For industrial spaces and occupiers to be protected and supported, industrial activities need to be better understood and valued by London’s leaders and national government. We therefore need to help leaders and policymakers understand how industrial accommodation supports the city. In turn, leaders also need to know how they can usefully support London’s industrial uses and spaces.

Businesses and occupiers themselves are the best placed to raise the profile of activities taking place on industrial land and articulate the changes occurring within different sub-sectors. They should be afforded more influence in policymaking. Local authorities also need better skills and training to keep up with transformations within the sector.

1. Champion industrial accommodation

“There’s a misconception about who industrial occupiers are… there seems to be a lack of understanding that everything basically comes from industrial uses and operations in some way or form – from heating, repair, the clothes we wear, the food we eat.”

Industrial land agent, global real estate services provider

“National government’s over-prioritisation of housing is frustrating. There’s no regard for the infrastructure needed to support new homes. We think about schools, and broadband and gas, but if you’ve got more people then there’s a correlating need for industrial land. We also need to get industrial land policy right to meet net zero goals.”

Head of Policy, trade association

Despite their crucial role, activities happening on industrial land are not always well understood and receive relatively little attention. Critical industrial infrastructure – whether waste treatment and management, transport, power or data supplies – is so integral to the city’s proper functioning that we scarcely notice these activities unless they are not running as well as they should be. Additionally, some of the more modern activities that take place on industrial estates – such as coffee roasting or dark kitchens – may be less recognisable than the heavy, noisy and smelly industry of the public’s imagination. This can lead to misunderstanding and a misrepresentation of the sector. Residents and local politicians may be reluctant to have businesses in their area that they perceive as outdated, low-value or incompatible with the aspirations of their locale, even when those same businesses support and contribute to the development of local economies. ²⁵

Consequently, we need to better communicate the value of London’s industrial spaces, the activities they support, and how these keep the city running. We also need to explain the ways in which certain operations support our consumer behaviours, and the need to bring more spaces into being as our behaviours evolve. For example, while Londoners have become used to the convenience of “just in time” delivery, they may not be aware of the infrastructure required to make such deliveries possible. Understandably, they may also be unaware of the changes occurring within the industry itself to ensure that deliveries are carried out more efficiently and sustainably – for example, through the use of electric and smaller vehicles for last-mile delivery, or greater use of automation within warehouses. Technology-driven processes such as additive manufacturing or 3D printing may also be far from the experience of everyday Londoners, even as they allow bespoke goods to be produced locally, at lower cost, and with less impact to the environment. ²⁶ Because many of these activities take place behind closed doors in workspaces and warehouses, residents may rarely see them.

Other cities in Europe are working to celebrate and promote their industrial activities. The Made in Zurich initiative is a platform that brings together makers, manufacturers and industrial companies to increase the visibility of manufacturers and promote the production of goods within the city for sustainability reasons. ²⁷ Activities have included holding “Urban Production Days” when the public are invited to visit participating factories, workshops or studios – including a sculptor’s studio, a textile manufacturer and a chocolate factory. Similarly, AFILOG, a French association of logistics real estate members, organised its first “Logistics Week” for Paris and other French cities in 2021. As part of this, AFILOG invited visitors to tour different warehouses, get an insight into how such spaces work, and see the environmental changes the sector is undergoing. ²⁸

Misunderstandings about industrial spaces and their value also extend to development professionals and decision makers, who may not be aware of emerging challenges and new trends. ²⁹ Sectors can change rapidly in response to industry trends, external pressures and the wider commercial context, and it is of course difficult for leaders to keep abreast of all these changes and their possible consequences.

Development professionals must also navigate a national and regional policy landscape that prioritises housing. The London Plan 2021 has put forward the need for 66,000 homes per year by 2041 and sets a clear agenda for affordable housing. ³⁰ Industrial land has been championed at a very senior level in City Hall in recent years, and the Draft London Plan in 2019 pushed for a similarly activist policy for industrial land, including a rule of “no net loss” of industrial accommodation. However, this rule was ultimately rejected by the Secretary of State in order to conform to national planning policy’s focus on housing. Although the London Plan 2021 has retained some innovative policies such as intensification and co-location, industrial land policy still lacks the weight attached to London’s housing targets. This follows from a national approach that continues to prioritise housing delivery. It is also noteworthy that national government’s now-abandoned Industrial Strategy gave relatively little attention to the protection of the country’s industrial land. ³¹

The priority given to housing delivery reflects public opinion. Londoners continue to feel the impact of the housing crisis, either directly or indirectly, while the implications of shifts in consumer behaviour such as online shopping remain somewhat invisible. Londoners have therefore accepted housebuilding on brownfield land – often industrial or formerly industrial – rather than the densification of existing suburbs or building on the green belt.

