northamptonshire technology realm: forward strategy · northamptonshire enterprise limited (nel)...

Northamptonshire Enterprise Limited (NEL) and Partners

Northamptonshire Technology Realm: Forward

Strategy 7 February 2007

Private and Confidential

A Final Report by: DTZ Consulting & Research No. 1 Marsden Street Manchester M2 1HW

Contents

Page

1. Introduction & Purpose of this Document.................................................................... 1

2. Specification of the Technology Realm ......................................................................... 5

3. Management and Implementation of the Technology Realm ................................... 14

4. Development Appraisal................................................................................................. 18

Appendix 1 Technology Realm Core Standards Specification: Environment and Design Appendix 2 Technology Realm Core Standards Specification: Enterprise Support Services Appendix 3 Technology Realm Core Standards Specification: ICT Appendix 4 Technology Realm Development Appraisal: Key Assumptions Appendix 5 Technology Realm Initial Infrastructure Appraisal

Quality Assurance Record

Checked By:

Date: 07/02/07

Authorised By:

Date: 07/02/07

Ref: 05/04725-9

Northamptonshire Enterprise Limited (NEL) and Partners Northamptonshire Technology Realm: Forward Strategy

7 February 2007

1

1. Introduction & Purpose of this Document

Introduction

1.1 Northamptonshire Enterprise Limited (NEL) and partners commissioned DTZ to assess how the County can use a Technology Realm - the provision of innovative property solutions and related business innovation services - to achieve a step change in jobs growth in the County. This step-change relates to both the quality and quantity of jobs created in Northamptonshire and is being driven by the Milton Keynes South Midlands (MKSM) Growth Agenda. MKSM is a major Government initiative that plans to create an additional 84,600 additional jobs in Northamptonshire by 2021. The Technology Realm builds upon previous research such as the Northamptonshire Commercial Property and Employment Land Study (COPELA), Northamptonshire Business Sectors Propositions Work, Northamptonshire Business Infrastructure Mapping, Northamptonshire Integrated Local Employment Strategy and Workstyle Trends research. This document is the final deliverable from DTZ and should be read in conjunction with the Technology Realm Feasibility of Concept and Options Assessment reports.

1.2 This section sets out why Northamptonshire needs a step-change in jobs growth, the role that the Technology Realm will play in this and the work programme that has been undertaken by DTZ and partners. It then goes on to set out the core principles of the Technology Realm and concludes by summarising the purpose of this document.

Why Does Northamptonshire Need a Step-Change in Jobs Growth?

1.3 There are a number of strengths and opportunities in the County that can be built upon to create high-value knowledge and innovation driven jobs in the future, including physical assets such as Silverstone, five existing and five planned incubation centres, the presence of leading companies such as Bookham, Caswell, Radstone Technology, Honda F1 and Ilmor and the growing role of the University of Northampton and its emerging specialisms in environmental technologies and creative industries, amongst others. Despite these assets and strengths, Northamptonshire is under-performing relative to its geographical neighbours in the East of England and the South East across a number of criteria, including relatively low levels of entrepreneurship and skills and a substantive under-representation of workers in knowledge-based industries. Additionally, the revised COPELA has highlighted a shortfall in quality office-based employment sites around the County, especially in Northampton. Addressing these deficits and providing a vehicle to deliver MKSM jobs growth targets are both key drivers of the Technology Realm.

What is the Role of the Technology Realm?

1.4 Driven by a need to attract high-growth business, develop the County’s skills base and wider image, aspirations and lifestyle proposition, the Technology Realm will be a key element for Northamptonshire in achieving employment growth as part of the MKSM strategy and developing the Northamptonshire offer to business, learners and its existing and future population. The Technology Realm will be a key tool in nurturing the growth of R&D and enterprise in the County.


7 February 2007

2

1.5 The Technology Realm revolves around the development of appropriate high-quality sites and premises, business support services, amenities and the cultural proposition for high level employment, whilst also developing the technological and ICT infrastructure of the County – creating buildings and workspaces that enable us to work smarter, live better and develop learning and flexible working opportunities across the community.

1.6 The delivery of the Technology Realm concept will support the development of specific sectors and niche specialisms within the County, building on and developing the University of Northampton’s strengths, knowledge exchange and collaboration. It will allow different locations in the County the opportunity to develop their economies, whilst operating as part of a County-wide initiative to improve the image and quality of Northamptonshire’s business accommodation and support services offer.

What Work has Been Done on the Technology Realm?

1.7 DTZ has completed detailed feasibility of concept work1 that concluded “the Technology Realm can be used as a vehicle to drive the step-change in growth set out through Northamptonshire’s Sustainable Communities aspirations and other key policy documents such as the Sub-Regional Economic Strategy and Local Area Agreement.” The feasibility of concept work outlined a number of fundamental recommendations and pre-conditions for growth that must be actioned before the Technology Realm is progressed any further. These recommendations were based on comprehensive work undertaken in the following areas:

• Assessing relevant polices and programmes at UK, regional and sub-regional levels.

• Assessing trends in the UK science and technology park arena.

• Assessing best practice case studies in science, technology and innovation parks globally.

• Auditing current science, technology and innovation assets in the County.

• Assessing prospective demand for the Technology Realm, from sources including spinouts from the University of Northampton, existing businesses in Northamptonshire, inward investors and additional demand stimulated through strategic programmes such as MKSM.

• Undertaking a strategic consultation programme with stakeholders in the County and wider region.

1.8 DTZ has also produced an Options Assessment report that specifies the different ways that the Technology Realm can be structured. This report was followed-up by a stakeholder workshop event to discuss the identified options and to agree a way forward.

1 DTZ (2006) Northamptonshire Technology Realm Feasibility of Concept Report.


7 February 2007

3

What are the Core Principles of the Technology Realm?

