Land intensification is on the cards in London but what exactly does that mean? Liza Helps reports.
Savills has been appointed by the Greater London Authority (GLA) to help develop a strategy to invest in industrial intensification and mixed-use development because basically residential and industrial land uses are at loggerheads in the capital and while it is politically expedient to build loads of houses at the expense of industrial land you still have to service the population unless you want a riot on your hands.
James Murray, deputy mayor for housing and residential development, says: “Tackling London’s housing crisis requires using all the tools at our disposal. This work will help identify ways the GLA can intervene to free up more land for housing, while ensuring we protect and strengthen industrial capacity in our capital.”
The latest projections see London’s population projected to grow by 70,000 a year up to 10.5 million by 2041. “At the same time,” says Len Rosso of Colliers, “we are in the midst of a generational shift from physical to online retail and that coupled with urbanisation is creating a huge demand on logistics.”
According to Cushman & Wakefield’s latest Urban Logistics report: “In terms of population and buying power, London is the largest and most mature e-commerce market in Europe with a current urban logistics space requirement of 870,000 sq m. This total is expected to exceed 1.2 million sq m in 2021, an increase of 42 per cent.”
Simon Lloyd of Cushman & Wakefield says: “The market is going to grow and grow substantially in the next five to ten years, which means we have to maximize use of land in urban areas.”
Rory Brooke, Savills head of economics, says: “One way to do this is to intensify industrial activity in multi-storey buildings so that the same amount of floor space and capacity is provided on less land, freeing up remaining land for housing-led development. There is a need to understand what is holding back this new market and what can be done to encourage new schemes.”
It is on this basis that Gazeley has announced that it intends to build the UK’s first three-storey warehouse in London. Commenting on the decision, Bruce Topley of Gazeley, says: “Demand is only going to go one way and we are certainly not going to hear that customers are going to want deliveries to be slower…”
Gazeley is due to submit plans shortly for a 426,000 sq ft three-storey warehouse on a six-acre site in Silvertown. The building will be used as a ‘last mile’ logistics hub for London and surrounding areas, targeting e-commerce, distribution and logistics customers.
Topley says: “With scarce land available in London and an increasingly on-demand economy, distribution and logistics operations must find new and innovative ways to keep up with increasing delivery volumes demanded in shorter time periods.”
This is the first three-storey warehouse in the UK and will use platforms to allow HGVs and other vehicles to access each level. Each storey will comprise 140,000 sq ft of space with 26 dock doors and 4 access doors on each level. The site will contain 350 car parking spaces and around 75,000 sq ft of ancillary office space. Gazeley expects the development to be completed by the end of 2019, subject to planning permission.
The development of G Park London Docklands follows GLP’s acquisition of Gazeley in December 2017. GLP has significant experience developing multi-storey warehouses around the world.
Paul Weston of Prologis says: “Looking at multi-storey is not such a bad idea but in the UK, the proof of the pudding is in the eating. It takes significant capital to build one of these and is a big commitment for any business to make – but is the situation really that pressing?”
Prologis has just acquired a site in Croydon, which could accommodate up to 200,000 sq ft of space. The 10-acre site is rumoured to have been sold for £3 million an acre.
Weston adds: “It all comes down to rent and transport costs. A 3PL will not be able to justify a high rent in a central urban location if transport is still affordable from an out of town facility. “
Bridget Outtrim of Savills agrees: “When it comes to intensification projects and there is a conventional choice; they [tenants]will pick the conventional unit. In a market with choice [the intensified project]will be the last to let. Those that need to be in the heart of an urban location and faced with no other choice will accept it.”
However, that pre-supposes that there will be no legislation to upset the status quo. London Mayor Sadiq Khan is already supporting daytime bans on diesel and petrol vehicles in certain areas in East London from July during rush hour in a bid to improve air quality. Then there is the Ultra Low Emissions Zone 2019, which will introduce a daily charge for drivers using the Congestion Charge Zone, if they do not meet an emissions standard. Unlike the proposal for east London, the ULEZ will operate 24-hours a day, seven days a week.
The Mayor of London is also under pressure to ban diesel vehicles across the city by 2025 ahead of the Government’s proposal to stop the manufacture of fossil fuel vehicles by 2040.
In Oxford petrol and diesel cars will be banned from the city centre from 2020 as the city looks to improve air quality.
These restrictions put the pressure on logistics to use electric vehicles and since these do not have the same range as a petrol or diesel vehicle this nudges logistics providers to look at more urban locations for last mile facilities.
The issues that this in particular gives rise to is one of power – do urban locations have the power infrastructure to provide the electricity needed to keep the delivery vans moving…and are there still other ways of providing last mile delivery?
In terms of providing the facilities from which to do the deliveries Edward Marshall of Frank Marshall Estates offers up the tantalising prospect of trade counter estates as alternative accommodation. Rents traditionally are higher in these locations he says but in terms of location for urban logistics – they are perfect.
Only recently Kerry Logistics took a 5,500 sq ft unit at Frank Marshall Estates’ 38,000 sq ft Newhall Business Park in Bradford.
This article first appeared in Logistics Manager, June 2018