities and what their DNA looks like over the next 25 years.
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 centre 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, with Manchester, for example, 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.
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.
Discovering Dynamos
Author: Jennifer Townsend
Identifying high-growth sub-sectors, emerging fields and their geographic footprint is key when looking at how real assets can be shaped to deliver long-term performance.
Many of the UK’s most dynamic sectors, including technology and media, are emerging outside London, powered by regional academic and industrial strengths. To support their growth, these sectors need the right real estate, funding, skills, and infrastructure.
One challenge is that the UK’s Standard Industry Classification (SIC) codes, often used for economic analysis, don’t fully capture the fast-evolving dynamics of modern industries. This becomes evident when looking at the Information & Communications sector (TMT: tech, media, telecommunications), which spans 32 sub-sectors, from TV production to software development and AI. Growth within these sub-sectors varies significantly, and real estate needs differ too.
Many of the UK’s most dynamic sectors, including technology and media, are emerging outside London, powered by regional academic and industrial strengths. To support their growth, these sectors need the right real estate, funding, skills, and infrastructure.
One challenge is that the UK’s Standard Industry Classification (SIC) codes, often used for economic analysis, don’t fully capture the fast-evolving dynamics of modern industries. This becomes evident when looking at the Information & Communications sector (TMT: tech, media, telecommunications), which spans 32 sub-sectors, from TV production to software development and AI. Growth within these sub-sectors varies significantly, and real estate needs differ too.
Growth Dynamos and Sectors of Magnitude
The Information & Communication sector will play a critical role in the UK economy, with the sector’s GVA expected to grow by 111.2% over the next 25 years, with significant growth driven by AI, video distribution, and gaming. Video distribution, in particular, has surged, growing by 196% over the past five years, driven by streaming services and new content platforms. Similarly, the gaming industry has grown by 188%, proving resilient despite restructuring, with companies like Frontier in Cambridge and Cloud Imperium in Manchester emerging as leaders.s outside the capital
expected Information & Communications sector GVA growth
One of the largest sub-sectors within Information and Communications is IT consultancy, which includes nearly 94,000 active companies employing over 346,000 people. The demand for IT services, fuelled by AI and data needs, continues to drive growth in this area. However, the sector’s scale is driven by its maturity, with firms like Computacenter and Sage (based in Hatfield and Newcastle, respectively) standing out as key players. Operational scale varies widely across the sector. For instance, companies in software publishing average over 100 employees, while smaller sub-sectors like music publishing often consist of micro-businesses with just a few employees.
Growth Sectors and Regional Clusters
Emerging fields like Software-as-a-Service (SaaS), AI, and FinTech represent significant growth opportunities within the Information & Communications sector. These fields are typically composed of small companies requiring flexible, affordable spaces, often found in incubators or shared facilities. These companies, despite their small size, are critical to innovation ecosystems and provide a pipeline for future growth. They also attract larger firms looking to collaborate, creating a dynamic described as "elephants and fleas," where small innovators work alongside large corporations. However, these high-potential fields come with higher risks and failure rates, requiring adaptable real estate models that can accommodate both growth and setbacks.
Geographically, sector growth is not uniform. Clusters form around regions with access to specialized talent, academic institutions, and infrastructure. Cambridge, Manchester, and Edinburgh are at the forefront of AI growth, with over 50 high-growth AI companies each. These cities benefit from their academic ties; for instance, the University of Edinburgh is one of Europe’s largest AI research hubs, while Cambridge ranks highly for computer science globally. Beyond these established clusters, emerging hubs for high-growth AI companies include Bristol, Glasgow, Cardiff, Leeds, and Newcastle, among others. Each of these cities has developed its unique strengths, contributing to the broader UK tech landscape.
The UK’s AI sector, worth over £16.8 billion and projected to grow to £801.6 billion by 2035, is becoming a crucial driver of economic growth. Interestingly, while London is a key location for AI firms, 40% of the UK’s AI companies are based outside the capital, showcasing the spread of tech innovation across the nation. This geographical dispersion of high-growth companies highlights untapped opportunities for real estate investment beyond the major cities.