1.9 The Vision for the Technology Realm is to “Develop and deliver new models of innovative property solutions and related business innovation services in Northamptonshire to enable the step-change in job quality and job growth advocated through the Sustainable Communities Plan.” The Vision for the Technology Realm will be delivered using the following eight core principles:

1. Northamptonshire will drive forward the MKSM Growth Strategy by supporting high value-added and innovative new (start-up and grow-on), existing and inward investment businesses across the following two sector groups:

a. Widely traded sectors (e.g. those that will bring net additional wealth into the County) – financial and business services; transport, communications and equipment; high performance engineering (motor sports, electronics, measuring instruments and advanced materials); environmental technologies; food and drink; and healthcare/life sciences.

b. Enabling sectors (e.g. those that enable growth to take place elsewhere in the economy) – construction; retail & wholesale; public administration, education and health.

2. Build on existing assets in the County to provide a ladder of high-quality, connected and flexible workplaces in Northamptonshire across sectors and the workplace lifecycle – virtual, studio, workshop, office, hybrid, flagship, etc. to maximise employment growth in high value added innovative industries.

3. Collaborate with learning and skills partners to create a highly skilled and knowledge-based workforce that is capable of meeting the needs of employers in target sectors both now and in the future.

4. Coordinate and develop leading business support services to companies in the above sectors to promote increased levels of growth, productivity, competitiveness, innovation, entrepreneurship and enterprise.

5. Work in partnership with the University of Northampton and other key Higher and Further Education partners to promote university-industry collaboration to promote innovation in products, processes and services.

6. Position and communicate the Northamptonshire brand as a ‘high-growth, high-quality place to work and live.’ This should build upon the offer of the wider Oxford to Cambridge Arc (O2C) and Central Innovation Network (CIN) but should also differentiate Northamptonshire’s offer within these wider locations.

7. Support existing and pipeline area-based regeneration programmes to ensure that socially excluded groups in the County have the skills, means and confidence to access the opportunities created through the Technology Realm.


7 February 2007

4

8. Develop the County’s amenity proposition (residential, retail, leisure, transport and environment) to attract and retain highly skilled people and high-growth businesses. This will be achieved through working with partners such as the West Northamptonshire Development Corporation, North Northants Development Company, other public sector partners and the private sector.

What is the Purpose of this Document?

1.10 This document is the final deliverable by DTZ. The work that we have undertaken to date has been summarised in this section and the remainder of this document sets out how to take the programme forward. It is structured as follows:

• Section 2 starts by specifying the sites and premises that will be progressed through the Technology Realm. It then goes on to summarise the core standards specifications for the Technology Realm - environment and design, enterprise support services and information and communications technologies (ICTs).

• Section 3 summarises the management options for taking the Technology Realm forward, assesses the relative merits of each and concludes with an implementation recommendation for the Technology Realm.

• Section 4 concludes this Forward Strategy by setting out a development appraisal of the Technology Realm, an initial infrastructure assessment and providing commentary on the proposed public sector contribution to the scheme. It then concludes by setting out the next steps that need to be taken to progress the Technology Realm.


7 February 2007

5

2. Specification of the Technology Realm

Introduction

2.1 This section starts by specifying the sites and premises that will be progressed through the Technology Realm, summarising the scale of product, its geographical distribution across Northamptonshire and the composition of premises by use. It then goes on to summarise the core standards specifications for the Technology Realm with regard to the following three areas (further details are attached in the Appendices):

• Environment and design: ensuring that the Technology Realm is developed in a sustainable manner and is guided by design principles that maintain a coherent sense of place.

• Enterprise support services: ensuring that Technology Realm occupiers have access to leading enterprise support services.

• Information and Communications Technology (ICT): ensuring that Technology Realm occupiers can access competitive ‘best-of-breed’ ICT as and when they need it.

Technology Realm: Sites and Premises

2.2 The Vision for the Technology Realm is to “Develop and deliver new models of innovative property solutions and related business innovation services in Northamptonshire to enable the step-change in job quality and job growth advocated through the Sustainable Communities Plan.”

2.3 The Technology Realm is an umbrella programme that will incentivise private and public sector stakeholders in Northamptonshire to generate a step-change in the quality and quantity of employment land supply and associated business services in the County. The rationale for this step-change is derived from the Milton Keynes South Midlands (MKSM) Growth Strategy, which has charged Northamptonshire with creating an additional 84,600 jobs between 2001 and 2021. The aim of the Technology Realm is to contribute to the MKSM Growth Strategy by accommodating 10% of job growth targets.2 This means enabling the delivery of the sites, premises and associated hard and soft infrastructure (e.g. enterprise support services) to support approximately 8,500 net additional jobs in Northamptonshire. It should be acknowledged that achieving 10% of the MKSM jobs-growth target is a challenge in itself. This is because DTZ considers that the ‘policy-off’ scenario for the County (i.e. what would happen in the absence of MKSM targets) is the generation of a net additional 11,300 jobs over the period 2006-2021. Furthermore, the average annual take-up rate for office premises in Northampton over the past five years has been circa. 14,700m2. Developed out on an S-Curve basis, the Technology Realm would need to deliver up to 8,600m2 of offices premises per annum (across the County) to deliver the first 10% of the MKSM jobs-growth target.

2 The 8,500 additional jobs generated through the Technology Realm will be in the widely traded sectors of financial and business services; transport, communications and equipment; high performance engineering (motor sports, electronics, measuring instruments and advanced materials); environmental technologies; food and drink; and healthcare/life sciences.


7 February 2007

6

2.4 In summary, DTZ considers that the net additional 8,500 jobs3 in Northamptonshire delivered through the Technology Realm will require approximately 236,000m2 of office, industrial and warehouse premises on approximately 60ha of land. Full details of this are contained in Table 2.1.

Table 2.1 Northamptonshire Technology Realm Estimated Floorspace Requirements

Office Industrial Warehousing4 Total

Employees 5,950 1,700 850 8,500 Employment Density m2 per employee (GIFA)5

18 32 88 -

Floorspace Requirement 107,000 54,000 75,000 236,000 Plot Ratio 40% 40% 40% - Plot Requirement (ha) 27 14 19 60

2.5 The Technology Realm will focus on jobs-led growth to 2021 and it is important to note that these additional jobs will assist in creating some of the demand for the County’s housing growth targets. Furthermore, the Technology Realm will be embedded within sustainable communities developed through the MKSM growth programme and consideration should be given as to how residential schemes in the County can be used to cross-subsidise the Technology Realm. The Technology Realm will not be prescriptive with regard to the distribution of sites and premises across Northamptonshire, as the market will dictate this. However, the Technology Realm will provide a strategic framework to guide the geographical distribution of constituent schemes.

