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21/11/2016

Report: UK requires more industrial space to grow

Words: Laura Edgar

Without proper government support, the UK will run out of space to sustain Britain’s burgeoning e-commerce sector.

How Soon Is Now?, by law firm Addleshaw Goddard, suggests that to keep pace with online retail growth, 18 million square feet of logistics space needs to be built annually.

But with just 3.5 million square feet projected to be built over the 12 months, the law firm say radical measures are needed to unlock land and speed up delivery.

According to the Office of National Statistics, as of August 2016, “online sales constituted 14.3 per cent of UK retail, and are projected by the Centre for Retail Research’s Retail Futures 2018 report to grow to a 21.5 per cent share of retail sales by the end of the decade”.

There has been, the report's authors claim, a "sea change in occupier preferences", with four times as much take-up in 2015 being built bespoke to the occupier's requirements.

Recommendations in the report include: making councils designate land for industrial use; the government should support development by SMEs; investment in local planners and proper coordination of transport infrastructure.

Jonathan Powling, partner at Addleshaw Goddard, said: “Our economy is dependent on industrial property and warehousing, well-funded road and rail networks, and a tax system which encourages investment. While it is vital that there are sufficient homes for our growing population, the need for industrial space must not be overlooked purely because it is not seen as a short-term vote winner.”


How Soon Is Now? – A number of recommendations in more detail

 

  • Government must recognise the importance of logistics and industrial property to the country’s economy.

There needs to be a top-level acceptance of the role the manufacturing and retail sectors will play in the UK’s future economic growth. Additionally, there needs to be cohesion in the measures taken across the raft of policy areas that play a supporting role. If we are to have a Britain that works for everyone, we must prioritise support for industry.

  • Councils should be made to designate land for industrial use
The new housing and planning minister should encourage local authorities to prioritise properly thought-through employment policies. Housing policy trumps employment policy within local planning, which is not necessarily always the best priority. There should be far greater curation of uses, and this must be intertwined with greater clarity at a national level.

There should also be consideration of what different types of industrial sites are now needed.

  • Government should work in conjunction with the private sector to bring forward more public land for designated uses

The government needs to encourage local authorities to identify more land for industrial development, and in suitable locations near to transport networks and junctions. Finding uses for public land could create long-term income for cash-strapped councils as well as government departments.

Finding innovative ways to create joint ventures with investors to provide big box warehousing or local distribution hubs could generate significant value for the long term.

  • Government should look to directly support development by SMEs

The government needs to consider a greater role for the Homes and Communities Agency, which has £4.7 billon of grant funding available for affordable housing, to kick-start industrial development with a similar kind of budget for land assembly, remediation (cleaning up sites) and above all, installing vital infrastructure that could offer many broader benefits to both employment and housing delivery.

  • Invest in and empower local planners

Developers and ministers routinely criticise local planning for being slow. The complexity of the planning process, and the many contradictions between national policy declarations and local concerns, are exacerbated by the shortage of planning officials and lack of government investment in the profession.  

Government should give greater delegated powers to planning officers so that non-contentious applications can be dealt with and approved without unnecessary delay. Above all, it needs to better resource the system. Developers are largely content to pay a surcharge to support quicker processing of applications and a better, more rigid structure to enable this to happen in a transparent fashion should also be prioritised.


The report was produced with contributions from the sector’s leading investors, developers and occupiers including Tritax, P3, L&G, M&G, Aberdeen, Prologis, DP World, Britvic, and Diageo.

It can be found here.

Image credit | iStock

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