The Centre for Cities was quite busy today. We co-produced two reports on regeneration, launched together this morning in London:
(1) We wrote Regeneration and the Recession - the latest report from the All Party Urban Development Group;
(2) My colleague, Catherine Glossop, wrote a chapter for Regeneration in a Downturn - a collection of articles published by The Smith Institute.
The slightly tiresome Chatham House Rule was enforced throughout - so I can't tell you who said what. But here are the main points...
- Regeneration is unfinished business. The last decade has seen a lot of new development, but there's still a massive job to do - especially in smaller, less trendy cities like Grimsby.
- The economic climate for regeneration is now very difficult. Developers are facing a liquidity crisis, high-density residential schemes are no longer happening, Section 106 receipts have dried up, and the returns on investment in deprived areas have disappeared.
- If we're not careful, the next decade could see very little regeneration activity at all. Big retail-led regeneration is unlikely in the near future. Access to development finance has been severely curtailed. New regeneration activity will probably focus on areas that offer high returns and low risk.
- The public sector will have to play a bigger up-front role in the near future, and take on more risk from the private sector. The Homes & Communities Agency will face some very tough choices on where to spend its cash. And new sources of finance will have to be found - e.g. from institutional investors, new models like Accelerated Development Zones, and private equity.
Here's the dilemma for regeneration. The recession is hitting smaller cities like Barnsley much harder than the likes of Leeds and Sheffield. So the need for regeneration is greatest in those smaller cities. But it looks like developers will head for those bigger cities first, where returns are higher and the risks lower. In the next decade, the big challenge for Bob and the HCA will be to invest the very limited public sector cash where the private sector is unwilling to go.