2.6 The geographical framework for the Northamptonshire Technology Realm can be broken down into the following three constituent components:

1. Technology Realm hub: there needs to be a central component to the Technology Realm where critical mass can be developed. This Technology Realm ‘Hub’ should be developed in the Northampton Growth Area, due to the presence of existing infrastructure for employment, housing, education and support services.

2. Technology Realm growth areas: the Technology Realm will also support relevant developments in the growth areas of Corby, Kettering and Wellingborough.

3. Technology Realm areas of opportunity: there are also a number of other ‘areas of opportunity’ in Northamptonshire that will be incorporated within the Technology Realm. These areas include, but are not limited to, Daventry (which has plans for a Technology Park) and Towcester. It also includes the major opportunity to develop an internationally recognised science and technology scheme, building on the motorsports and advanced engineering cluster at Silverstone.

3 The 8,500 jobs created through the Technology Realm are net of the ‘policy-off’ scenario and include jobs potentially safeguarded (e.g. jobs that would have been lost without the Technology Realm intervention). 4 Technology Realm warehousing will be non-strategic unless the case can be made for strategic warehousing (e.g. employment in target sectors). 5 Employment densities taken from COPELA for the purpose of consistency.


7 February 2007

7

2.7 The Technology Realm will build on existing assets to provide a ladder of commercial premises in Northamptonshire ranging from 125-500m2 offices, 200-1,000m2 industrial units and some targeted 10,000m2 premises to attract regional and national B1 functions. In particular, the Technology Realm will be used to increase B1 business accommodation in the County, a need identified through the COPELA update. Table 2.2 gives an example of how the Technology Realm can be progressed, setting out the nature and scale of buildings required to deliver 236,000m2 of commercial floorspace. Although this is purely indicative, and subject to further detailed feasibility work, it is based on the findings of the following exercises:

• DTZ’s review of the nature and scale of premises on science and technology schemes elsewhere in the UK.

• DTZ’s assessment of the economic profile of Northamptonshire,6 including a sizeband analysis of the business base.

6 This can be found in DTZ (2006) Northamptonshire Technology Realm Feasibility of Concept Report.


7 February 2007

8

• Parallel employment land work that has been undertaken in the County (including Roger Tym & Partners’ COPELA work and DEGW’s Worstyle Trends work).

• Ongoing consultation with DTZ office and industrial agents working in the County and ongoing client discussion and feedback.

2.8 We therefore consider Table 2.2 to be a useful platform from which to undertake more detailed feasibility work to determine the precise nature, scale and distribution of buildings to be progressed through the Technology Realm. As is set out in DTZ’s Technology Realm feasibility of concept work, all buildings progressed through the Technology Realm should include as much flexibility as possible in their design (to accommodate as wide a range of requirements as possible) and should be configured to enable companies to expand on site, reducing the need to relocate as Technology Realm companies grow.7 Technology Realm premises should be progressed on relatively large contiguous sites in the Technology Realm Hub, growth areas and areas of opportunity. This will allow the programme to develop critical mass.

Table 2.2 Northamptonshire Technology Realm Indicative Premises Profile8 Size of

Building Number of Buildings

Total Floorspace

Total Employees

Average Floorspace

Take

10,000m2 2 20,000m2 1,110 >500m2 3,000m2 14 42,000 m2 2,330 150-500m2

Office

1,500m2 18 27,000 m2 1,500 100-150m2 800m2 23 18,400 m2 1,020 50-100m2 Sub-total - 57 107,400 m2 5,960 -

3,000m2 10 30,000 m2 940 >1,000m2 Industrial 1,000m2 24 24,000 m2 750 200-1,000m2

Sub-total - 34 54,000 m2 1,690 -

Warehouse 25,000m2 2 50,000 m2 570 25,000m2 5,000m2 5 25,000 m2 280 1,500-5,000m2 Sub-total - 7 75,000 m2 850 -

Total - 98 236,400 m2 8,500 -

2.9 In summary, the Technology Realm will act as an umbrella programme that will incentivise private and public sector stakeholders in Northamptonshire to facilitate a step-change in the quality and quantity of employment land in the County, as detailed above. This is based on the premise that the MKSM Growth Strategy will stimulate a substantive uplift in jobs growth in the County. The Technology Realm will also drive minimum standards with regard to environmental sustainability, design, enterprise support services and information and communications technology (ICT) to ensure that the programme is consistent and retains its integrity. Each of these areas is assessed in turn below.

7 In line with recommendations contained within UKSPA (2006) The Planning, Development and Operation of Science Parks. Second Edition. 8 Figures in Table 2.2 do not sum exactly with figures in Table 2.1 due to rounding. All figures in Table 2.2. are indicative and subject to further detailed feasibility work.


7 February 2007

9

Technology Realm: Environment & Design

2.10 It is important that there is a degree of consistency between the sites and premises progressed through the Technology Realm, as this will maintain the integrity of the scheme. As such DTZ, in conjunction with master planners Faulks Perry Culley & Rech, has developed a design and environment core standards specification for the Technology Realm and this is attached at Appendix 1. It draws on a range of policy, strategy and best practice guidance and is structured around the following 11 areas.

Workplace models The Technology Realm should support the development of a ladder of quality

business premises in Northamptonshire, catering for the following workplace models: virtual, studio, workshop, office, flagship, hybrid and tanker workplace.

Overall design objectives

Premises progressed through the Technology Realm should be distinctive and high quality and should be as good as, or surpass, similar schemes in the both the UK and abroad. Proposals for the Technology Realm should respond to the objectives laid down in “By Design” with regard to character, continuity and enclosure, quality of the public realm, ease of movement, legibility, adaptability and diversity.

Existing environment

Design proposals for the Technology Realm should start with a thorough analysis of the site context and environment. This should include current landscape character, historic landscape character, biodiversity, architectural context and cultural context.

Urban structure Getting the property product right for the Technology Realm is crucial as it will

dictate how effectively intellectual property (IP) is shared and exploited between occupiers and can be used to support high levels of creativity, productivity and innovation. Key principles should include the use of flexible, “future proof” buildings with a modular construction, individual buildings and whole developments designed to maximise formal and informal interaction and the use of striking architecture that is innovative and forward-looking.