With local authorities constrained by other priorities and a lack of expertise, the city needs high-level industrial land and accommodation champions to ensure that the needs of occupiers and different industrial sub-sectors are heard. These champions should be placed in positions where they can contribute meaningfully to the decisions made about industrial accommodation – for example, in local planning authorities. Membership organisations such as London First and the London Chamber of Commerce and Industry play an important role in raising the profile of their members and making their voices heard. They have also contributed to processes such as the Examination in Public for the London Plan. However, when it comes to industrial land, their influence and activities are generally limited to these formal procedures.

In 2017 the Greater London Authority (GLA), with the support of London First, created the Industrial and Logistics Sounding Board – a coalition of occupiers, business representatives, academics, planners and property experts who would independently scrutinise and respond to the Draft London Plan’s policies on industrial land. One member interviewed said that the Board, which was until recently last active in 2019, had acted as an important starting point in building a collective voice across different industrial land stakeholders, and that it ought to have a continuing role. The Board has now been reactivated, and this Commission has considered how it can be independent and reflective of the diversity of the businesses and sub-sectors that use industrial spaces.

Recommendations

To make the case for London’s industrial spaces, and to ensure that the sector is better understood, industrial users need to have greater influence. We recommend that:

• The revitalised Industrial and Logistics Sounding Board (ILSB) should evolve into an independent and powerful London Industrial Land Business Group led by the private sector. This group should inform planning policies, scrutinise evidence and raise the profile of industrial activities. Though supported by the GLA, the group should be self-organised and crosssectoral. It should centre the voices of a range of occupiers to reflect the diversity of the organisations who use or rely on industrial accommodation. In being independent, the group should play a key role not only in informing policy, but also in ensuring that relevant bodies are following policy. The Mayor should convene the first board meeting and should attend with the Deputy Mayor in charge of industrial land.
• The new London Industrial Land Business Group should organise public campaigns and open-door events to increase public visibility and understanding of activities happening in industrial spaces. While informing policy will be a key mandate of the new business group, it is important that it also plays an outward-facing role by interacting with the public and relevant public sectors. Working with relevant industrial businesses, sectors and the Deputy Mayor in charge of industrial land, the Group should facilitate London-wide cultural events such as festivals and exhibitions to promote the different roles that industrial activities play in London. The Group should also work with local authorities to fund programmes that develop the skills and knowledge of local authority planning officers.
• The Mayor of London should appoint a dedicated advocate for industrial land, this could be one of the Deputy Mayors who would be given a specific and renewed focus on industrial land occupiers and their needs. London needs more senior leaders who explicitly champion industrial accommodation and push for its protection and growth. The issue of industrial accommodation also cuts across many different briefs, making it difficult for businesses to know who to engage with. The designated Deputy Mayor should actively champion the needs of industrial land users and raise the profile of the industrial economy as a key policy issue. The Deputy Mayor should take the lead in facilitating a joint approach across departments, including those focusing on housing, the environment, town centre regeneration and recovery.
• Local authorities, with the support of the GLA and the private sector,
  should upskill their staff working with industrial land. It’s important for local authorities to keep up with the changes and opportunities occurring on industrial land. It’s also vital that they are able to apply that knowledge when making land use decisions to supporting economic development in their area – for example, when using findings from Employment Land Reviews. However, due to resourcing issues, this is not always possible. Officers can develop their skills and knowledge by having more opportunities to interact with different occupiers and sectors using industrial spaces. Boroughs should also seek out partnerships with organisations such as Public Practice, Urban Design London and relevant universities to exchange knowledge and participate in programmes that will equip officers and teams with new skills. Where they don’t already exist, local authorities should also ensure that there are teams dedicated to thinking about industrial needs. These should collaborate across the local authority to ensure that policies and implementation match wider economic, environmental and housing goals.

2. Improve evidence to inform decisions

Over the last two decades, London lost much more industrial land than it planned for. These losses have occurred despite pre-existing benchmarks in the Land for Industry and Transport Supplementary Planning Guidance (2011) that established how much London could release between 2011 and 2031. ³² That the city has released almost three times more land than the projected benchmarks allowed suggests a disregard for cautioned release in the face of pressure to build more housing, as well as a lack of coordination across London as a whole. This further indicates that the city needs more regular and up-to-date information on what land is being lost, where, and to what uses. Such an information resource should not just focus on amount of space, but should additionally consider their quality and affordability. It should also be a critical source of information for officers when assessing development proposals, and provide a mechanism to ensure that benchmarks for planning and monitoring industrial release are adhered to.

