Government’s Industrial Strategy needs industrial and logistics development at its core to be achievable
While it is positive news with the Government’s Going for growth policies and Industrial Strategy they are ‘missing a trick’ according to Potter Space managing director Jason Rockett.
By Liza Helps, Property Editor, Logistics Matters
ON THE publication of the company’s fourth BIG Things in SMALL Boxes report in partnership with Savills Rockett said: “It is encouraging to see the Government acknowledge I&L as an integral part of the economy through the Modern Industrial Strategy and the National Planning Policy Framework (NPPF).
“However, as our latest BIG Things in SMALL Boxes research clearly demonstrates, the Government is missing a trick if it does not recognise the potential of the sub-100k sq ft I&L sector.
In an interview with Logistics Matters he said: “The policies are positive but don’t go far enough meaning the Government misses a trick.
“SMEs are in many ways the life blood of economy and are the ultimate driver to achieve the Government’s Industrial Strategy. However, in order to do that, SMEs need the tools to deliver. The Industrial Strategy is a great and positive policy but now it needs to be implemented and the only way to do that is to enable development of small and midbox warehousing which is the cornerstone of any business.”
This is the fourth report where Potter Space has highlighted supressed demand and lack of supply, and it is still not being addressed. According to the report small to mid-box accounts for 95% of I&L units. However, occupiers are still struggling to find space as the undersupply is failing to meet resilient demand.
At a national level, from 2014 to 2024, demand has been suppressed by 35%. This means that had it been available, businesses would have taken 35% more space to meet their needs, equating to 60 million ft2, over the last decade.
It is estimated that meeting this demand could have facilitated 48,000 jobs and £3.3 billion of Gross Value Added (GVA) to the economy.
The report identifies the challenges restricting sector growth, including unclear Minimum Energy Efficiency Standards timelines, a strained planning system, poor understanding of sub-100k sq ft I&L among planning professionals and policy makers, and spiralling business costs.
Rockett said: “More than ever, we need to recognise the role of sub-100k sq ft I&L as a facilitator of growth. Getting small to mid-box in the NPPF, Planning and Infrastructure Bill and the upcoming Freight Plan is a starting point. Doing this will facilitate a joined-up local and national planning system which prioritises policies that redress supply shortages and help unlock the sector’s full potential.”
Regional analysis shows that suppressed demand is not limited to a particular part of the country. In the South East, annual suppressed demand is at 34%, which equates to an additional 689,000 ft2 of missed occupation each year. The North West could have leased an additional 838,000 ft2 annually if it had been able to meet occupier demand.
Resulting low availability has meant that on average, rents for sub-100k sq ft I&L units have increased by 79% on average since 2014, adding significant cost pressures to occupiers.
Mark Powney, Savills director, Planning Economics: “Recognising suppressed demand strengthens the case for treating I&L as critical national infrastructure. It reinforces the need to support the sub-100k sq ft market in requiring local authorities to plan effectively for business needs in their area to support their local economic growth. This includes recognising the particular locational needs of the sub-market and realising its importance to supply-chains facilitating the Government’s Industrial Strategy for a strong and growing British economy.”
Clare Bottle, CEO of the UK Warehousing Association, added: “Warehousing is not just space, but a key factor in business decision-making.
“Within this, the sub-100k sq ft I&L space has a key role, providing essential employment land for businesses of all sizes and across all sectors, and it is vital that the market has champions.
“That is why we welcome the latest BIG Things in SMALL Boxes report from Potter Space and Savills, which clearly sets out the challenges and helps the sector, and policy decision-makers, navigate a path forward.”
Rockett concluded: “The powers that be are looking in a rear view mirror in terms of what is needed going forward. Unless the strategy percolates down to Local and Mayoral Authorities and puts them under pressure to deliver industrial and logistics space in small to midbox warehousing [similarly to the provision of housing] then it won’t address it and growth with be frustrated.”