Access movement & linkages

Site analyses should be used to identify important linkages between premises delivered through the Technology Realm and their surrounding environments. Design proposals should maximise opportunities to create better linkages within the site and to link with the wider area. Innovative models for increasing public transport patronage should also be used.

Public realm The hard and soft landscape spaces within and surrounding the Technology

Realm will play an important role in achieving a vibrant and distinctive scheme. These spaces should be treated in a positive way rather than being leftover spaces and the materials used should be simple, robust and reflect Northamptonshire. Tree species should include native trees typical of Northamptonshire and should not be planted across desire lines. All soft landscaped areas should be maintained to a high standard.

Green infrastructure

Green infrastructure is set within and contributes to a high quality natural and built environment and can be used to enhance the quality of life for workers, residents and visitors to the Technology Realm. Green infrastructure for the Technology Realm should be delivered through a planned network of multifunctional green spaces and interconnecting links that is designed, developed and managed to meet the economic, environmental and social needs of communities across Northamptonshire.


7 February 2007

10

Sustainable construction

Sustainability is a key theme that runs throughout the Technology Realm and all development progressed should comply with a Building Research Establishment Environmental Assessment Method (BREEAM) score of at least ‘very good’, requiring a minimum score of 55 for both office and industrial units. Key elements in achieving this will be: conservation of existing landscape features; creation of new landscape areas; application of Sustainable Urban Drainage System (SUDS) where appropriate; fully integrated transport systems; optimisation of daylight provision in buildings; use of low energy fittings where appropriate and consideration of alternative building services (e.g. geothermal heat pumps); rainwater harvesting and waste minimisation.

Quality details & identity

Quality design details and identity standards should be used to ensure good design at all levels of the Technology Realm. Buildings, the public realm and movement corridors should be designed in tandem and to high standards of attractiveness, durability and environmental performance.

Safety & security Safety and security will be vital elements of the Technology Realm and a

combination of good design; good management and community involvement should be used to create secure environments, reducing vandalism and the risk and fear of crime. Key measures should include the provision of safe routes for walking and cycling, buildings fronted onto public realms, locating parking in courtyards and/or secure areas and considering the density and mature height of planting. Obtrusive security measures should be minimised through such good design.

Waste To ensure that the Technology Realm is truly sustainable, a strategy should be

developed to reduce, recycle and recover waste arising from all demolition, construction and operation activities. Consideration should also be given on appropriate sites to the provision of combined heat and power plants.

Technology Realm: Enterprise Support Services

2.11 A key driver of the sustainability and long-term success of the Northamptonshire Technology Realm will be the provision of effective and well-resourced enterprise support services. These services, delivered both formally and informally, should meet the specific needs of both the indigenous and external businesses that are engaged in the Technology Realm. As such DTZ, in conjunction with technology consultants Angle Technology, has developed a core standards specification for the delivery of enterprise support services through the Technology Realm and this is attached at Appendix 2.

2.12 The objective of the Technology Realm’s enterprise support services is the widening and deepening of an innovative and sustainable knowledge economy in Northamptonshire, whose product is a community of successful high-growth businesses. The enterprise support services should focus on assisting pre-start, start-up/emerging and established businesses across the widely traded and enabling sectors identified in the previous section. The typical characteristics of businesses in each of these maturity stages are summarised below:

1. Pre-start businesses in the Technology Realm: support should assist these companies to identify the opportunity, explore markets, develop a business idea and build a business plan. This cohort tends to have no formally established systems or processes and is funded from entrepreneurs’ own resources.


7 February 2007

11

2. Start-up/emerging businesses in the Technology Realm: this is a high-risk period for Technology Realm businesses and requires intensive support. These companies are exploiting early opportunities with a product or service that is likely to be incomplete and they need to be flexible to respond to customer requirements. They are often operating with restricted capacity in terms of skills, resources and financial facility and this is where support for this cohort should be targeted.

3. Established and larger businesses: these businesses focus on securing market position whilst exploring new markets and refining service or product offerings. They often ensure they have a stable environment for efficient operation through organic and acquisitive growth. Support in this area should focus on formalising business processes, structures and systems.

2.13 The Technology Realm should ensure that all businesses in the three target maturity stages (and other stakeholders such as the University of Northampton) are signposted to and access appropriate programmes already available to them. These are detailed in Appendix 2 of this report and include Business Link’s Universal Start-Up Offer (due to be consolidated into mainstream delivery in 2007); emda’s High Growth Academy, Mentoring Escalator, Business Champions,9 Cluster Support Programme, Growth Investment Network East Midlands, Regional Venture Capital Fund; services delivered through UK Trade & Investment and the Employment, Skills and Productivity Partnership.

2.14 The role of the Technology Realm is to ensure that businesses make the most of what is already on offer to them and a route to achieving this is attached at Appendix 2. Key additional business support recommendations for the Technology Realm are also detailed in Appendix 2 and the immediate priorities for enterprise support services under the Technology Realm are summarised below.

Technology Realm Business incubation network

There are a significant number of innovation centres operating and planned within Northamptonshire. This is a good opportunity to build a strong, coherent network providing a consistent business incubation service offering. By deploying a coordinating resource to ensure that the incubators work collectively, there is strong potential for the initiatives within the Technology Realm to create a network able to leverage greater opportunity for Northamptonshire and create critical mass to drive the enterprise agenda forward.

Technology Realm enterprise network

Consideration should be given to the creation of a Technology Realm Enterprise Network which would not only provide a focus on the enterprise agenda in Northamptonshire but could provide the means by which the Technology Realm moves beyond pure branding and becomes a tangible entity.

Technology Realm innovation counsellor

Ensure that there is active participation from initiatives in the Technology Realm in the products delivered from emda’s Regional Innovation Strategy. This includes the development of iNets and the establishment of iHubs using innovation centres or research centres within the Technology Realm. This process could be facilitated by a dedicated Innovation Counsellor resource established within the Business Link offer.