London already has some tools to monitor the supply and demand of industrial land. The London Industrial Land Supply and Economy Study (2015) provides an extensive overview of the supply of industrial land. ³³ Complementary to this is the Industrial Land Demand report (2017), which provides a snapshot of the city’s needs for industrial floorspace. ³⁴ At the borough level, Employment Land Reviews (ELRs) are useful evidence bases that local authorities use to develop their local plans and effectively manage competing land uses, particularly between housing and employment. ³⁵

While this work is essential and has been useful, London-wide studies and  borough reviews have their limitations.

• Timeliness: Demand and supply studies only offer a snapshot of the need for industrial accommodation at a specific period of time – but market demand can change quickly. As such these studies are inevitably out of pace with economic or policy changes. For example, in the past, increasing housing targets have hung as a shadow over ELRs. Case studies of the London boroughs of Camden and Lewisham found that between 2011 and 2015, annual housing targets rose by 31 per cent and 25 per cent respectively. ²⁵ Publication of the next London Plan supply study is expected in early 2022. It will need to consider the impact of the COVID-19 pandemic, increasing rent and land values, and net zero carbon targets on the availability and quality of London’s industrial spaces.
• Granularity: Future supply and demand studies should also address the type, quantity, quality and affordability of existing spaces, as well as those that will be needed by different sub-sectors in the future. The scale of London and the diversity of its industrial accommodation means that London-wide needs assessments will always face limits on detail, so boroughs will need to access and produce more fine-grained data about industrial land supply and demand. Detailed industrial land audits have been conducted on some of London’s more well-known industrial estates, such as the Park Royal Atlas, ³⁷ the Old Kent Road Employment study (2016) ³⁸ and the industries in the Upper Lea Valley. ³⁹ These provide an in-depth survey and analysis of the rich diversity of businesses in those areas, as well as their contribution to the local economy and London’s as a whole.
• Evidence: Demand studies will have to find a more robust method of calculating floorspace demand – one based on market intelligence rather than historical trends in floorspace or employment projections (as are currently used). Unfortunately, the latter methodologies have been rendered unreliable by the rapid changes in many activities occurring on industrial land.
• Value creation: Certain reviews present local authorities with a choice between retaining industrial uses with low employment density or encouraging higher-density uses. ⁴⁰ However, employment is a limited lens with which to assess the need for industrial spaces and uses within boroughs. Despite low employment densities, some activities may be a key link in local supply chains. And some critical functions that rely on industrial accommodation – such as logistics and data centres as well as waste, recycling and utilities –often have low employment densities. Instead, some types of industrial space use, such as logistics or waste, should be considered critical infrastructure. A more formulaic approach to understanding need could help with planning accordingly for this infrastructure: for example, planners might consider how much demand for industrial space is generated by each home.
• Borough boundaries: Industrial operations and infrastructure have value outside of borough boundaries, and local interests need to be balanced against the needs of other boroughs and London as a whole. Edmonton EcoPark, a waste-to-energy plant located in the London Borough of Enfield, takes in the waste of six other boroughs including Barnet, Camden and Hackney. Local Plans therefore need to be tied more closely to citywide strategic ambitions, and boroughs must collaborate with their neighbours. One approach to this – a form of categorisation used by the Industrial Land Supply and Economy study (2016) – is coordinating and organising according to the property market area that boroughs belong to.

Of course, improving the quality of evidence on supply and demand for industrial accommodation won’t alone tip the balance towards industrial spaces in land use decisions. As noted previously, London’s land is highly constrained. Though seeking to achieve the right balance, some reviews have pointed to the complications of meeting industrial and warehousing demand when there are also requirements for leisure, retail, health and education spaces in addition to those for housing growth. ⁴¹ Nonetheless, to make better, well-informed decisions about London’s industrial land, the city will need a more reliable, granular and up-to-date evidence base on the supply and demand for industrial floorspace. This will help boroughs plan for the city’s changing needs when it comes to industrial land.

Recommendations

• The Greater London Authority should use live property market data for its supply and need studies, which should be updated annually.
• Boroughs should lead on needs assessment and develop a more granular, up-to-date understanding of their industrial land. Their Employment Land Reviews should be based on market intelligence and industrial land audits, not just economic models and forecasts. Boroughs should use this evidence to specify, not only how much industrial floorspace is needed, but also the needs for yard space and parking space.
• To help with this, real estate companies could make industrial land market data more readily available to policymakers. This would give policymakers up-to-date, granular intelligence on industrial land supply and need. Industrial occupiers and estate agents could apply pressure onto database holders for this to happen, or this could be part of data base holders’ corporate social responsibility metrics.
• The London Plan and Local Plan review processes should consider housing and industrial demand together, to avoid one taking precedence over the other.

