Reading: Where businesses are ‘tripping over international opportunities’
An ‘epicentre for technology’ that is overflowing with management talent and international giants, Reading has emerged in recent years as a commercial centre of sufficient power to reverse its traditional outflow of talent to London.
In the latest in a new series of city spotlight features, Business Leader spoke to some of the area’s key figures to learn more about what’s driving Reading’s growth, and its future ambitions.
What are the strengths of Reading from a business perspective?
Nigel Horton-Baker, Executive Director of Reading CIC, said: “A de facto city, Reading’s second-to-none location, west of London, has been a consistent and crucial factor in its ability to attract businesses in every area. Connectivity to London and Heathrow attracted big US corporates in the 1980s/90s like Microsoft, Hewlett Packard and Oracle, who landed at Heathrow and turned left to where there was plenty of land to build European HQs.
“Agglomeration theory then began to take hold, as computer companies followed computer companies to the Greater Reading area, demanding further real estate investment. The ‘three I’s’ – ITC, insurance and investment – have been driving Reading’s economy over the last 30 years.
“In the past 12 months, the roster of high-profile businesses working in the knowledge economy has been boosted by the arrival of global pharma giant Sanofi, and international communications brands such as Ericsson and Virgin Media, who have set up UK HQs here. Flexible space to foster a dynamic working environment has proliferated, while business parks and new university-backed Thames Valley Science Park have strong demand on space.”
Lawrence Dean, Head of South for mid-market investment firm LDC, said: “Reading has many strengths for businesses and employees, with access to world-class universities, good transport links and proximity to London. In recent years, it has also become something of an epicentre for technology firms, with a number of tech giants based across the Thames Valley. A recent report rated Reading as the ‘No1 entrepreneurial hotspot in the UK’.
“Furthermore, just last month, Reading was revealed as the UK’s third largest digital technology city behind only London and Manchester. There’s often much talk about the ‘brain-drain’ to the capital, but the region is becoming increasingly credible as an entrepreneurial business hub.”
Bruce Potter, Chairman of law firm Blake Morgan, said: “The Thames Valley has a compelling offer for businesses and investors. Its robust economy, workforce talent and transport links make it a popular choice for starts-up as well as established corporates.
“We have a really balanced economy, and while Reading itself is fast becoming known as a tech hub within the UK, a lot of sectors are thriving in the wider, regiona,l business community. This is no surprise when you consider the recent investment made into the infrastructure, including the regeneration of the train station, introduction of the M4 smart motorway at J11 and its close proximity to Heathrow Airport and London.”
Neil Dickins, Founder and Director at IC Resources, said: “One of Reading’s great strengths is its transport links. For companies in central Reading, the mainline station links to local towns as well as London, Bristol and Cardiff.
“This leads to demand for space in a constricted central area – companies such as ourselves therefore locate outside of town, near the M4 so people can access the office from all four directions. Crossrail will be a welcome addition and provide access to Heathrow by rail.”
Professor Andrew Godley, Associate Dean International at the University of Reading’s Henley Business School, said: “Obvious strength number one is the quality of local senior management; there’s a very large supply of highly-qualified, skilled, experienced senior management people who have trained and worked in central London consultancy, finance or law, and then relocated out to the Thames Valley for family reasons.
“Extraordinary advantage number two is that it is the location out of the entire country with the highest density of international businesses working in it. Greater even than London. What that means is that you’re tripping over international opportunities – you just can’t avoid international opportunities. Compare that to any other regional economy outside of London, and it’s just chalk and cheese.”
And what are its weaknesses?
Godley: “The obvious weakness is nobody knows about it. If I were to tell people even in the Reading area about the strengths we’ve discussed, most people would find that very surprising. There is no strong self-identity with this entrepreneurship and extraordinarily dynamic tech sector in Reading.
“Nobody knows about it internally, nobody knows about it externally, so it’s got no brand. To use the obvious example in this country, Cambridge has developed a very strong brand around life sciences and links with the university. Oxford is trying to do the same thing. They’ve got a really good story – the story is way ahead of the reality – but they have a really clear brand they’re trying to present. Reading has got none of that.”
