Industry warns industrial planning flaws undermine levelling up

Leading real estate figures have stepped up calls for planning reform in the wake of findings that show policymakers have vastly underestimated demand for industrial and logistics space for a decade. Research from the British Property Federation and Savills, shared with EG, underlines that the UK planning system is restricting growth in the sector by not allocating land in the right locations. Using a new methodology devised by Savills and St Modwen, researchers found that demand for industrial and logistics space is 29% higher across England than past take-up levels suggest. The effect is most prominent in the North and Midlands. Compared with levels recorded today, future demand is estimated to be 42% higher in Leeds, 35% in Manchester, 29% in Birmingham and 28% in Nottingham. Combined with the ongoing shortage in logistics supply, the potential for levelling-up and economic growth could be significantly undermined, warned the BPF and Savills. “Distorted” figures Supply-demand dynamics of warehouse space were shown as distorted since 2011, with annual take-up averaging a net 34m sq ft over the period. This was 46% higher than the net delivery for new space. Meanwhile, rents have risen by 61%, more than twice the rate of inflation. The national vacancy rate has stayed consistently below the 8% benchmark rate. The analysis, carried out in partnership with the UK Warehousing Association and industrial developers including Tritax Symmetry and SEGRO, highlights that assumptions used to designate land for industrial and logistics uses do not factor in the growth of the digital economy and are therefore outdated. Drivers that are being omitted include growth in housing, online retailing, freight volumes and the need for larger premises. A key recommendation is to incorporate the new methodology for estimating future demand within the National Planning Policy Guidance to inform local plans. This would replace the typical reliance on using historic data to project future demand. Economic “no-brainer” Kevin Mofid, head of logistics and industrial research at Savills, said that by having more accurate methods to calculate the amount of space required in the future, local authorities will be “better placed to plan effectively for the sector’s needs and capture the economic, social and environmental benefits new development can bring to an area”. “The UK struggles against European peers in terms of labour productivity,” added Mark Powney, director in the economics team at Savills. “It is important to facilitate growth in the sector to bridge that gap. From an economic point of view, it is a no-brainer.” Binding targets for logistics space have also been proposed as a way of updating the system, as well as adapted design codes, modernised employment land reviews and a presumption in favour of logistics development where strict criteria are met. Critical infrastructure Experts are additionally campaigning for greater support for industrial and logistics to be recognised as “critical” infrastructure within national planning guidance. Gwyn Stubbings, planning director at GLP and chair of BPF’s industrial committee, told EG that the industry is “looking to lobby government to ensure we have the right policies in place that can cascade down to local authority level”. “The Covid-19 pandemic has demonstrated that our industrial and logistics facilities are a key part of the nation’s critical national infrastructure,” said Stubbings. He added that they should be viewed as equally important to roads, rail, airport and port facilities as an “integral” part of the ecosystem in moving goods around the country. “There are a lot of different pressures – population growth is accelerating in the UK, but we need to make sure that the industrial land supply is keeping pace with housing growth to service that,” said Stubbings. “Enabling the sector to reach its full potential is essential to driving economic growth but our planning system remains a barrier by not allocating enough land in appropriate locations. If the industrial and logistics sector is to play its full part in the economic recovery and levelling up, it is vital that we create a more agile planning system which is more responsive to the sector’s needs.” Melanie Leech, chief executive of the BPF, said: “For more than a decade, planning policy has underestimated the need for logistics space in and around major population centres to support the growth of e-commerce and create robust and resilient supply chains. “Demand for warehouse space is currently at an unprecedented level, but future demand is likely to be significantly higher as the digital economy continues to expand, and supply chains are reconfigured post-Brexit. It is therefore imperative that we find new ways to complement the delivery of housing with modern warehouse facilities, which will support jobs and growth and help revitalise regional economies.” To send feedback, e-mail pui-guan.man@eg.co.uk or tweet @PuiGuanM or @EGPropertyNews