3. Enhance local planning, protection and flexibility

The foregoing sections have looked at how local authorities and the Mayor can be provided with the resources and the senior champions they need to develop strategies for industrial land. This section looks at the powers they have at their disposal to protect industrial land.

Generally, the Mayor of London and boroughs have strong powers to retain industrial land through the planning system, and protections for industrial land have been strengthened in the 2021 London Plan. But the high levels of industrial land release in the past decade – way above release benchmarks – suggest that overall, London boroughs and the Mayor of London have not used their powers to protect industrial land as much as they could have.

This section looks at each of these powers and what they mean for industrial spaces. It also makes recommendations on how local authorities can use them effectively to protect industrial land. There are three major ways for boroughs and the Mayor to do this: through the use class system, designation, and by placing requirements on developers before they can change land use. We look at these in turn.

Use classes

The use class system is a way for local authorities to influence where in the city activities can take place. Activities are grouped in different categories as shown in Figure 3 below. Generally, planning permission is required to change from one use class to another, but over time national government has introduced “permitted development rights” under which planning permission is no longer required. We look at this mechanism further below.

Figure 3: Use classes, after 2020 reform

National government has recently introduced major changes to the use classes. One key change for industrial land is that most commercial activities are now
grouped into a single use class “E”, which also includes light industrial uses. This
change makes it easier for light industrial activities to be replaced by non-industrial businesses, and vice versa:

“The unintentional consequence of Class E is that you won’t know what exactly falls under the loss of a class E use… this could be anything from recreational use to a coffee shop. It means that light industrial uses won’t exist as its own separate thing.”

Principal Planner, local authority

From the perspective of local authorities, the grouping of light industrial uses
with other commercial uses means they will be less able to safeguard light
industrial spaces, as changes within Class E can take place without requesting
permission. Of course, this additional flexibility could also potentially create
more space for light industrial uses – especially where industrial land values
are higher than for other types of use.

Designation and safeguards

The Mayor of London and the boroughs also have the power to designate industrial sites “to ensure that London provides sufficient quality sites, in appropriate locations, to meet the needs of the general business, industrial and warehousing sectors.” ⁴² Once a site is designated, specific planning rules can apply to protect industrial land. For example, boroughs can refuse planning applications for some types of use on the grounds that they take away designated industrial land.

The Mayor of London can also designate “Strategic Industrial Locations” (SILs), and, through the London Plan, require boroughs to designate Locally Significant Industrial Sites (LSIS) based on evidence of local needs. There are currently 55 SIL areas protecting 51 per cent of London’s industrial land, while another 14 per cent is protected by LSIS. The remaining 35 per cent of London’s industrial land is not designated. ³⁴

The upside of designation is that it’s a rather effective mechanism to protect industrial land from development – and it’s generally easier to protect what already exists than to release land for industrial accommodation elsewhere. But one downside of designation is that it’s currently an all-or-nothing policy: currently, there are no levels of designation to reflect the very different activities taking place on industrial land, and whether accommodation for them can be more or less easily provided elsewhere. Some industrial land occupiers are relatively easy neighbours to accommodate, while others need specific conditions to operate – such as a very large site, access to river transport, or because they generate frequent vehicle movements. On top of this, relocation always has costs, and these vary hugely depending on the activity.

Generally, the Mayor of London and boroughs have strong powers to retain industrial land through the planning system. But the high levels of industrial land release in the past decade suggest that overall, London boroughs and the Mayor of London have not used their powers to protect industrial land as much as they could have.

Some specific types of designation do exist, but they are very limited. Wharves are protected under national legislation, and national government currently directs London boroughs to consult the Mayor of London (and follow their direction) to remove protection from wharves. London’s waste sites are safeguarded in the London Plan: Policy SI 9 requires that there should be no net loss of waste site capacity within London, and developments that result in loss of waste site capacity will have to re-provide this capacity elsewhere within London.

The very different activities taking place on industrial land call for different levels of planning protection, based on criteria such as criticality and neighbourliness, rather than the current all-or-nothing approach. The shortage of industrial land means that there are more instances of industrial land values overtaking housing land values: therefore housing need is no longer a driver of the loss of industrial land. In these cases boroughs should look at designation flexibly, so they can deliver on both their housing and industrial land needs. A more calibrated approach to protection would open up opportunities to mix uses or provide new industrial accommodation through development. Section 5 on co-location (below) explores how policymakers can ensure this is done well.

