City councils are not businesses, but there are areas where they can act more commercially while still ensuring they always act for the public good. Here, Peter Chandler explores Leicester City Council’s success story with commercial workspaces, a model that prioritizes both economic sustainability and community well-being
It’s an interesting topic, and it involves the council being comfortable with a level of risk and reward that is important to recognise and understand.
Learning from the practice of other local authorities can help councils navigate the prospect of commercial activity and reap the benefits for the communities they serve.
It’s not surprising that local authorities are facing a growing financial crisis, and in some circumstances, commercial activity can help generate additional income while delivering quality services for local communities.
At Leicester City Council, my team and I have explored this practice with commercial projects like our new Dock buildings, a series of net carbon zero, managed workspaces fuelling economic regeneration and innovation in the city.
We have been building our commercial workspace portfolio for many years, and our first workspaces have been so successful that an expansion of this development is set to open its doors at Space City in October 2024.
Long-term thinking for community interest
Not-for-profit and government-run organisations may be apprehensive about the idea of commercial thinking and how it may be perceived.
Actually, commercialising council activities (like managed workspaces) doesn’t mean putting profit first – it means creating sustainable revenue streams that flow back into delivering services for the community. It means creating more jobs and stimulating more innovation. It means taking an on-the-ground approach to area regeneration and place-making. It means economic, environmental, and social benefits for the people of Leicester – and that’s exactly what Councils should be doing.
The key benefits of commercial workspaces
These workspaces aren’t just providing office space; they’re enabling councils to reposition their local economy for the future, supporting sustainable revenue growth and tangible area regeneration. Based on our experience in Leicester, we’ve identified three core benefits to developing commercial workspaces:
- Revenue growth and economic sustainability:
- Commercial workspaces can provide a valuable stream of long-term revenue, particularly if they become self-financing. Depending on the scheme, they also have the potential to generate commercial income from tenant businesses, which the local authority can reinvest in public services.
- Area regeneration and place-making:
- Workspaces have also proved to be an effective mechanism for kickstarting the delivery of area regeneration across Leicester. The ripple effect of projects like Dock can be significant, from boosting investor confidence and attracting private sector investment to the creation of business ecosystems – all of which support long-term, sustainable economic growth.
This has been the case with Leicester’s Cultural Quarter, Pioneer Park/Space City and Waterside, where workspaces have been the first key regeneration intervention in each area. Leicester’s zero-carbon Dock development, for instance, was designed with sustainability in mind and shines another spotlight on Space City. It only uses electricity for heating, incorporating eco-friendly features like a sustainable drainage system, bird boxes, tree retention, and reduced lighting to protect local wildlife.
- Job creation and innovation cultivation:
- when it comes to increasing economic growth for a local area, creating high-value jobs can offer a significant boost for local communities like Leicester. Our commercialised workspace projects have supported over 650 direct jobs in tenant businesses. By 2027/28, this is projected to reach over 1100 jobs across 10 workspaces.
These commercial developments are also helping to grow knowledge-based sectors, with small creative and technology businesses as one of our key tenant demographics. New businesses are the foundation of our economy and the heart of local communities, but more than a third (34%) close by the end of the second year of operation, and up to half (50%) within just three [1]. Workspaces can be a great platform for sector support, networking, and collaborative working – all of which can increase the survival rate for small businesses.
Take the LCB Depot – a workspace in the Cultural Quarter and Leicester’s Creative Industries Hub. It’s been driving the delivery of Design Season, an annual showcase for the city’s design strengths, and provides an ongoing programme of support for business-led networks in design, film, music, fashion, and architecture. It also fosters relationships with local universities to support entrepreneurialism and new business start-ups from the student talent pool.
Prepare to step outside your comfort zone
At Leicester City Council, we’ve grown a successful commercial workspace portfolio over many years in a steady, deliberate and entrepreneurial way. This has delivered results – and good ones, too. But it has meant being agile and adapting to a new way of thinking and acting which does deviate from the more traditional approach that local authorities may be known for.
This is, of course, completely understandable. And a more risk-taking, commercialised approach may not be right for, or possible for, every council, but it can be an important element of success for those ready and willing to pursue new ways of revenue building and area regeneration.
Practical advice for developing commercial workspaces
- Where possible, have a specific sectoral focus for the workspace – one that’s relevant to the local communities.
- This provides focus and intention, and a testament to authenticity by reaffirming the value of these projects beyond profit. Industry specific ‘hub-style’ workspaces allow tenants to build more meaningful communities, tap into networks and foster innovation. Leicester’s Dock buildings, for example, focus on high-tech, space, and sustainability industries, aligning with the city’s broader economic goals and regenerating Space City.
- Curate an entrepreneurial team.
- As with any project, finding the right people to deliver – and later run – your workspaces can make or break them. Success in managing workspaces requires an entrepreneurial mindset. These unique workspaces also benefit from a team that can navigate both the public and private sectors. While not a lynchpin to success, in our experience, it can be a distinct advantage.
- Secure the right funding.
- Every council will be familiar with the importance of securing funding, and the challenges that can come with it. Applying for grants can be a dark art, so it’s useful to have someone who knows how to write successful funding bids. But just as a business needs capital, a council needs funding – and unsurprisingly, so does a commercial workspace. For instance, we secured significant investment from the UK Government’s Levelling Up Fund to deliver Dock 3 – 5, which is launching in October 2024.
The future of workspaces and the role of local authorities
We all know that hybrid working is here to stay. Flexibility and convenience are mainstays of not just the modern lifestyle but also the workplace. Leicester’s model of managed workspaces provides a meaningful look at the power of thinking commercially, acting sustainably, and prioritising people—all for the prosperity of our community. We hope that by sharing our learnings, other local authorities will feel better equipped to harness the potential of commercial activity.
