Last week, I helped chair Property Week’s SHEDS conference in Birmingham. Like the reunion of an old rock band, the revitalised event was played out in front of packed audience, helped by the new lease of life given to industrial property largely by e-commerce and the ‘Amazonisation ‘of retail and logistics.
Significant attention was poured around last mile logistics with a fair dollop of debate on the potential for mixing in more residential – something I’m personally rather anxious about. One thing everyone agreed on was the need for greater understanding of the contribution made by this sector and with government’s industrial strategy consultation doing the rounds, there’s a real opportunity to help inform policy.
Following the major 95-page report authored by Blackstock Consulting entitled, How Soon Is Now: The Disruption and Evolution of Logistics and Industrial Property, produced on behalf of Addleshaw Godard, we’ve set out a number of recommendations we believe can help the sector.
1. Government must recognise the importance of logistics and industrial property to the country’s economy
The industrial and logistics sector is a vital source of employment outside London and the south east, particularly in the Midlands and North, and in coastal areas that have been largely forgotten at the expense of our cities. It makes sense to prioritise support for industry.
2. Councils should be made to designate land for industrial use
In local planning housing policy often trumps employment policy but this is not necessarily always the best priority. Housing and planning minister Sajid Javid should encourage local authorities to prioritise properly thought-through employment policies. We should also consider what different types of industrial sites are now needed. If consumers want products within 24 hours, then infrastructure, real estate and transport will have to support this.
3. Government should work in conjunction with the private sector to bring forward more public land for designated uses
The growing demand for industrial space along with the dwindling supply on offer has seen rents rise, putting pressure on business costs. The Government needs to encourage local authorities to identify more land for industrial development, and in suitable locations near to transport networks and junctions.
4. Government should look to directly support development by SMEs
The Homes and Communities Agency has £4.7bn of grant funding available for affordable housing. A similar budget to kick-start industrial development for land assembly, remediation (cleaning up sites) and infrastructure would offer broader benefits to both employment and housing delivery.
5. Invest in and empower local planners
Developers and ministers routinely criticise local planning for being slow. But a complex planning process is not helped by contradictions between national policy and local concerns and a dire shortage of planning officials and investment in the profession. Delegating greater powers to planning officers could expedite the approval of non-contentious applications without unnecessary delay.
6. Properly coordinate transport infrastructure
Major projects must contribute to the logistics network effectively and support growing needs. We should clearly set out the routes of major projects at an early stage, which will avoid costly planning delays and allow investment to be deployed early.
7. Better road transport
The Government has already invested significantly in road improvements over the past seven years but the pace of investment must be maintained. The number of road users is continuing to rise, mitigating the improvements that have been delivered. Highways England should work more closely with Network Rail to further integrate road and rail capacity during off-peak periods at night.
8. Using finance and technology to drive increased rail freight capacity
Rail transport is not a viable logistics option for many UK firms, due to the relatively short distances covered and the high cost of access. There are a number of ways to address this; first, access contract lengths should be offered in line with real estate lease lengths. Second, there needs to be better use of technology to manage the network and incentives to create new, less damaging rolling stock. Finally, if the Government wants to move more freight off the roads and on to rail, it will need to ensure that the charges paid for accessing the rail network are fair.
9. Focus on skills
One of the biggest risks to many of Britain’s business sectors is our future pipeline of skills. This is in evidence both in the road haulage sector, which currently has an employment shortfall of 60,000 hauliers, and similarly in construction, which faces an estimated shortfall of 700,000 workers over the next five years.
10. Making business rates transparent and fair for all ratepayers
The charging of business rates on empty properties disincentives the speculative development of industrial and logistics property. Rates shouldn’t be levied on speculative schemes until they have tenants. Some individual councils already do this, but the Government should take the lead and make it national policy.
11. Continuing EU funding after Brexit
Currently, the EU provides various grants and funding for major infrastructure projects that support industrial development. The Government must commit to matching this funding after Brexit.
12. Create an industrial forum to identify sites and overcome barriers
And finally, a national forum identifying sites suitable for logistics use or infrastructure to assist logistics transport will drive development of the 18 million sq ft of logistics space the UK needs each year.