Wide benefits of Heathrow boon

Government approval for a third runway at Heathrow Airport last week is good news not just for businesses in and around the airport but for the whole UK property market. The BPF has for years emphasised the role that major infrastructure projects can play in unlocking investment and creating economic growth. In a post-Brexit world, this will be more important than ever and so I am encouraged that Theresa May’s government has signalled its intention to take bold decisions in the national interest. In terms of property, there are several levels on which expansion of Heathrow will benefit our sector. Firstly, as a global financial centre, the London office market needs to be able to compete with rival destinations in New York, Hong Kong and, post-EU referendum, Frankfurt and Paris. Last week’s decision shows we are serious about maintaining our status as the world’s centre of commerce. Secondly, as an international retailing hub and tourist attraction, London’s West End and the South East’s major shopping locations, hotels, restaurants and other tourist amenities need to maintain a high level of overseas visitors – so Heathrow’s expansion is also a big boost to retailers. Regional cities will also benefit because Heathrow’s expansion was the only solution which would connect all parts of Britain to new trading routes beyond Europe. The referendum was a cry for help from across the UK and it is vital that rapid growth in international commerce flows through to the North and Scotland. And finally, expansion at Heathrow is very good news for the South East industrial market. As the UK’s biggest owner and manager of properties around London’s airports, with almost 6m sq ft valued at £1.5bn, SEGRO has been a passionate supporter of expansion because we can see how the lack of international connectivity relative to our continental European peers has constrained growth. When we surveyed our customers last year, 84% said they supported expansion of the airport. But owners and developers of warehouse and industrial property across the region will benefit, because while the market around Heathrow has never been sluggish, it has undoubtedly been constrained by its current capacity. While it cannot expand its runways Heathrow also cannot grow its passenger and cargo facilities, and this has been holding the market back even in the short term. While a decision about a third runway was up in the air, some businesses focused on Heathrow were unwilling to make long-term commitments, but customers will now start to plan with more certainty. Demand for space will also rise in the medium-term, as companies involved in the construction of the runway will need logistics space for an epic project that will help fill the sector’s order books after the completion of Crossrail. Overall, the third runway will create up to 180,000 new jobs – four times more than a new runway at Gatwick, with 2,700 highly skilled jobs created in the first year alone. Yes there will be a further consultation, but changes to planning legislation to allow major infrastructure projects to progress more quickly mean the runway will progress faster than did Terminal Five. When the third runway is debated in parliament, it is important to remember that many of the arguments in favour hinge on air cargo, which accounts for 40% of Britain’s exports by value, ranging from precision engineering tools to Scottish salmon and whisky. More goods leave Britain via Heathrow than all other airports combined, and by value 51% of UK exports to non-EU countries go by air. We trade 20 times more with countries where we have a direct air link, and new research from Frontier Economics has identified 40 new long-haul trade routes that could be introduced once the new runway is built. There is no argument that Britain needs further airport capacity, and when the global trade benefits are taken into account, a third runway at Heathrow is the clear winner. With uncertainty affecting many property sectors in the wake of the EU referendum, a third runway at Heathrow will also deliver a timely boost to office, retail and industrial markets across the UK. David Sleath is chief executive of SEGRO and president of the British Property Federation