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Government threatens industrial land in London

21 March 2024

The government in the form of Michael Gove, Secretary of State for the Department of Levelling Up, Housing and Communities, has told Sadiq Khan, the Mayor of London to free up 1,800 acres of industrial land for residential use.

By Liza Helps Property Editor Logistics Matters

THE CALL comes following the announcement last month by Gove that brown field land should be prioritised for housing, at the time it was thought that strategic  industrial land in the Capital would be sacrosanct, however Gove now intends to intervene in the London Plan – an overall strategic plan, setting out an integrated economic, environmental, transport and social framework for the development of London over the next 20 – 25 years.

In the letter to the Mayor on Monday, Gove directed Khan to conduct a review of the London Plan – which ring fences strategic  industrial land after it was found that London has lost nearly a quarter of its industrial land to other uses since 2000, stifling economic growth and putting the capital at risk of not being able to function. 

Disingenuously Gove states that there is an estimated 16,800 acres of land being used for industry in the Capital and that of this 1,800 acres could potentially be turned into housing developments – the point is the land is being used for industry. If it is turned into housing  where does the industry go?

British Property Federation Assistant Policy Director, Planning and Development Sam Bensted, said: “While the need to tackle London’s housing crisis is irrefutable, the idea that we can relocate employment uses outside of the M25 to free up land for new homes fundamentally misunderstands how our cities work and the need to create housing and jobs side-by-side.

“Over the past 20 years London has lost 24% of its industrial land to other uses, which is naturally restricting the development of modern warehouse space and making it harder for businesses to find the premises they need to manufacture and move goods. This will impact job creation and economic growth moving forward.

“Intensification and mixed-use industrial development are possible solutions to balance London’s housing and employment needs but are not silver bullets as they are not suitable everywhere. Current evidence also suggests that our capital will need much more industrial space in the future to meet London’s population and business growth needs, rather than supply being eroded further.”

The whole reason to ring fence the remaining industrial sites in the Capital was stressed in a Centre for London commissioned report published in 2022 and carried out by the Industrial Land Commission, which as well as reporting on loss of  industrial floorspace in London also reported that  Greater Manchester and the West Midlands saw theirs decrease by a fifth (20 per cent and 19 per cent respectively).

In London, the loss of industrial floorspace was equivalent to 840 football pitches (64.5 million ft2) between 2000/01 and 2020/21.The losses have been particularly acute in inner London, where more than 40% of total industrial floorspace has been converted to other uses – mostly housing - over the same period.

The Commission warned that this would have a devastating effect on how London functions. Unlike smaller cities in the UK, London’s size means that industrial accommodation for critical activities – such as waste removal, delivery depots and repair and maintenance activities – must be available in or near the city centre rather than just at the city fringe. The rise in online shopping compounds the problem with even more pressure on industrial sites as in order to deliver the goods sustainably depots need to be centrally located.

If that were not all The Commission argued that London could not afford to lose any more industrial land not least because jobs in traditional industrial activities such as manufacturing, repair and warehousing are worth more than £78 billion to the city’s economy, but the true figure is likely to be even higher as this excludes nonindustrial activities such as most creative industries.

Earlier this week Logistics Matters published research from Valor Developments which indicated that ONS data underestimated the depth of online grocery  shopping happening in the Capital. The ONS data while not wrong, looked at the penetration of grocery shopping on a nationwide basis without specific reference to individual areas, regions, or cities. ONS Data put online grocery shopping  at 8.8% of food retail sales (by value) but according to Valor’s survey of 4,000 people in London on their shopping habits, 40% buy groceries online at least once a week with almost half the basket sizes between £40 – £99.

Valor Head of Research Qiong Xu, said: “Our research suggests that the proportion of food purchased online is significantly higher in London than national data suggests, and with grocery spend being largely non-discretionary we can expect these online channels to continue to grow despite economic headwinds.”

The developer noted that in order to satisfy this demand on a nationwide basis will require some 187 million ft2 of additional logistics demand in the UK between 2023 and 2027. In the Capital that would require some 42 million ft2. Basically to satisfy this demand alone, a 7.2% year-on-year increase in total would be required versus a current annual growth rate of just 0.43%.

As the announcement came the day before London Mayoral election campaign period started - during which  official communication from councils and government departments are restricted - a spokesperson for London Labour described it as a 'stunt'. Be that as it may, any new or indeed re-elected  Mayor of London still has to report back to government by September, and as this is likely to be just as a General Election is announced.

 
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