A report commissioned by SEGRO says that it is crucial to halt the loss of London’s industrial land now, in order to sustain the city as it continues to grow.
The ‘Keep London Working’ report offers insight into the importance of industrial land in London and the vital role it has in supporting the capital’s future economic and population growth. The movement of goods to and from people and businesses keeps London functioning and helps make it a successful global city.
As the capital grows the demands placed on businesses to get their goods and services to their customers increases, with consumers expecting certain deliveries within the hour. London’s population is projected to increase from 8.7 million to over 10 million by 2031, the equivalent of the populations of Birmingham and Coventry moving to the capital. This, combined with technology, has led to an explosion of e-commerce, driving the demand for industrial land to ensure we can all get our goods delivered.
Population growth also puts an additional strain on the availability of housing. However, industrial land is being lost rapidly, frequently to residential use, at a rate three times greater than the Greater London Authority (GLA) had expected. At the current rate of decline, the GLA’s expected release of industrial land by 2031 could be reached this year.
Amy Gilham of Turley, the report’s author, described the logistics sector – a key consumer of industrial property in London – as both vital for the cities survival, and a sector with 10% growth in jobs, and average salaries well above the national norm. This should make it an attractive sector for councils.
The pressures on the sector are many, but the key ones picked out are the evolution and growth of e-commerce producing a very large increase in the number of parcels carried; the new reverse logistics sector, where 40% of items bought on the internet are returned; increasing competition on delivery quality and predictability – the rise of the one hour delivery slot; and London’s population growth, amplifying these pressures.
Most operators use a hub and spoke model, which affects the kind of property they want to occupy, and the desired locations.
The report outlines that there is an industrial land supply of around 7000 hectares, with a major concentration in West London at Park Royal. However, this has been released for redevelopment, mainly as new homes, at a rate of over 100 hectares per year over the last five years.
Andy Gulliford of SEGRO, presenting the report, said that a balanced approach to industrial land is required, and one which “keeps London working”, in that it preserves our ability to deliver for the growing population, and the new inhabitants of the new homes.
The report contains ten recommendations – including one that London commissions a strategic industrial land review, itemising what we have, where it is, and what quality it is. This would be accompanied by a demand assessment – including a look at locations, density and power capacity. This would inform what a balanced approach could look like.
The report also calls for an industry voice comprised of occupiers and land owners to input in to policy development.
Colin Wilson from the Greater London Authority added that the Mayor of London is commited to jobs and the space needed for them. However, given that he is also committed to a number of other things, including new homes, finding the right balance will be tricky, and that London will “need a cunning plan, a more cunning one than we have had before”.
Both Colin Wilson and Alan Donald of SEGRO talked about SEGRO and Barratt’s plans to redevelop the Nestle site in Hayes as mixed use residential and industrial. As they put it, it could be an exemplar of suburban intensification next to crossrail. Mr Wilson commended the “rather fantastic delivery of new industrial behind a listed art deco facade” which is included in the plan.
Then there is the question of height – Alan Donald said that the muli-level industrial unit X2 which they inherited in the Brixton acquisition, although it has had its problems, is now fully let, and that he was confident that SEGRO will deliver another multi-level building soon, if not entirely industrial, then at least mixed use with homes over industrial.
David Sleath, CEO of SEGRO, said: “A robust and flexible logistics infrastructure is key to keeping London working. It’s very important to halt the loss of industrial land to provide employment opportunities and a landscape for new businesses to arise.
“As a result of the report, our call to action, endorsed by the British Property Federation, is to immediately undertake a strategic review of industrial land coupled with a full and comprehensive demand assessment.
“There needs to be a thorough review of industrial land designation, which recognises the locational requirements of urban logistics operators to be able to respond to last mile activities.
“We need to ensure the industrial and logistics sector has a voice within London policy decision making to ensure that the rapid loss of industrial land is reversed and intensification of industrial and logistics uses is possible when practical.”
Jasmine Whitbread, Chief Executive, London First, said: “London’s industrial land is home to ecommerce businesses, technology start-ups and companies vital to keeping the city supplied with goods and services. So we must ensure London has capacity to house these companies alongside the people they support and employ.”
Melanie Leech, Chief Executive, British Property Federation, said: “The industrial and logistics sector is an important part of our modern economy, but the vital part it plays in our everyday lives can often be overlooked. The provision of industrial land does more than just ensure that online deliveries arrive on time – it also creates skilled jobs and delivers significant economic growth. The competition for land in London is intense with an acute shortage of housing, but we need a balanced approach. Sustainable communities require both homes and the right infrastructure to provide services, facilities and jobs. We therefore fully support this initiative and SEGRO’s recommendations.”