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You take Manhattan

You take Manhattan

🕔30.Jul 2013

Paul Dale has a hard earned and richly deserved reputation as an indefatigable teller of truth unto power. In a previous existence, when one of my tasks was to artlessly gild the Birmingham lily, I was often stopped in my tracks as I dreamed up some extravagance by reflecting on the scorn and ridicule that Paul might well heap upon it once it slid into the public domain.

I fear however that with one his recent pieces he has fallen into that mind set that insists if there is a bad thing to say about Birmingham, then the only honourable response is to repeat and bandy it about as freely as possible.

The issue here is a line buried deep in a report by the Centre for Cities that says that it is more expensive to acquire office space in Birmingham than in Manhattan. Paul Dale has picked this up and made rather a lot of it. The Dale piece goes on to conclude that it is cheaper to start up a business there than here – which is less stretching the point perhaps than to subject it to fairly extreme aerobics, Mr Dale acknowledges that the data that all this is based on dates from nearly ten years ago but rather baldly and blandly asserts that there is no evidence that the findings have changed significantly. Well, we’ll come back to that, shall we?

Now it just so happens that I have what the late Inspector Morse would call a ‘previous’ in respect of this particular statistic. It was first drawn to my attention by a man called John Kingman four or five years ago. You will possibly not have heard of Mr Kingman and he is probably quite happy with that situation.

Mr Kingman is not so much one of the men who run the country but rather – and he would of course demur most elegantly at my suggestion – one of the men who run the men who run the country. He has mostly been a fast tracking, high rising and now very senior civil servant, principally in the Treasury or its immediate environs.

He was one of those embroiled in the hand to hand fighting that saved the world from the 2008 banking crisis and then ran the company set up by UK Government to hold the banking assets that we were obliged to acquire in the aftermath. More recently his name was murmured in connection with the possibility of his becoming the Deputy Governor of the Bank of England – it later emerged that in fact he was one of those responsible for interviewing the candidates for that position – which must make him even more elevated than the candidates themselves.

He is – it goes without saying – a man of huge ability and competence.

A couple of years ago he was on a mission taking the mood and temperature of the nation beyond the rarefied atmosphere of SW1 and found himself here in Birmingham. There was a discussion about the challenges and opportunities facing the City and he dropped into the conversation the fact that he understood that commercial property was more expensive here than in Manhattan. I was sufficiently surprised at this to have enquiries made as the meeting progressed and was delighted as we wrapped up to advise Mr Kingman that according to the information I had turned up he was, regrettably, misinformed.

‘You’d better let Peter Cheshire at the LSE know that’, advised Mr Kingman, ‘because he’s the one publishing papers’ saying that is the case.’ And indeed it is the said Professor (now in fact Emeritus Professor) Cheshire who is the source, in a paper published in 2008, of the Centre for Cities citation and by default that of Paul Dale.

To return, however, to the evidence. The Cheshire study draws on a survey undertaken and published by the late chartered surveying practice King Sturge in 2004. The most recent comparable data comes from CBRE – still in business – and released just a few weeks ago. This tells us that currently in Manhattan Midtown office space costs $120 per square foot per annum (even in the Manhattan Downtown area it is $75 per square foot) while in Birmingham the converted cost is $66. And as best as I recall these are broadly the differentials I bounced at John Kingman five or so years ago.

Birmingham ain’t more expensive than Manhattan.

And I have to confess that I suspect in the stratospheric ellipses that Mr Kingman orbits he probably still advises those he counsels that Birmingham is more expensive than Manhattan because an LSE professor said that it was – rather than some bloke he met in Birmingham.

The other issue for me – and I suspect it underlines that I am acquiring a real Birmingham chippiness after long years here – is that Manchester, Edinburgh and Glasgow  (in 2004 and today) all have occupancy costs at much the same level. But that it was – in metropolitan eyes – the absurdity of Birmingham appearing more expensive than Manhattan that was the real ‘killer fact’. The things we have to put up with.

Michael Loftus is Director at News from the Future Ltd. He often writes on the challenges facing new businesses.

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