We were especially encouraged to see the focus on addressing the talent and skills mismatch in last month’s Levelling Up White Paper.
It has long been known that talent isn’t exclusively fostered in the South East, but rather that is the direction in which it has been mobilised in the past.
It looks increasingly likely that Covid might be the catalyst that changes this trend. While offices, and London headquarters, are likely to continue to remain a part of corporate strategies, hybrid working and itinerant workforces seem here to stay.
It is therefore fair to assume that commuting, particularly for those who work in London, is unlikely to return to pre-pandemic levels. This itself will create a ‘levelling up’ across the country, with regional cities retaining a higher proportion of their local talent base.
Not being in the London office is no longer a barrier to active employee engagement
We are witnessing these trends first hand at Industrials REIT. With more people looking to live outside London and work closer to where they are from or where their extended families may live, we have been able to attract high-quality talent by offering them the opportunity to work in our Stockport office. Half of our employees now work out of London, and some have moved to Stockport or the surrounding cities from the south on a permanent basis.
The lifestyle changes and geographic redistribution of talent now mean that this office has become both a talent magnet and retention tool.
As a result, Stockport has become significantly more than an administrative centre for Industrials REIT. It has become central to our long-term success, reflected by the number of senior team members based there and the range of disciplines from technology, sales, finance, asset management and leasing present in that office.
We are a highly active manager, with more than 100 properties in our portfolio. Stockport is within an hour’s drive of around 26% of these; one would struggle to reach any of our assets in an hour by car from our London office.
Our Stockport office has also helped us benefit from having a workforce who have an in-depth understanding of the local and regional markets, where most of our assets are situated. Regional staff tend to have a greater affinity with our customer base than our employees in London do. At the same time, video conferencing has brought our regional teams into the heart of the company. Not being in the London office is no longer a barrier to active employee engagement or career success.
Talent retention tool
While managing a team, nurturing talent and building a corporate culture with a more dispersed workforce has obvious challenges, the perk is no longer a ‘nice-to-have’ but rather an essential talent retention tool for business success as geographic talent clusters evolve.
There is also a clear correlation with the sector in which we operate. In the ecommerce world, it matters less where you are based, and new businesses are increasingly choosing to locate away from London. When selling into a national or international marketplace via a website, why choose to have a higher cost base in London when you can make more profit by locating elsewhere?
Also, the more that other businesses choose to relocate north, the more this phenomenon will feed on itself and become a self-perpetuating cycle. For our business, which has multi-let-industrial (MLI) units across the country, this can only be beneficial as more people in more businesses means more demand for MLI space.
Our investment and workforce strategies are also closely aligned. Regional MLI offers an attractive income return versus London MLI, which is important for a REIT like us. It also benefits from strong growth (4% to 5% per year), low rents and pricing below the replacement cost.
Private business has a responsibility to be a key cog in the levelling-up agenda, narrowing the current social and economic inequality. Our corporate strategy plays into this narrative, and we hope it will be a key driver for our future success.
Paul Arenson is chief executive of Industrials REIT