This report has evidenced the need for an improved method to estimate future I&L land demand
It is clear that demand within the sector has been much higher than supply for most of the last decade which has resulted in extremely low availability and exponential rental growth as occupiers compete for limited available stock. In order for the sector to grow to its full potential and generate the jobs and investment the national economy needs, the planning system has to better estimate future land demand. It is recommended that the Savills and St. Modwen ‘suppressed demand’ methodology is incorporated within the NPPG to help inform Local Plans.
The evidence within this report also supports a number of previous BPF recommendations outlined in its Employment Land Manifesto (July 21)47 as discussed below.
Recommendation 1 of the Employment Land Manifesto
Introduce a Presumption in Favour of Logistics Development within the NPPG when precise criteria are met, such as:
- Easy access and proximity to the strategic highway network.
- Ability to provide effective access by non-private car to suit shift working patterns.
- Located away from residential development/where there is no unacceptable impact on residential amenity to allow for uninterrupted 24-hour working.
- Capable of accommodating large scale buildings in terms of both footprint and height.
- Sites that suit the future occupier’s needs.
The Local Plan process is too slow to respond to significant market-changing events, such as the Covid-19-induced acceleration in the growth of e-commerce. As evidenced in the ‘An Economic Powerhouse’ chapter, the planning system has failed to provide a sufficient level of I&L land to meet demand. This has resulted in the national I&L market becoming supply-constrained for the last seven years, as signalled by availability dropping below the equilibrium threshold of 8%, and high rental growth at twice the rate of inflation.
Recommendation 2 of the Employment Land Manifesto
Ensuring Local Plans allocate logistics sites in the right locations to respond to a broad range of market needs.
The optimal location for I&L occupiers allows them to be close to their suppliers as well as their end customers. For this reason, access to the strategic road network is critical, as it reduces transportation time, costs, and carbon emissions. The strategic road network also allows a site to expand its catchment of intermodal freight facilities, which are critical nodes within logistics networks. An optimal logistics site is also within easy reach of a workforce with a range of skills, and is close to worker amenities. It also requires good availability of utilities, services, and broadband. A dialogue between Distribution Network Operators (DNOs) and Planning Authorities should be encouraged to ensure power is supplied in locations where I&L development is being planned. Employment allocations should be in locations that allow I&L operators to work 24/7 without impediments.
Recommendation 3 of the Employment Land Manifesto
Ensuring the industrial and logistics sector is recognised for its focus on ESG: making a valuable contribution to the Government’s Green Industrial Revolution and generating social value.
As discussed in the ‘Growing Social Value Credentials’ chapter, the I&L sector supports large and diverse supply chains that generate significant economic and social value benefits. As the sector continues to expand so will the number of apprenticeships and training opportunities it supports. The sector is also heavily invested in the central and northern parts of the country and therefore is playing a critical role as part of the Government’s ‘Levelling-Up’ agenda.
As evidenced in the ‘Green Recovery ‘Boxed’’ chapter, I&L buildings are delivering on ESG objectives across all stages of a property’s life cycle. Reduction in embodied carbon is being achieved in numerous ways, such as via the use of recycled materials, cement alternatives in concrete, and reliance on local labour force. During the operational phase, energy efficiency can be achieved by addressing both energy demand and energy supply. The former is about reducing the inherent energy demand a building requires to operate, which can be achieved in numerous ways (for example, improving lighting or installing smart sensors and sub-meters; while the latter is about decarbonising a development’s energy supply via the use of renewable sources such PV, wind, etc.). Finally, with regards to the end of life phase, modern I&L buildings have the advantage of being lightweight structures that can be adapted for other uses. They can also be easily repurposed, or materials can be catalogued to allow for potential reuse in the future.
Recommendation 7 of the Employment Land Manifesto
Introducing an Employment Land Delivery Test to ensure that a commensurate amount of employment land is brought forward to counterbalance housing and that any employment land lost to other uses is delivered in the right locations. If a local planning authority failed to meet the delivery test, a presumption in favour of sustainable logistics development could be engaged.
I&L facilities and their supply chains support the functioning of our economy and the way we live our lives. One of the biggest transformations to our lifestyles in the past 15 years has been the rise of e-commerce. In 2006 online shopping was at 3%, while today, this share has grown to 26% and is expected to increase even further. The growth in online shopping has significant implications for future I&L demand given that e-commerce requires over three times the logistics space compared to traditional brick-and-mortar retailers. Population growth is a key driver of this rise in e-commerce as more people mean increased online speeding. Based on Savills future I&L demand estimation, Government housing targets and I&L space requirements per housing unit, we know that about half of future I&L demand will be linked to housing growth. This means that Government should not plan for housing growth without also planning for I&L growth.
47 BPF (July 2021), BPF Employment Land Manifesto
Read the articles within Levelling Up – The Logic of Logistics below.