Development criteria

Industrial land can also be protected through planning policy. The Mayor of London has the power to set specific conditions for developments that take away industrial land. The London Plan 2021 uses this power in at least two ways. The Plan has raised affordable housing requirements for housing developments taking place on industrial land to 50 per cent of the new units, compared to the 35 per cent generally required. For developments on non-designated industrial land, the Plan also requires developers to demonstrate that “there is no reasonable prospect of the site being used for the industrial and related purposes”, unless industrial floorspace is being provided as part of the redevelopment. To prove that the site is no longer suitable for an industrial use, developers must provide, among other things, “evidence of vacancy and marketing with appropriate lease terms and at market rates suitable for the type, use and size for at least 12 months”, as well as evidence that an offer was made to create modern industrial premises. ⁴⁴ The benefits of setting development criteria is that they offer some protection to non-designated industrial land, such as small industrial units in very mixed areas. The downside is that they are rather generic and don’t take into consideration the specificities of a site and its occupiers.

The powers of the Mayor and the boroughs to protect industrial land are comprehensive, but they are constrained by national planning policy and Permitted Development Rights (PDR). PDR and the new Use Class E have created some uncertainty as to how widely these development criteria will apply. Indeed, PDR allows development to take place without planning permission, provided it meets certain design rules. Since PDR applies to the new Class E, light industrial activities now included in Class E could be converted to housing without planning permission, or the restrictions described above. Boroughs can seek exemptions to PDR for a specific site or parts of the borough, under so-called Article 4 directions, if they feel PDR would be prejudicial to “proper planning in their area”. Boroughs have recently introduced Article 4 directions for some of their industrial estates to ensure they don’t lose industrial land through permitted development. Nevertheless, changes to national policy have introduced some uncertainty over how far the Secretary of State will support boroughs’ Article 4 directions. Introducing Article 4 directions can also be costly, as they require robust evidence to support their designation. Their often “non-immediate” status to remove risk compensation can also undermine their impact.

Recommendations

• Boroughs should take more responsibility for their industrial land policy in order to reflect their local circumstances. Boroughs will have particular needs when it comes to industrial land, and the Mayor of London will need to give boroughs a degree of freedom to set their own industrial land policy. But each borough will also need to meet its own requirements for industrial land, and have an appropriate process to deal with this. The Mayor’s strategic role remains crucial, and they should continue to issue strategic guidelines for protection and release of industrial land.
• National government should ensure that boroughs have the freedom to set different levels of protective designation for industrial floorspace. Designation should be more granular to reflect the vastly different types of activity taking place on industrial land. The Mayor of London should continue to safeguard critical infrastructure such as waste sites and wharves.
• National government should limit the scope of Permitted Development Rights where they may result in loss of industrial premises or compromise effective operation of industrial space. Meanwhile, boroughs should continue to protect their existing industrial sites from conversion to housing through Permitted Development Rights, to prevent industrial space from being depleted “through the back door”.
• Boroughs should ensure that new Class E premises meet the needs of light industrial activities.

4. Make better use of existing land

In the face of dwindling supply, a key concern for London will be to prevent further loss of its remaining industrial floorspace. However, with its high housing targets and dense population, an urban metropolis like London will inevitably face pressures to use scarce land more intelligently and intensively. One solution is to build upwards to create additional floorspace.

The London Plan’s Policy E7 on industrial intensification, co-location and substitution encourages denser use of industrial land. Intensification can take different forms, including bringing in small units and basements. Not all of them are highly costly or require substantial redevelopment, and some can involve businesses improving or adapting the way they use their space. Technical guides such as the Industrial Intensification and Co-location Study, ⁴⁵ Industrial Intensification Primer, ⁴⁶ and the Old Oak and Park Royal Development Corporation (OPDC) Land Review 47 provide examples of the different forms intensification could take and how it could work in practice for different typologies.

There are certain sectors where building upwards is becoming unavoidable and even desirable. The logistics industry is facing rapid changes as shopping online becomes the norm and consumers expect to receive their packages rapidly and at a low cost. Meeting this demand is pushing logistics companies to seek out smaller industrial sites and warehouses closer to residents and with good transport links. However, with industrial land in short supply and land values at an all-time high, doing so is increasingly challenging. Intensification is a potential solution to this quandary, bypassing the need to secure new sites by increasing the floorspace capacity of existing developments.

