Our Property Director Rob Barker talks to Property Week about the benefits of collaboration and co-location.
Increased demand for space across sectors, from residential to industrial and logistics (I&L), is placing pressure on developers. With competition for space at an all-time high, industries need to find a way to work together. Recent research by commercial property developer, Potter Space, conducted in collaboration with Savills, demonstrates that working together across sectors and with government and local authorities could help to alleviate the pressures for I&L developers while continuing to provide the jobs and housing necessary for communities to grow.
Potter Space’s BIG Things in SMALL Boxes report, which focuses on the sub-100k sq. ft. warehousing market known as small to mid-box, has revealed that the supply of land currently available for commercial development simply isn’t enough to meet demand. This means that businesses struggle to find the space they need to expand into so must “make- do” with their current facilities – an issue referred to as suppressed demand. The report shows that suppressed demand for land sits at 38 per cent across England, climbing to 51 per cent across Nottinghamshire and Derbyshire, and 57 per cent in Birmingham and reaches 166 per cent in areas such as Crawley. It is vital that this situation is looked at carefully, as a continued lack of land could stifle business growth and job creation across England.
Tackling issues such as suppressed demand is just one of the ways that developers can help to facilitate growth, especially in areas where businesses are keen to expand their operations. However, there are a number of barriers obstructing the path to successfully tackling suppressed demand, including a long planning process and the prioritisation of much needed residential developments.
As highlighted by Michael Gove's December planning update speech, local authorities are under intense amounts of pressure to meet planning application deadlines to alleviate the ongoing housing crisis. However, commercial developments also have an important role to play, providing new residents with places to work. Logistics infrastructure is also vital to support deliveries and the provision of goods and services, but how can I&L developers work together with residential developers and planners successfully?
Co-location, or site sharing, could be a viable solution for future I&L developments that will assist with easing the planning process. It will require collaboration between small to mid-box developers and big box developers – those with properties over 100k sq. ft. To make co-location work, big box sites could offer un-utilised land unsuited to large warehouses to smaller developers, sharing not only the already approved location but also amenities, which could reduce the red tape around planning applications.
With suppressed demand in the small to mid-box sector leading to an estimated loss of £480 million in Gross Value Added (GVA) per year, a coordinated approach from commercial developers, Government and local authorities to utilise innovative solutions such as co-location could help to boost the economy while simultaneously reducing suppressed demand across England.
Small to mid-box facilities are key to providing a workable solution and creating a balanced environment for people to work and live in. Suited to irregular sites or areas close to residential developments, beside motorway junctions or railway tracks, these warehouses are adaptable and agile to the needs of their tenants, offering a variety of roles and job types. This is compounded by the research, which shows a 16 per cent rise in office spaces being incorporated into new warehouse buildings in England since 2020.
In fact, the sub-100k sq. ft. market is home to some of the most diverse use of space within the I&L industry, with a reported increase in research and development activity, including technological research. From manufacturing and warehousing operations, newly incorporated offices through to supporting innovation within the small to medium employer (SME) sector small to mid-box developments are crucial to the country’s economic wellbeing. It therefore makes sense to collaborate with the housing industry and planners to ensure the creation of balanced and successful communities.
Furthermore, the industry has come a long way in showing that I&L property is no longer dirty, loud or energy inefficient. Employee welfare and Net Zero initiatives are standout agenda items within the sector, with the industry additionally focused on attracting newer generations as they enter the workforce. Small to mid-box property providers have a major role to play in this area of employment, with data showing that around 31 per cent of apprentices within the I&L industry (or 13,000) begin their careers in SMEs – typically situated within sub-100k sq. ft. warehouses. If suppressed demand was adequately addressed this figure could quickly increase to 18,000 per year; contributing to meaningful careers for many more apprentices and working to close the national skills gap.
Ideally, developers across the I&L and residential sectors would work with local planners to consider co-location. With so much to be gained, developers, leaders within the I&L sector, Government and local authorities should take a positive approach to planning to unlock economic benefits and create a balanced environment with enough jobs to support new residents. By collaborating with developers across industries and working harmoniously together, there is an opportunity to provide housing, jobs and unlock millions in potential GVA.