Strategies to Support Future Growth
By integrating broad economic analysis with granular insights into sub-sectors and regional dynamics, it becomes clear that the UK’s economic growth is driven by a diverse set of industries, many of which are rooted in smaller, high-growth firms.
For real estate markets, understanding these emerging fields and their unique requirements will be key to supporting and sustaining future growth. The ability to identify and nurture these clusters will provide opportunities to create business environments that foster innovation and scale.
Success in these rapidly evolving industries depends on attention to detail, flexibility, and a forward-looking approach that aligns real estate strategies with the needs of modern, dynamic economies.
One of the largest sub-sectors within Information and Communications is IT consultancy, which includes nearly
active companies employing over
people.
Growth Dynamos and Sectors of Magnitude
The Information & Communication sector will play a critical role in the UK economy, with the sector’s GVA expected to grow by 111.2% over the next 25 years, with significant growth driven by AI, video distribution, and gaming. Video distribution, in particular, has surged, growing by 196% over the past five years, driven by streaming services and new content platforms. Similarly, the gaming industry has grown by 188%, proving resilient despite restructuring, with companies like Frontier in Cambridge and Cloud Imperium in Manchester emerging as leaders.s outside the capital
expected Information & Communications sector GVA growth
One of the largest sub-sectors within Information and Communications is IT consultancy, which includes nearly 94,000 active companies employing over 346,000 people. The demand for IT services, fuelled by AI and data needs, continues to drive growth in this area. However, the sector’s scale is driven by its maturity, with firms like Computacenter and Sage (based in Hatfield and Newcastle, respectively) standing out as key players. Operational scale varies widely across the sector. For instance, companies in software publishing average over 100 employees, while smaller sub-sectors like music publishing often consist of micro-businesses with just a few employees.
Growth Sectors and Regional Clusters
Emerging fields like Software-as-a-Service (SaaS), AI, and FinTech represent significant growth opportunities within the Information & Communications sector. These fields are typically composed of small companies requiring flexible, affordable spaces, often found in incubators or shared facilities. These companies, despite their small size, are critical to innovation ecosystems and provide a pipeline for future growth. They also attract larger firms looking to collaborate, creating a dynamic described as "elephants and fleas," where small innovators work alongside large corporations. However, these high-potential fields come with higher risks and failure rates, requiring adaptable real estate models that can accommodate both growth and setbacks.
Geographically, sector growth is not uniform. Clusters form around regions with access to specialized talent, academic institutions, and infrastructure. Cambridge, Manchester, and Edinburgh are at the forefront of AI growth, with over 50 high-growth AI companies each. These cities benefit from their academic ties; for instance, the University of Edinburgh is one of Europe’s largest AI research hubs, while Cambridge ranks highly for computer science globally. Beyond these established clusters, emerging hubs for high-growth AI companies include Bristol, Glasgow, Cardiff, Leeds, and Newcastle, among others. Each of these cities has developed its unique strengths, contributing to the broader UK tech landscape.
The UK’s AI sector, worth over £16.8 billion and projected to grow to £801.6 billion by 2035, is becoming a crucial driver of economic growth. Interestingly, while London is a key location for AI firms, 40% of the UK’s AI companies are based outside the capital, showcasing the spread of tech innovation across the nation. This geographical dispersion of high-growth companies highlights untapped opportunities for real estate investment beyond the major cities.
Strategies to Support Future Growth
By integrating broad economic analysis with granular insights into sub-sectors and regional dynamics, it becomes clear that the UK’s economic growth is driven by a diverse set of industries, many of which are rooted in smaller, high-growth firms.
For real estate markets, understanding these emerging fields and their unique requirements will be key to supporting and sustaining future growth. The ability to identify and nurture these clusters will provide opportunities to create business environments that foster innovation and scale.
Success in these rapidly evolving industries depends on attention to detail, flexibility, and a forward-looking approach that aligns real estate strategies with the needs of modern, dynamic economies.
One of the largest sub-sectors within Information and Communications is IT consultancy, which includes nearly
active companies employing over
people.