Intensification has proved successful in other cities where land is at a premium. In Asian cities like Hong Kong, Singapore and Tokyo, high population densities and a scarcity of industrial land have created the conditions for multi-storey logistics facilities to become well established and more cost effective. ⁴⁸ While there are other examples of intensification, London has been comparatively slow in bringing forward multistorey development. The X2 two-storey warehouse at Heathrow, which was completed in 2008, is London’s only such example of an existing multistorey development. More examples are coming soon, such as the three-floor logistics warehouse at the G Park London Docklands site in Silvertown, and the Industria stacked development in Barking and Dagenham – a non-logistics multi-storey development that will provide a range of flexible light industrial units. Industria was supported by public investment to meet the high costs of a flexible multi-tenancy development, receiving £33 million from Barking and Dagenham Council and £1 million from the Mayor of London’s Good Growth Fund. ⁴⁹

It’s clear that public sector investment by local authorities and the GLA creates the conditions for more sites to be brought forward for intensification. These examples of multi-storey developments in London are setting precedents and increasing market confidence in the viability of these developments. Not only do these new developments set an example for landowners and developers, they also help overcome occupiers’ scepticism about the ability of intensified spaces to meet their needs.

Nonetheless, while intensification is an innovative and increasingly necessary way of addressing London’s industrial accommodation capacity issue, it shouldn’t be seen as a “silver bullet” policy. Intensification won’t work for all types of industrial activities, occupiers and spaces. Where intensification seeks to bring together multiple occupiers on a redeveloped site, different operational requirements relating to operating hours, servicing and yard space may make multi-storey developments impractical for some businesses. ⁵⁰ Cost is another key barrier. Large multi-storey developments are expensive to build, especially if they require access ramps for delivery vehicles, and development costs are borne upfront by developers. To make up for the additional cost, multi-storey structures are currently only viable in places where these costs can be offset by higher rental values. ⁴⁵ This means that while multi-storey buildings create new industrial floorspace, they are likely to be unaffordable for a range of future tenants. Additionally, some landowners may be reluctant to undergo redevelopment, especially when faced with additional costs such as temporarily transferring existing occupiers who may not be able to return. ⁵² Pressures to unlock more floorspace capacity on limited land will nevertheless encourage landowners to bring multi-storey schemes into being in appropriate places.

Recommendations

Intensification is needed to provide additional industrial capacity, but it will not work for all industrial users, and it will need the right conditions to be workable and affordable. To boost intensification, we recommend that:

• The Mayor of London should create an Industrial Space Investment Fund to co-invest in developments that provide stacked industrial floorspace. City Hall has ringfenced a portion of the GLA’s Land Fund for industrial projects, but only for a time-limited period. The Mayor should boost the availability of funding for industrial development. The public sector also has the potential to be a trailblazer by maximising opportunities for intensification and setting the conditions for redeveloped sites to become a viable and desirable solution – for example, by investing in infrastructure to support activities taking place on industrial land.
• The Mayor of London should provide case studies of different examples of intensified land and spaces. These should include information about the cost and location of the development, its yield, any changes in the occupiers using the spaces, and the experience of current occupiers.
• The Mayor of London and boroughs should identify opportunities for intensification of industrial floorspace on land that they own.
• National government should help local authorities to incentivise intensification – for example, through business rates policy. This could include introducing business rates relief for multi-storey businesses (at a cost to local authorities). Local authorities and developers should also explore whether other appropriate incentives can be offered to businesses.
• Through the Industrial Land Business Group, industrial land users and occupiers should trade their knowledge and experience of the different ways to intensify floorspace. Intensification includes not only the development of new sites, but also the more efficient and intensive use of existing spaces through new forms of technology. The Group should also facilitate dialogues between occupiers and developers to understand how to bring forward successful schemes.

5. Make co-location work

“We need to stop thinking about industrial land as places that are full of anti-social uses… and work with landowners and land users to reimagine and create a better public realm.”

Director, sustainability consultancy

“The biggest challenge is perception. The old use class order didn’t help and was too restrictive. The word ‘industrial’ gets associated detrimentally with being bad for residential. Once you understand what uses can be and show how they can be integrated they become more palatable.”

Director, architectural practice

Due to the scale, requirements and impact of certain industrial activities, it’s important that their spaces are safeguarded from other uses. However, there is also scope to mix industrial spaces with other types of development. We know that some industrial businesses value proximity to residential or office space, for example to reduce delivery and servicing costs. This could create industrial accommodation in places where there was none previously – or ensure that industrial land redeveloped into other uses retains industrial floorspace. Perhaps unintentionally, London already has experience of industry living organically side-by-side with other uses and within London’s neighbourhoods – whether it’s the motor repair firms operating under railway arches next to a cluster of homes, or the bakeries and breweries scattered along high streets and local town centres.

