The Mayor of London has now published the new draft London Plan. This proposes to substantially scale back on the release of industrial land. However it opens up new opportunities and ways of approaching industrial development. Policy E7 allows housing development on Strategic Industrial Land (SIL) and Locally Significant Industrial Sites (LSISs) provided various conditions are met, including that there is no net loss of industrial floorspace and that the approach is policy or agreed masterplan led. A key way these objectives can be met is by intensifying industrial development.

There are a number of challenges to successful implementation of Policy E7 and industrial intensification. Savills has been working on solutions to these challenges and has worked on a number of projects looking at industrial intensification for developers and local government. We are collaborating with a number of leading architectural practices to explore and develop industrial intensification solutions.

The right masterplan framework

We recognise that the potential for industrial intensification varies with type of activity and not all activities are compatible with residential-led development. Consequently we have developed different solutions at a building, block and neighbourhood level. Our thinking on an overall masterplan framework for development of industrial areas is broadly structured around a transition from high density residential-led development near public transport, through to multi-storey industrial units and larger sheds further away. This is illustrated in the image below prepared by dRMM.

dRMM Estate Transformation and Intensification

Demand analysis and market research into occupier requirements

The quantity of different types of industrial space and buildings can be informed by market research looking at demand and supply. We have also researched the compatibility of different types of occupier with different types of multi-storey and mixed use formats.

Building designs

A gap in existing provision is for multi-storey industrial buildings for medium-sized units (typically in the range of 1,000 sq.ft to 5,000 sq ft/unit). The lead image is a smart shed concept that responds to this brief developed by ScottBrownrigg.

In some circumstances industry can be incorporated in to mixed-use buildings. This is illustrated in the work of Hawkins/Brown below.

Viability

One aspect of the draft London Plan Policy E7 that could affect the viability of development is application of a 50 per cent affordable housing requirement. This can be challenging if the investment value of existing occupied industrial space is high compared to the residual value of mixed-use development proposals. If appropriate viability analysis can be carried out to present the case for a suitable level of affordable housing to ensure that good quality industrial intensification schemes come forward.

There is also a need to take in to account owner and investor priorities. Institutional investors in industrial land typically place more emphasis on a guaranteed revenue stream (from rentals) over one-off payments. This could be accommodated by guaranteeing revenues during construction until new space is ready for occupation and new rental streams are in place.

The next steps

It appears likely that the industry that can leave London has already left and what remains is largely about supporting the rest of the London economy. This could imply that demand for industrial space may increase in future. The supply of industrial space in London is tight and consequently occupancy and rentals at historic highs and may continue to rise. This provides a key part of a positive context to facilitate viable industrial intensification and mixed use development.

Savills can help find the right solutions for industrial land owners and developers research and prepare and take forward industrial intensification and mixed-use development proposals on industrial land.

Further information

Contact Savills Planning