Real Asset Insight #6 June 2020

Private sector involvement in
innovation districts growing
More investors are becoming interested in involvement
in city schemes rather than individual buildings
‘Investments in
infrastructure
and transport
can determine
the viability of
the entire project.’
Anna Stamp,
Edinburgh BioQuarter
Innovation districts are a great showcase of
positive, win-win relations between the public
and the private sector at a time when such
partnerships are more needed than ever.
‘The principle of a public sector lead is to be the
catalyst and provide a platform that allows the
private sector to come in and feel comfortable
about taking on risk,’ says Graham Hill, partner,
city executive, at Arcadis. ‘If the public sector
leads on the vision, then the offer becomes more
attractive for the private sector and the place can
become a real hive of investment.’
PARTNERSHIP APPROACH
Each innovation district has a group of partners
such as cities, local governments and
universities, so ‘it provides a great opportunity
for the private sector to come in and support
and shape the sector’, says Ann Allen, executive
director of estates & commercial services at the
University of Glasgow. ‘Funds have moved from
supporting investment in one building to
supporting an entire district. It is crucial to
create the right partnership to go out to the
market with great clarity on the project.’
Local government has a fundamental role to
play in the process. ‘We are trying to achieve
the perfect balance between the private and
the public,’ says Alasdair Morrison, head of
regeneration at Renfrewshire Council. ‘Local
government has a key role to play to facilitate
and bring about change in the built environment
and to ensure sustainability.’
The Advanced Manufacturing Innovation District
in Glasgow has benefited from a £40m funding
for upfront infrastructure from Glasgow City, but
‘we are now looking for a joint venture partner
with a long-term commitment of up to 20 years to
develop the site’, says Morrison.
A looming issue is the squeeze on public finances
because of economic difficulties caused by
coronavirus. ‘Reliance on public finances will be
under pressure at a time when major investments
are needed,’ says Anna Stamp, interim
programme director for Edinburgh BioQuarter.
‘Investments in infrastructure and transport so
that people can reach the site, for example, can
determine the viability of the entire project.’
In difficult economic conditions innovation
districts ‘can create new ideas to develop,
can facilitate and nurture start-ups and local
businesses and create employment’, says Eri
Mitsostergiou, director of European research at
Savills. ‘They have a particularly valuable social
impact at a time of economic recovery.’
Investors more comfortable with regeneration-driven schemes
Private investors’ interest in
innovation and healthcare-related
real estate is set to increase,
experts agree.
‘Values such as health and wellbeing will
become even more important after the
crisis, and for that reason the sector will
attract more private sector investment,’
says Eri Mitsostergiou, director of
European research at Savills.
Last year venture capital alone invested
€4bn in life sciences and science parks.
As for innovation districts, ‘they have a
long-term vision that offers long-term
security of income to investors’, says
Mitsostergiou. ‘They are productive,
inclusive, promoting sustainable
businesses, retaining and nurturing talent.
In short, the very definition of resilience.’
Investors are increasingly comfortable
with regeneration-driven initiatives and
communities built from scratch, she adds,
just as they used to be ‘scared’ by mixeduse
but now they have embraced
its flexibility.
MORE RESILIENCE
‘Investors’ interest will continue to grow,
as they see mixed-use projects as being
more resilient,’ says Ann Allen, executive
director of estates & commercial services
at the University of Glasgow.
The emergence of social and
environmental awareness among investors
is also playing a role, Mitsostergiou
46 Real Asset Insight | Issue 2 July 2020