9 Business Champions is run on behalf of emda by Carter and Carter plc.


7 February 2007

12

Technology Realm knowledge transfer

The University of Northampton has been identified as a critical success factor for the Technology Realm. It is important to ensure that the success of the University’s activity continues by increasing its penetration within Technology Realm businesses. The University should continue to build on the success of its Knowledge Transfer Partnership scheme and focus on the deployment of resources to deliver an interface to the University that is driven by business demand and is responsive to SME needs, constraints and behaviour.

Technology Realm: Information and Communications Technology (ICT)

2.15 All sites and premises progressed through the Technology Realm should offer competitive and leading ICTs to all occupiers. To help deliver this DTZ, in conjunction with IT & communications consultants the Analysys Mason Group, has developed a core standards specification for the delivery of ICT across the Technology Realm.

2.16 Mason Communications has also developed specifications and indicative costs for the ICT specifications of the seven workplace models that will be progressed through the Technology Realm. This is detailed in Appendix 3. This ICT core standards specification builds on the “ICT Toolkit” published by the East Midlands Development Agency (emda) and endorsed by the East Midlands Regional Assembly (EMRA) and South East of England Development Agency (SEEDA). This “ICT toolkit” is available to download at http://www.emda.org.uk/icttoolkit and should be used by all leading stakeholders in the Technology Realm. The ICT core standards specification for the Technology Realm builds on the regional “ICT Toolkit” and is based around the seven key areas summarised below.

Account for ICT from the outset

It is important to consider ICT at the outset of the Technology Realm. There are many examples of development schemes elsewhere that have failed to do this, leading to costly retrofitting of buildings and telecommunications operators having to disrupt newly laid external works surfaces. To avoid this, the Technology Realm should include ICT on the agenda of all relevant scheme meetings and ensure that all sites and premises progressed through the Technology Realm are informed through the guidance notes and checklist available in emda’s “ICT Toolkit.”

Allocate appropriate funding for ICT

Although ICT is often bundled with other utilities such as gas, electricity and water, our experience suggests that it often does not have a specific budget allocation at the outset of development schemes. This often results in the use of contingency budgets and can ultimately lead to the reduced profitability of schemes. To avoid this, the Technology Realm should include ICT explicitly in the development budget of all sites and premises progressed. It should also specify what financial contribution will be made by telecommunications operators (if any) and the conditions that are attached to such contributions.

Clarify the ICT roles & responsibilities of stakeholders

There are primarily three types of stakeholders with respect to the delivery of ICT within the Technology Realm: (1) property developers/construction companies; (2) public sector organisations such as Northamptonshire Enterprise Limited (NEL) and emda; and (3) telecommunications operators and equipment vendors. To avoid any scope for confusion, the Technology Realm should clearly define the roles, responsibilities, boundaries and contractual relationships with regard to ICT, including incentive mechanisms where appropriate.


7 February 2007

13

Specify the scope of ICT

If specific ICT roles and responsibilities are left out of the Technology Realm stakeholders’ scope then owners/occupiers of buildings will be left to request services from service providers themselves. It is therefore important to be clear about the scope of ICT for the Technology Realm across the following three main components for consideration: ICT infrastructure, ICT connectivity and ICT services. It is important to be clear about the scope of ICT for the Technology Realm in contractual agreements between stakeholders.

Develop appropriate ICT specifications

There are no “off the shelf” blueprints for developing ICT specifications for the Technology Realm. Each development project within the programme will have its own set of criteria based on target occupiers, the commercial position of stakeholders and stakeholders’ appetite for ICT investment and risk. However, evidence of best practice should be gathered from the case studies attached at Appendix 3. This should be used to prepare ICT documentation for Technology Realm sites and premises setting out technical specifications, procurement, testing and commissioning, operations and maintenance.

Develop appropriate ICT sourcing strategies

There are a number of strategic options that affect the procurement of ICT for a development during the initial build phase and the post-build operational phase. A balance will need to be struck between offering supplier choice against enabling an advanced ICT environment within acceptable risks. As such, the Technology Realm should develop and document a clear sourcing strategy for procuring ICT for the Technology Realm.

Keep up-to-date with ICT legislation & regulations

There are a number of legislative and regulatory issues that the Technology Realm should be aware of going forward and up-to-date information regarding legislation and regulatory measures should be maintained. The key sources of information are the DCLG10, Ofcom11 and the Department of Trade and Industry (DTI).12

10 DCLG, http://www.communities.gov.uk/. 11 Ofcom, http://www.ofcom.co.uk/. 12 DTI, Telecommunications sector page, http://www.dti.gov.uk/sectors/telecoms/index.html.


7 February 2007

14

3. Management and Implementation of the Technology Realm

Introduction

3.1 This section starts by setting out and assessing a number of options for taking the Technology Realm forward. It then goes on to specify DTZ’s preferred option for implementing the programme.

Specification of Options for Taking the Technology Realm Forward

3.2 Although no single management programme will be capable of delivering the Technology Realm in its entirety, we set out below the four main options for progressing the scheme. These options are assessed according to the following criteria: delivery focus, access to resources, risk exposure and degree of influence.

Use of Development Agreements

This option would involve the coordination of a number of Development Agreements for schemes progressed through the Technology Realm. Development Agreements could be progressed with a range of different developers and the role of Northamptonshire Enterprise Limited (NEL) and partners would be to ensure a degree of consistency with regard to target occupiers, design, sustainability, ICT, etc. Effectively, Development Agreements are contracts that would constitute a formal legal agreement between all parties with an interest in the Technology Realm. The objectives, individual rights and obligations of partners are all enshrined in the Agreement, which can cover issues such as planning, site assembly, funding, development responsibilities, project management, payments/profit share, etc. Development Agreements are relatively simple and can minimise bureaucracy that can be attractive to potential private sector partners. We appraise below the relative merits of this option according to the following criteria: delivery focus, access to resources, risk exposure and degree of influence:

1. Delivery focus – this approach would achieve a good focus on delivery at the level of individual sites and premises but it would be relatively difficult to achieve a degree of consistency across the whole Technology Realm.

2. Access to resources – this approach would provide sufficient opportunity to access private sector expertise and resources but this may need to be supported through public sector inputs (e.g. land contributions, planning conditions and/or funding to support Technology Realm core standards).

