Time to take stock

Is the nation’s employment land under siege from the pressure to build homes?

Brownfield land

17 December 2015

In the great debate on housing growth there is perennially a neglected child – employment land. In a very subtle way this was again demonstrated last week in the Government’s suggested changes to the NPPF – this time concerning Starter Homes:

‘We want to ensure that unviable or underused commercial and employment land is released under the exception site policy for starter homes. We propose to amend paragraph 22 of the Framework to make clear that unviable and underused employment land should be released unless there is significant and compelling evidence to justify why such land should be retained for employment use.’ (Consultation on proposed changes to national planning policy, DCLG, December 2015, para 37)

We are all aware that the provision of new homes is crucial to meet the growing population’s needs. However, the role employment land, and the jobs it can support, plays in enabling balanced and functioning places must not be forgotten.

Stepping up to the mark

The consultation states that Councils will be required to ensure their employment land evidence base is up to date:

At a minimum, this would include an up-to-date needs assessment and significant additional evidence of market demand.’ (para 37)

Local Planning Authorities (LPAs) have a long way to go, some more than others. Our recent publication, The Land That Time Forgot illustrated that much of the evidence base for employment land is vastly out of date and precedes the Government’s guidance (National Planning Policy Framework and Planning Practice Guidance).

It is critical that LPAs undertake a robust update of their employment land and economic needs evidence base and have sufficient resources to do so, particularly as the Government requires ‘significant additional evidence’. What exactly this will be is not set out, but in our opinion should ensure it reflects current and emerging sector (and sub-sector) requirements as far as possible.

Engaging businesses

This presents a timely opportunity for businesses and industry to seek to engage in the process, to ensure that their needs are taken into account. This is particularly pertinent as:

  • Employment Land Reviews use historic trends to project employment land needs. With the recession still hot on our tails, the figures may not demonstrate the full extent of future needs.

  • The way businesses operate and the types, quantum and location of land and premises they require will continue to evolve. The data will not fully capture this.

  • There needs to be a more sophisticated appreciation of employment uses as part of the way our world works. For example, a recent British Property Federation-commissioned study (undertaken by Turley) demonstrates there is considerably more to the logistics sector than meets the eye.

Policy directions – reason for concern?

Four further points need consideration and/or clarification:

  1. By demonstrating the lack of demand for, and therefore release of, employment land in some sites and locations, there should be a clear commitment to ensure new allocations of the right size in the right locations to meet businesses’ needs.

  2. A three-year timeframe for the protection of unused commercial or employment land is proposed. In a dynamic sector, this is potentially a blunt tool if decisions are made on historic data that has little relevance moving forward. It is far more appropriate to ensure the evidence is up to date and based on current market signals, and that the business community has been fully engaged, ahead of any decisions being taken.

  3. The reference to the potential release of employment land allocated in greenfield locations is interesting, with a seemingly arbitrary calculation to illustrate the potential contribution of such land releases in the West Midlands alone (para 39). Are we to understand that it is not only brownfield employment land that comes under scrutiny? Does one land use take precedence over the other or does the market decide?

  4. As with anything to do with land and property, there will be a clear north-south divide. While some local authorities in the north may jump at the chance to release unwanted employment land, those in the south are faced with a multitude of competing demands, with landowners seeing residential as the more attractive even where employment demands exist.

Smart solutions – quality not quantity

The commercial property market is a funny animal, where land supply has an often unhealthy relationship with values. Too little supply introduces great pressure on rental levels, but provides an attractive market for market interest and speculative development. Too much supply and values drop, which can hinder investment. It is a finely balanced machine, particularly in the south. This creates an inherent conflict with the planning system, which is plan led and often lacks flexibility to respond quickly.

What is required is smart, conscious decision making to ensure that sufficient land of the right quality is available, but without creating (or maintaining) a glut of supply that will sit unused and could be better utilised for alternative uses, including residential. Any review should ensure that the needs of one use are not met at the expense of another, but that all are properly catered for, with growth opportunities that are desirable to the market and of sufficient scale to meet genuine need.

The proposed policy amendments seek to strike such a balance, but have perhaps approached it from the wrong starting point. Local authorities should be challenged to ensure that sufficient employment land is available for all business types, but that such provision must be market tested. It is at that stage when judgments on genuine suitability should be made, but with appropriate flexibility to respond to ever changing market signals. This means being smart, or put another way, market savvy. Not something LPAs are typically adept at.

As with any policy amendments, the proof will be in the pudding, but now is the time for business and industry to step up and make its voice heard, and for Government to demonstrate it is listening.

The consultation is open for a further six weeks until 25 January 2016. Turley can advise on the implications of these changes and submit a response on your behalf; please speak to your usual contact for further information.