Dickins: “Reading’s current weakness is that it is perhaps Europe’s biggest technology cluster that is not a cluster. London, Cambridge, Oxford, Bristol and Bath, Edinburgh, even Wales have succeeded in growing multi-layered ecosystems that foster innovation and support start-ups. The Thames Valley has a huge range of technology companies, but there is very little joined-up thinking between academia, industry and local government to encourage start-ups, support research/development activities or aid market penetration.
“That it’s the biggest challenge, and opportunity, if Reading/Thames Valley wants to establish itself as a technology centre of excellence.”
Potter: “While we have seen uncertainty about the third runway at Heathrow and delays with the implementation of Crossrail, this hasn’t impacted business confidence in the area. However, more will need to be done to meet affordable housing supply to retain the workforce the region has worked hard to build – this will require some brave decisions over the next ten years.
“While the region’s close proximity to London makes it an attractive proposition to businesses, this also increases pressure on salary expectations and staff retention which business owners need to consider.”
How does Reading’s relationship with London work?
Potter: “London is a ‘world city’ and Reading has no doubt benefitted from its proximity. With Paddington a mere 25 minutes away by train, many companies have offices in both locations.
“The impact of Crossrail is yet to be seen and while it may allow a greater flow of business towards the Thames Valley, we anticipate a knock-on effect on housing costs which must be carefully managed.”
Horton-Baker: “Reading has long been a net in-commuter town, attracting highly-skilled young professionals away from London with the offer of high wages, more affordable housing, good career prospects and a high quality of life. Reading has many of the advantages of the capital without the drawbacks.
“A massive investment in the mainline and the new Tfl Rail services which started in December have literally put Reading on the London transport map. This is a stepping stone to Reading’s eventual status as the western terminus on the Elizabeth Line. Many corporations have relocated their back office and marketing and sales functions to Reading, while they maintain a smaller City of London address.”
“There is huge investment in housing near Reading Station with over 5,000 homes under construction or in planning. The Crossrail scheme has made Reading even more attractive to investors and London-based workers who see easy commuting and lower housing costs as a key benefit.”
Godley: “Reading was a classic commuter town. The local standard of living was dominated by London wages because people would go to work in London.
“In the last 20 years, of all of the commercial centres within a 50-mile radius – that includes all of those historic cities on the perimeter of the M25 and beyond – Reading is the only one that has moved from having a net out-flow of commuter traffic every day to having a net in-flow of commuter traffic every day. The local economy has now become sufficiently powerful that it’s attracting people into Reading more than the London economy is attracting people out of Reading.
“The traditional model of the impact of the metropolis on regional centres on the perimeter is not happening to Reading, and something else is going on. That something else is probably linked to specialist business services and tech, the things it seems to have become specialised in.”
What are the benefits to running a business in Reading?
Horton-Baker: “Excellent rail and road communications to London and Heathrow, access to talent, a dynamic city centre underpinned by £1m per annum investment in two Business Improvement Districts and strong business support networks. Reading is a cultural place, business base and living base.”
Potter: “Reading is centrally placed in an expanding and vibrant Thames Valley economy, with a healthy mix of UK and international businesses. The town has received continued investment over the last ten years and the newly-redeveloped Reading train station is one of the busiest in the UK.
“With four major business parks and a massive investment in business premises in the town centre, there are plenty of commercial real estate options. More developments are in the pipeline, costs are lower than in London.”
Dean: “One of the main benefits is access to a large talent pool. Reading is an exciting place to be right now and, with the booming technology industry, that is set to continue. More young people want to work in tech and the better quality of businesses we have means we’ll attract better talent.”
Horton-Baker: “In 2019, Reading has 50% of its workforce with a degree or above qualification. A recent Sunday Times survey ranked Reading as the number one city for first-time buyers. The second highest average wages in the UK and a high-quality of life also attracts talent. A fifth of The University of Reading’s graduates also stay locally to bolster the workforce.”
What are the main challenges and opportunities of further evolving Reading?
Horton-Baker: “The ‘problems of success’ are firstly related to transport. We have seen rapid growth in car travel on a road network built on a medieval footprint with little room for growth, and the mainline train track and River Thames a barrier to North/South travel.