3. Risk exposure – development agreements are a well-tested approach through which risk can be effectively managed and mitigated but such an approach may lead to risks regarding a lack of overall coordination of the Technology Realm.

4. Degree of influence – sufficient influence over the developer(s) can be leveraged through Development Agreements for the Technology Realm.


7 February 2007

15

Use of a development consortium

This option would involve the use of a single Development Agreement with a developer/developer consortium to progress the Technology Realm. Although the process would be similar to that outlined above, only one Development Agreement would be needed to progress the Technology Realm and this would ensure a greater degree of consistency with regard to target occupiers, design, sustainability, ICT, etc. We appraise below the relative merits of this option according to the following criteria: delivery focus, access to resources, risk exposure and degree of influence:

1. Delivery focus – this approach would achieve a good focus on delivery at the level of individual sites and premises and would also allow a consistent focus on progressing the Technology Realm programme across the County as a whole.

2. Access to resources – this approach would provide sufficient opportunity to access private sector expertise and resources but this may need to be supported through public sector inputs (e.g. land contributions, planning conditions and/or funding to support Technology Realm core standards).

3. Risk exposure – development agreements are a well-tested approach through which risk can be effectively managed and mitigated and this ‘bundled’ approach would support the overall coordination of the Technology Realm.

4. Degree of influence – sufficient influence over the developer(s) can be leveraged through a single Development Agreement for the Technology Realm.

Use of existing delivery capabilities

This management option would use the existing delivery resources in Northamptonshire to drive the Technology Realm Forward, namely the West Northamptonshire Development Corporation (covering Northampton, Daventry and Towcester), the North Northants Development Company (covering Corby, Kettering and Wellingborough) and Blueprint13 (covering Corby and Northampton) in partnership with Northamptonshire Enterprise Limited (NEL). These four organisations would enter into a formal agreement to deliver the Technology Realm and would also work in partnership with relevant organisations that represent parts of the County outwith their collective geographical remit (e.g. Silverstone). We appraise below the relative merits of this option according to the following criteria: delivery focus, access to resources, risk exposure and degree of influence:

1. Delivery focus – existing delivery resources in Northamptonshire are well placed to deliver the Technology Realm but important pockets in the County (e.g. Silverstone) are outwith their remit.

2. Access to resources – the two development corporations in Northamptonshire plus the regional body Blueprint are well placed to access both private and public sector resources.

3. Risk exposure – although existing delivery resources in the County are well placed to deliver the Technology Realm, they would need to be incentivised and compensating for doing so. If not, there is the risk that the Technology Realm is not prioritised.

4. Degree of influence – sufficient influence over developer(s) can be leveraged through the use of existing delivery capabilities in Northamptonshire to implement the Technology Realm.

13 Formerly known as the East Midlands Property Investment Fund (EMPIF).


7 February 2007

16

Establishing a dedicated Special Purpose Vehicle (SPV)

This management option would involve a separate organisation being established by stakeholders to deliver the Technology Realm. In this way, establishing a development company allows the powers and resources of the public and private sectors to be combined in a single entity through a joint venture (JV). The company’s shares would be owned by the public sector bodies and the private sector partner in an agreed proportion, and shareholder representatives from the Board of Directors would have legal responsibility for managing the company and an Executive would carry out the day-to-day operations of the company. A Memorandum & Articles of Association would govern the company’s activities. Furthermore, the Shareholders’ Agreement would set out the roles and relationships between the parties involved in the company. We appraise below the relative merits of this option according to the following criteria: delivery focus, access to resources, risk exposure and degree of influence:

1. Delivery focus – establishing an SPV to deliver the Technology Realm will provide an organisational focus on delivery for the programme.

2. Access to resources – procuring a private sector partner/partners to join the SPV will provide access to private sector resources and skills.

3. Risk exposure – there are potentially substantive risks associated with entering into a JV (particularly when establishing a JV and specifying roles, responsibilities and liabilities) and these will need to be mitigated and managed effectively (e.g. obtaining timely information, effective contingency planning). Furthermore, it is likely that such an approach would duplicate existing delivery capabilities in the County and could displace pipeline investments in Northamptonshire.

4. Degree of influence – stakeholders will share control with development partners and this can me managed in several ways – e.g. effective use of Memorandum and Articles of Association to govern activities, ensuring that Technology Realm stakeholders are shareholders and have Board representation, etc.

Summary Assessment of Options for Taking the Technology Realm Forward

3.3 Table 3.1 summarises each of the identified management options for taking forward the Technology Realm with regard to the key performance criteria of delivery focus, access to resources, risk exposure and degree of influence. In summary, the best performing option is to use existing delivery capabilities in Northamptonshire to progress the Technology Realm. This is because the use of existing special purpose vehicles in Northamptonshire to deliver the Technology Realm will provide a strong focus on delivery, can be used to access both public and private sector resources, minimises the risk of duplicating current and pipeline activities/investments and is capable of exerting sufficient influence over developer(s).


7 February 2007

17

3.4 Given this assessment, DTZ considers that Northamptonshire Enterprise Limited (NEL) should enter into discussions with the West Northamptonshire Development Corporation, the North Northants Development Company and Blueprint to discuss their willingness, appetite and ability to take the Technology Realm forward on behalf of regional stakeholders. Once this has been established, a detailed business plan and delivery plan can be produced for implementing the Technology Realm. Clearly, each of these four organisations will need to be appropriately incentivised (through financial and other resources) to take the Technology Realm programme forward.

Table 3.1: Northamptonshire Technology Realm Summary Assessment of Implementation Options

Option

Delivery Focus Score

Access to Resources Score

Risk Exposure Score

Degree of Influence Score

1. Use of Development Agreements

Medium Medium Medium Medium

2. Use of a Development Consortium

High Medium Medium Medium

3. Use of existing delivery capabilities

Medium High High High

4. JV Development Company

High High Low High


7 February 2007

18

4. Development Appraisal

Introduction

4.1 This final section starts by setting out the results of our development appraisal of the Technology Realm and by also summarising indicative utilities requirements (heat, power and water) for the scheme. It then goes on to assess the level and nature of public sector support required to de-risk to scheme to the point where the private sector can take it forward. This section concludes with a summary of DTZ’s findings to date on the Technology Realm and sets out the immediate next steps that need to be taken to progress this innovative programme.