Co-location and mixed-use developments also offer a way to knit residential developments and more “neighbourly” industrial activities together – whether by housing the two in the same development vertically, or bringing them into closer proximity horizontally. Mixed-use developments do not have to be restricted to the integration of industry with homes: they can also involve industrial activities being incorporated alongside offices and retail. Finding a way to successfully integrate and maintain industrial accommodation within neighbourhoods also has other benefits, such as supporting high streets and boosting local employment. Yet the role that industrial spaces play in the recovery is often underconsidered. For example, the economic recovery missions of the GLA and London Councils include a commitment to developing thriving neighbourhoods, supporting businesses and investing in innovation, ⁵³ but their framework does not consider how bringing light industrial spaces into high streets and town centres can lead to the growth of activities that are attractive to residents.

Local authority policies are already setting precedents for co-location and mixed use, but there are issues with the quality of some schemes. An industrial land and logistics agent that we spoke with expressed concerns over residential developers who, when tasked with putting back industrial and employment floorspace, end up creating poorly designed spaces that are ill-suited to the operational needs of industrial users. Developers, eager to gain access to land, may bring forward mixed-use schemes with light industrial uses without sufficiently considering operational needs such as vehicle movements and physical fitting requirements.

Case study: Logistics hotels in Paris

Like other cities around the world, Paris is reckoning with an explosion in deliveries as more and more people shop online. In 2019, the Paris region had about 600,000 parcel deliveries made directly to customers daily, increasing to 900,000 in 2020. ⁵⁴ As Paris faces pressure to meet swelling demand for goods that arrive quickly and cheaply to people’s front doors, the city is forced to think creatively about locating distribution centres within its boundary rather than on its periphery.

One innovative solution being explored is the development of “logistics hotels” – mixed-use developments used primarily for deliveries but located within neighbourhoods. One of the most recognised logistics hotels is Chapelle International, located in the 18th district of Paris on an abandoned railway. The mixed-use development become fully operational in June 2018 and comprises 10,000 square metres of office space, a data centre, sport and leisure facilities, and an urban farm on its rooftop. ⁵⁵ A neighbouring development on the east side of the site will also host 900 homes. Chapelle International was developed by Sogaris, a logistics real estate developer and manager partially owned by the City of Paris; the project has other partners including Société Nationale des Chemins de Fer Français (SNCF), France’s national railway, and third-party logistics companies such as XPO Logistics and Eurorail.

Chapelle International has certain advantages over more traditional types of distribution centre. First, the name dispels the sometimes-alienating language of industrial activities and is immediately more attractive to residents. The central location also allows logistics to become a more visible feature of the city’s environment and encourages interesting and attractive designs. Additionally, by enabling several activities to happen in one development, the hotel has generated higher revenues than logistics tends to bring. ⁵⁶

The development hasn’t been without challenges, however. A long journey began in 2010 that required the developers to undergo several administrative processes, including a 19-month wait to obtain a building permit and a further year to receive a special agreement for large industrial spaces. ⁵⁷ La Chapelle also required substantial investment from Sogaris, which is not expected to see returns on the project for 20 to 25 years.

In some cases, ground floor areas reserved for light industrial are instead occupied by retail stores, cafés or other types of employment, rather than industry-related workspaces and urban warehousing. ⁵⁸ Residential developers often lack the expertise to build flexible industrial premises appropriate for different users. They are also less likely to involve an expert management partner who can then take the industrial units on and find the right occupiers – meaning that industrial spaces are more likely to go underused or abandoned.

Industrial land occupiers are also worried that that co-location with other uses may compromise their ability to operate. The London Plan has introduced policy tools to prioritise the needs of existing occupiers against new developments, so that existing industrial operations are not undermined. The Agent of Change principle requires developers who want to build homes next to (or on) an industrial site to take responsibility for insulating residents from the impacts of operations already taking place there (such as noise and pollution). ³⁰ While the Agent of Change principle is a useful policy tool, it is only applicable to pre-existing industrial operations.

Like intensification, co-location won’t work for all types of industrial operations and spaces, particularly strategic functions like waste management and construction. In cases where co-location does work, it will require careful and innovative design that does not compromise on flexibility for current and future occupiers.