“Reading has a lack of innovation space in the city centre. With high rents and little financial support, it is difficult to crack the issue of supporting entrepreneurs, start-ups and innovation projects at the heart of a dynamic economy. Good news though – Reading UK is one of the partners behind the Curious Lounge, which opened this month. A new digital tech networking and training facility next to Reading Station, it is designed for businesses looking to recruit digital talent, re-skill and up-skill staff, train to industry standards or simply run creative meetings or innovative workshops.”
Dickins: “The challenge – and opportunity – for Reading is the evolution of technology from being skills/function-specific to sector-specific. For example, until recently, IT, electronics, software, web, app and UX development were relatively siloed. The trend now is for companies to integrate many or all technologies into a product that delivers a need in a sector, such as agriculture, industrial automation, healthcare, automotive, etc. This of course is not a rule but a trend.”
Godley: “There are two challenges. One that’s really important is to build a brand, and build an identity around a strong city economy. There’s no brand associated with entrepreneurship in the region.
“The second thing is networks, or knowledge-sharing. Compared to Manchester, Liverpool, Leeds or Edinburgh, Reading – despite its extraordinary success in producing very fast-growth tech companies that have scaled up from zero to £100m – is not actually a regional economy that has a highly-functioning local network. There’s no obvious forum or mechanism where people can meet and share ideas. We’ve started to create that, through Henley Business School, and it is making a difference, but it’s a long haul.”
What future developments are planned and how will they impact the area?
Horton-Baker: “Reading has demonstrated consistent resilience, adaptation and clustering and used them to its advantage. The planned expansion of Heathrow Airport and the associated direct Rail Link will further cement its locational advantage.
“A new station at Green Park will open in 2020, serving a major new housing development, the fast expanding Green Park Business Park and a new convention centre, to rival Birmingham, which has planning permission adjacent to the Madejski Stadium.
“The Reading 2050 Vision, outlines an aspiration to be an internationally-recognised smart and sustainable economy with green technology businesses and innovation at the heart of its development by 2050. Harnessing green technology as the heartbeat of future development is one of three key themes, developed in partnership with Barton Willmore and the University of Reading, along with the business community in Reading and the local authority.
“The long-awaited redevelopment of one million sq ft of mixed-use development outside the station is on the starting blocks, breathing life into secondary shopping areas. Like every city centre based around retail, Reading is feeling the pinch. But with the £90m station at its centre and a huge high-rise residential and office-building programme, the city centre will be unrecognisable in ten years’ time, supporting a dynamic work-life community and driving demand for new services and experiences.”
Potter: “The ‘cranes are up’, which is always encouraging to see as regeneration of older buildings continues, and it will be a welcome sight to finally see the redevelopment of the old Station Hill site.
“A lot of eyes will also focus on what occurs at the Reading Gaol site – whether a mix of housing and leisure, or the enhancement of a cultural quarter – and how this will impact on the city centre and wider redevelopment plans. Reading will need to cohesively plan to cope with housing and transport pressures to ensure the region remains competitive.
“Ultimately, the spirit of ‘getting things done’ coupled with continued investment in infrastructure and development projects means 2020 looks set to be a prosperous year for businesses in the Thames Valley.”
Dean: “The business community across Reading and the Thames Valley is highly resilient. Anecdotally, we’ve heard business leaders commit to put big plans in place despite the recent economic uncertainty. Lloyds Banking Group surveys business leaders from across the South East, and its latest Business Barometer found that South East business confidence is on the rise, along with firms’ confidence in their own prospects and hiring intentions across the region for 2020.
“It’s great to see such positivity as we head into the new year.”
Godley: “I’m very confident in the future for the region. It’s very difficult to think of any other regional economy in the country that has the potential to grow more quickly.
“Despite the disadvantages – the lack of brand and identity, the current relatively weak network, and the absence of really effective regional government authorities really driving forward economic co-ordination and growth – it is going to continue to be very, very successful.
“That’s driven by an observation of how successful it has been in the past 15 years and the sectors it has grown into, and the likely future for those sectors. I’m very, very confident that Reading region’s entrepreneurs are going to continue to be very successful.”