Technology Realm Development Appraisal

4.2 DTZ has undertaken a development appraisal of the Technology Realm to determine approximate heads of costs, receipts and land values. This is not a valuation but an appraisal based on a substantive number of assumptions and estimates as set out in Appendix 4. This development appraisal assumes that the Technology Realm will be built out over a 15-year period on an S-Curve basis, providing premises as set out in Table 2.1 of this document. It also assumes that the MKSM Growth Programme will stimulate enough demand to sustain the Technology Realm going forward, through the generation of a substantive uplift in jobs growth (see paragraph 2.3). Other key assumptions include:

• Build costs - office: £1,356m2; industrial/warehouse: £603m2.

• Land costs: £716,000 per ha.

• Car parking and landscaping costs: £100,000-£300,000 per phase.

• Finance: Debit Rate 6.500%; Credit Rate 2.500% (Effective).

• Average rents - office £135.00m2; industrial £65.00m2.

• Average yield - office: 5.75%; industrial/warehouse: 6.00%.

• Real rental growth rate of 2% per annum. Table 4.1 Northamptonshire Technology Realm Development Appraisal Total Initial Annual Rental Income £20.6m Net Development Value £421.76m Acquisition Cost (Land*) £42.91 Acquisition Costs (Fees, Stamp Duty and Planning) £2.73m Construction costs (Including 5% Contingency and External Works) £238.14m Professional Fees £22.32m Marketing and Disposal Fees £10.17m Finance £50.47m Total Costs £366.75m Profit @ 15% on Costs £55.01m TOTAL Costs (Including Profit) £421.76

*Land value on 60 ha @ circa. £716,000 per ha (circa. £290,000 per acre) = £42.91m. Figures do not sum exactly due to rounding.


7 February 2007

19

4.3 It is important to note that we have not included site servicing and infrastructure costs in our development appraisal. Such costs will vary considerably from site to site (e.g. depending on whether sites are brownfield or greenfield) and are impossible to estimate robustly at this stage. However, our experience from similar schemes suggests that such costs could be in the region of £105-£150 per m2. On this basis, the total costs of servicing Technology Realm sites could be between £25m-£35m. This results in negative land values in some phases and some form of gap funding will be required to take the scheme forward. An important role of the public sector will be to de-risk the Technology Realm so that the private sector regards the programme as offering an acceptable risk/reward ratio. The public sector can incentivise the private sector to take the Technology Realm forward in a number of ways, including through land contributions, supportive planning conditions and capital and revenue funding.

4.4 More detailed appraisal work should be undertaken to determine the scale of the anticipated Technology Realm deficit, once specific sites have been identified. It is also worth noting that a reduction in build costs of circa. £108m2 would increase residual land values for the Technology Realm by approximately £30m. As such, a proportion of the identified deficit could be addressed through reducing build costs for the scheme.

Technology Realm Indicative Utilities Requirements

4.5 DTZ has worked with engineering consultants Scott-White & Hookins to undertake a review of the estimated infrastructure requirements of the Technology Realm. We have estimated the heating (gas), power (electricity) and water requirements of the scheme as it is built out over an assumed period 2008-2021. The initial utilities requirements for the Technology Realm are summarised in Table 4.2 and full details are attached at Appendix 5.14

4.6 We consider that the ultimate heating demand for the Technology Realm is circa. 15MW, the ultimate electricity demand to be circa. 15MW and the ultimate water demand to be circa. 169,000 litres per day. It should be stressed that this is based on an initial assessment and is subject to further detailed work in this area. All assumptions made in calculating indicative infrastructure requirements for the Technology Realm are contained in Appendix 5.

14 Heating demand based on CIBSE figures for offices and historical data. Heating for industrial and warehousing taken as the same figure. Electrical demand based on BCO guide with air conditioned offices. Electrical demand for industrial taken to be the same as offices. Electrical demand for warehousing based on ratio of warehouse to office population. Water demand based on CIBSE guide and historical data, based on circa. 20 litres per person per day.


7 February 2007

20

Table 4.2 Northamptonshire Technology Realm Estimated Infrastructure Requirements Heating Demand Power Demand Water Demand

Commentary The National Grid owns and

maintains the gas network in the UK and discussions with the National Grid regarding the availability of supply would need to take place. It is envisaged that the gas to the Technology Realm sites and premises would be supplied via a medium pressure main and if no main is supplied near the proposed sites then a medium pressure main will need to be installed from the nearest supply.

The majority of Northamptonshire falls within the area maintained by EDF Energy and discussions with EDF Energy would need to take place regarding the availability of supply. The anticipated electricity demand for the Technology Realm is substantive and is likely to require reinforcement of the electricity supply network.15 If this is the case, EDF Energy may require contribution towards offsite reinforcement and discussions with them will confirm this.

Anglian Water would provide water supply to the Technology Realm and it is likely that a scheme the size of the Technology Realm would require off-site reinforcement to the supply network.16 This will need to be confirmed through discussions with Anglian Water.

Estimated Demand 2010

3MW 3MW 36,000 litres per day





Technology Realm Anticipated Public Sector Contribution

4.7 The private sector will be responsible for taking the Technology Realm forward and public sector inputs should only be made available where there is an evidenced case for intervention. Data on public sector contributions to science and technology schemes in the UK is not publicly available as this information is often commercially sensitive. However, DTZ has advised on a number of science park developments in the UK and we consider that the public sector contribution to the development of Bristol and Bath Science Park17 (SPark) is not atypical. The Quantum Property Partnership, a joint venture between Quintain Estates and Development and Morley Fund Management, will develop the £300m scheme with £30m funding from the South West Regional Development Agency (SWRDA),18 representing a public sector contribution of circa. 10%. Although this provides a useful yardstick, public sector funding for the Technology Realm will need to be allocated on the foundation of an evidenced case for intervention and not on what public sector allocations have been on similar schemes elsewhere.

4.8 We set out below prospective areas of public sector funding for the Technology Realm in the areas of environmental sustainability, enterprise support services and ICT. It should be noted that these are over and above management and administration costs for the Technology Realm as well as funding for any development deficits on constituent Technology Realm schemes, as presented earlier in this section.