Recommendations

London will need to provide further industrial accommodation through well-designed co-location schemes. To do this successfully, we recommend the following:

• The Mayor of London and the boroughs should consider subsidising developments that provide new industrial floorspace in locations where none currently exists. This is especially useful where it unlocks colocated developments that would otherwise be unviable.
• The Mayor of London should provide a set of principles and case studies for how co-location can work operationally. These principles and case studies should move beyond architectural examples: they should show what uses work well in co-location, how to build flexible accommodation, and how co-location can be effectively managed. Co-location also opens up issues around mortgageability, building insurance and the general operation of space: the mayoral guide needs to address these if the potential of co-location is to be realised.
• Boroughs should require that industrial floorspace provided as part of development proposals is suitable for a range of industrial activities. Local authorities should require developers to provide sufficient evidence that the designated space is suitable for the current and future needs of different businesses and industrial activities.
• Residential developers designing mixed-use developments should work with The Industrial Business Land Group to build knowledge about the needs of different businesses when operating close to residents.

6. Enhance strategic planning

“There was renewed enthusiasm that [industrial sectors] at least had GLA support. The first Draft London Plan provided policies to protect industrial land and pushed innovative ideas such as supporting multi-storey, co-location. Though there was still some scepticism about how deliverable they were, the sector welcomed a more supportive attitude from the GLA; then national government stepped in and watered down these changes.”

Director of Planning, business membership group

Improved understanding of the need for industrial land – and better intelligence from the industrial land market – will help improve strategic planning. However, producing the London Plan is a lengthy process taking around four years. The London Plan 2021 was also delayed by political intervention, including the Secretary of State requiring the removal of the “No Net Loss of industrial land” policy on the grounds that this would be counterproductive to housing target delivery – even though the London Plan is responsible for protecting employment land as well as planning to meet London’s housing needs. As well as delaying the process, this type of interference risks diminishing the power of the Mayor of London to oversee strategic planning for the city.

Planning policy reviews are also few and far between. As mentioned, the London Plan has at least a four-year cycle, and Borough Plans are generally required to be reviewed every five years. This means planning policy is often outdated by the time it is published. However, both the Mayor and the boroughs can update the interpretation of policy more frequently by issuing Supplementary Planning Guidance.

Recommendations

1.To ensure the London Plan is more reactive to London’s interests:

• The GLA and its planners should have as much power as possible to devise the city’s land use strategy. The government’s role in approving the London Plan should be limited in scope to a few specific considerations directly impacting on the national interest. This would also give national government more capacity to respond to pressures elsewhere in the UK.

Improving strategic planning within London will not in itself be sufficient to address the city’s industrial land shortage. London is not an island, and its economy operates as one with that of the Wider South East. The shortage of industrial accommodation is at its most severe in the inner city, but pressures have reached far into outer London and are also felt by industrial businesses that service London’s economy from beyond the M25.

In the 2000s, national government experimented with regional planning to join up strategies across London and the Wider South East. This created three planning regions – London, the South East, and East of England – which were due to work together to coordinate planning. These institutions were scrapped in 2010 and subsequently replaced by a “Duty to Cooperate”. This requires local authorities to include the opinion of neighbouring authorities upon reviewing their local plans. While the Duty to Cooperate has a laudable aim, it has been criticised for not promoting genuine strategic collaboration across local authority lines. The London Plan is also exempt from this duty, further diluting the potential for London’s needs to be effectively planned for across the Wider South East. This means that local authorities can allow reductions of industrial floorspace without necessarily taking into account the impact on their neighbours. The Duty was due to be scrapped in the government’s upcoming planning reform, and at the time of writing there is uncertainty and a lack of clarity on how cross-border strategic planning issues will be effectively addressed going forward.

The lack of strategic planning for industrial capacity across the Wider South East also means that there are missed opportunities in terms of infrastructure planning and investment. For example, there are large pockets of industrial land near London that may not currently be in use because they are not well connected to the capital, or because workers struggle to get there. Identifying these opportunities and making the case for government investment in infrastructure would mean new industrial businesses could settle there and still service London’s economy. London’s neighbouring authorities would see increases in employment while also reducing pressure on London’s industrial floorspace – a clear win-win for all parties.

2.To bring forward space for industrial innovation:

• a) The National Infrastructure Commission should work with London and neighbouring authorities to identify how infrastructure investment could increase the supply of suitable industrial land in the Wider South East.
• b) National government should invest in infrastructure that will unlock additional industrial floorspace in the Wider South East, thereby helping to counterbalance industrial land loss in London.

All aspects of London’s economy today, and tomorrow, are dependent on the activities that take place on industrial land. We ignore it at our peril. If we fail to address the pressures we have set out in this report we risk throttling the supply of industrial accommodation, raising costs for all (including consumers), pushing innovation and talent away from the city, and hindering our battles on multiple environmental fronts. Without sufficient industrial land, London will be a weaker city. However, with a stronger voice for industry, more data-driven insight, improved planning, intensification where it makes sense, and reforms to public powers, we may yet sow the seeds of future success and economic recovery for the whole of London.