Government is holding the industrial sector back with ineffective planning policy, according to planning and development consultancy Turley’s latest report, ‘Playing to our industrial strengths’.
The industrial sector has the ability to play a key role in a green economic recovery but national planning policy has for too long disregarded its importance, instead focusing on the housing crisis. Whilst housing delivery is vital for the future of our society and economy it must be in balance with economic growth and infrastructure.
The firm’s research points towards a crisis in the supply of industrial land which could constrain recovery.
2020 witnessed a record breaking take-up of industrial and logistics space. This followed a surge in online retailing during the pandemic and a linked shift from ‘just-in-time’ to ‘just-in-case’ supply chain inventories fuelled by fears of a no-deal Brexit and the risk of shortages arising from COVID-19.
This development follows nearly a decade of year-on-year growth in demand for industrial space with land supply struggling to keep up and, most importantly, competing with other identified needs and land uses. We are at a tipping point with the very real prospect of no readily available land for large scale users by as soon as 2022 in some areas across the country. The biggest constraint facing the sector therefore is a chronic shortage of readily-available land, especially for ‘big box’ (i.e. units larger than 100,000 sq ft) and ‘last-mile’ urban logistics, where there has been a surge in take-up following the pandemic and limited new supply entering the market.
Despite industrial land historically being protected from change or redevelopment to ‘higher value’ uses (e.g. residential and retail) through national, regional and local planning policy, much of it – especially in urban areas – has been sacrificed to housing over the past 20 years to feed the ‘brownfield first’ mantra.
Throughout the past decade, London alone lost around 100 ha of industrial land annually, compared to a release benchmark of just 37 ha per annum in the now superseded London Plan (2016). Following the “Intend to Publish” version of the London Plan in December 2019, the Secretary of State directed the removal of policy seeking “no net loss” of industrial land. This was intended to provide flexibility for its managed release ‘to other planning priorities’ such as housing, schools and other infrastructure which has been carried through to the adopted version (March 2021). This sends a clear message that Government is prioritising housing over industry and suggests that the erosion of available industrial land in the capital might continue.
Quick-fix solutions to provide essential last-mile hubs have been adopted by the industry and are becoming increasingly attractive to occupiers. These are often in the form of a “meanwhile”, time-limited use which can be reviewed, adjusted or relocated in line with demands or long-term objectives. The development potential of low density and struggling out-of-centre retail parks similarly present worthwhile locations for investors and developers as urban logistics hubs.
Taking into account the demand for high-density residential schemes and land availability within the M25, the public and private sector will need to work together to find innovative and masterplanned solutions to address all identified needs efficiently and effectively. Intensification, consolidation & ‘vertical/horizontal co-location’ principles, as envisaged in the London Plan (2021), will clearly have a role to play in addressing the housing shortfall and an emerging industrial and logistics crisis.
However, given the structural market changes happening in 2020, there are now first signs of a reverse in fortunes. Big industry players are actively competing with residential developers for land (i.e. Amazon recently acquiring a site benefitting from a residential-led planning permission in Barnet). Whilst this has largely been a London phenomenon to date, the rapid growth in online retailing has generated demand for urban and last mile logistics which is also likely to have an effect on land values throughout other UK cities.
Given the scarcity of brownfield land, built environment professionals will need to work collaboratively, be creative, and promote innovative ideas to ensure that we meet the balance of catering for our employment and industrial needs. Moreover, we must maintain the balance of other much needed uses (including housing) without a detrimental impact on the stock and capacity of our industrial land.
Making best possible use of designated and non-designated employment land will therefore be central to accommodating our industrial and (urban/last-mile) logistics needs. Local and regional authorities will need to plan positively for the inclusion of employment uses and distribution hubs in strategic locations to ensure they meet the fast-changing needs of multiple stakeholders. As demand from businesses and consumers continues to grow and land becomes more scarce, we must place greater emphasis on the role of industrial and logistics as we seek to build back better.