15 This is based on the assumption that Technology Realm premises will be clustered on sites in the Hub, growth areas and areas of opportunity and will not be evenly dispersed throughout the County. 16 As above. 17 Further details of the Bristol and Bath Science Park (also referred to as SPark) are contained in DTZ (2006) Northamptonshire Technology Realm Feasibility of Concept Report. 18 Information gained from www.southwestrda.org.uk/news/release.asp?releaseid=1494 and verified through a telephone discussion with a representative from the South West Regional Development Agency.


7 February 2007

21

• Environmental sustainability: In general, the costs of pollution accrue to society as a whole and not to the polluter. This means that there is little incentive for developers to progress environmentally sustainable buildings through the Technology Realm, as they are likely to receive little-to-no return on their investment in costlier materials and processes. This is a negative externality market failure and a case can be made that the public sector should address it. Research undertaken by the Building Research Establishment (BRE)19 indicates that the additional capital costs of achieving a BREEAM ‘Very Good’ rating for air conditioned offices is between 0 and 5.7%. This suggests that on average, achieving a BREAM ‘Very Good’ rating adds approximately 2.9% to total capital costs. As such, we consider that the total additional cost to the Technology Realm of ensuring that all premises reach a BREEAM ‘Very Good’ rating would be circa. £6.5m (at current prices, based on a total construction cost of £222.9m). There is scope for the public sector to fund this environmental sustainability ‘deficit’ to ensure that the Technology Realm meets the sustainability core standards set out in this document and in Appendix 1.

• Enterprise support services: DTZ, in partnership with Angle Technology, has set out and costed the immediate priorities for the Technology Realm’s enterprise support services and these are detailed in Appendix 2. In summary, we consider that the total annual costs of funding an innovation councillor and enterprise network coordinator to be £195,000. Providing these services over the 15-year period 2007/08 to 2021/22 would cost (at current prices) approximately £2.9m. Effective and well resourced enterprise support services are crucial to the success of the Technology Realm and this is a key area of public sector input into the programme.

• ICT: DTZ, working with Mason Communications, has provided specifications and indicative costs for the ICT specifications of the seven workplace models that will be progressed through the Technology Realm. This is detailed in Appendix 3. In summary, total ICT costs range from £32,000 for a studio workplace with approximately 12 employees to £300,000 for a flagship office workplace with approximately 200 employees. These costs should be used to ensure that ICT is embedded within the Technology Realm from the outset and is included in the programme budget. The balance of private/public sector contributions to ICT in the Technology Realm will vary from building to building but, in line with recommendations set out in Appendix 3, should be agreed using emda’s ICT Toolkit.

Technology Realm Conclusions & Next Steps

4.9 DTZ has undertaken detailed feasibility of concept work for the Technology Realm and we have concluded that “the Technology Realm can be used as a vehicle to drive the step-change in growth set out through Northamptonshire’s Sustainable Communities aspirations and other key policy documents such as the Sub-Regional Economic Strategy and Local Area Agreement.”

4.10 We consider that the following 9 next steps should be taken by Northamptonshire Enterprise Limited (NEL) in the short-term (financial years 2007/08 and 2008/09) to progress the Technology Realm:

19 BRE Centre for Sustainable Construction (2005) Putting a Price on Sustainability.


7 February 2007

22

1. Implement the Technology Realm recommendations and pre-conditions for growth set out in DTZ’s feasibility of concept report for the programme.

2. Enter into discussions with the West Northamptonshire Development Corporation, the North Northants Development Company and Blueprint to discuss their willingness, appetite and ability to take the Technology Realm forward on behalf of regional stakeholders. Consideration should also be given as to how each of these organisations should be incentivised to take the Technology Realm forward.

3. Enter into discussions with key stakeholders (e.g. emda, EP, DCLG, local councils) to discuss the level and nature of public sector funding that could potentially be allocated to the Technology Realm.

4. Contact the utilities providers identified in this document to discuss any supply issues that the Technology Realm raises and, if so, how these can be addressed.

5. Implement the recommendations on enterprise support services summarised in this document and detailed in Appendix 2.

6. Undertake more detailed work to assess the phasing of the Technology Realm and the specific nature of the sites and premises that will be progressed. This should be undertaken in close consultation with public and private sectors and should be based on evidenced demand.

7. Identify sites that are capable of accommodating Technology Realm premises through the Core Spatial Strategy, ensuring that constituent premises are located near to/are embedded within the County’s sustainable residential communities and comply with the recommendations and guidelines set out in this document (e.g. large sites capable of developing critical mass in the Technology Realm Hub, growth areas and areas of opportunity).

8. Undertake detailed assessments of each of the yet to be identified Technology Realm sites, including: demand studies to assess viability; traffic impact assessments; environmental assessments; drainage and flood risk assessments; ecological and nature conservation assessments; master planning; infrastructure/planning requirements; and any required site investigations/technical appraisals.

9. Constitute a body/formal agreement (drawing on the outcome of point 2 above) that is formally charged with delivering the Technology Realm and work in partnership with this body to prepare a detailed delivery plan, setting out costs and incomes (and overall viability) on the basis of detailed site assessments. The delivery plan should set out the following:

a. Specification of the sites, premises and support services to be progressed through the Technology Realm.

b. Costs of progressing the Technology Realm (capital and revenue) and sources of funding.

c. Incomes and values generated through the Technology Realm, derived from detailed development appraisals.

d. Outputs to be delivered through the Technology Realm, including floorspace built, jobs created, new business created and sustained, Gross Value Added, etc.


7 February 2007

23

e. Risk management, identifying and quantifying key risks,20 and setting risk management and mitigation strategies.

f. Forward strategy, setting out a detailed programme of actions, key milestones and management, reporting and evaluation procedures.

20 Key Technology Realm risks are likely to include, but not be limited to, land acquisition, planning and design, pre-construction, site clearance/remediation, infrastructure, construction, funding, legislative, demand/take-up/value and legal/delivery structure/partnership.

northamptonshire technology realm: forward strategy · northamptonshire enterprise limited (nel)...

Documents