Reconstrucción de expe-

Industrial/Warehousing (B1c/B2/B8)

Our assessment has concluded that demand levels for industrial premises are stable, as a whole, having experienced a fall at the onset of the economic downturn. There are successful examples of high-specification developments (Beam Reach 5 and Easter Park) and demand for medium-large premises remains. Most requirements are for warehouses with good observed take-up of vacant land and new premises. Demand and take-up of second-hand stock is considered to be somewhat more muted.

Although new high-quality premises have recently been built, second hand stock dominates the market at present. Whilst occupiers demand a range of premises, there is a noted shortage of large distribution facilities or available land to build such premises, meaning that when demand for such premises arises, occupiers have to look elsewhere in the PMA.

Vacancy rates are generally considered to be low within the SILs, somewhat higher in the SEAs (though still low), and high in the de-designated employment areas. This points to there being a good level of churn of supply and demand for stock in protected locations, close to major road arteries and away from residential and other sensitive land uses. Consultees suggested that there was a relative lack of availability of good quality lower cost space for SMEs.

In conclusion, whilst it is likely that some demand from occupiers requiring large premises may be ‘lost’ to other boroughs in the PMA, supply generally meets demand, with vacancy rates appearing to have remained low. The presence of poorer quality premises in some locations may provide opportunities for refurbishment or redevelopment to ensure the needs of occupiers are met and the supply-demand balance maintained.

Office (B1a/b)

Based on consultation and review of information sources it is assessed that take-up rates of office floorspace in Havering has been slow in recent years, and demand is currently not strong, with relatively few enquiries being received. Where demand exists, good quality premises are required with good links to public transport and amenities. There is some evidence of demand for serviced offices within business centres, with good occupancy levels at such premises in Romford Town Centre.

The supply of office premises in Havering is not considerable and is largely concentrated within the Romford Office Quarter, where a number of good quality premises are available. This area was the only location highlighted as experiencing much demand, though small office units within the SILs do attract interest. The vast majority of the available stock is second hand, varying in age, with some relatively new stock at Melville Court (Harold Hill) and some refurbished serviced office space in the Romford Office Quarter. Short-term leases are generally offered, with most businesses being content with such tenure arrangements in the present economic climate. Over 50% of premises available for let are less than 2,500 ft2, with current vacancy rates standing at 12%, having increased since the onset of the economic downturn.

In conclusion, the supply of B1 floorspace generally meets demand in the Havering local office market in the current to short term period. The key gap is in affordable, serviced office accommodation to meet the needs of small start-up companies. The generally good quality of premises supplied meets the demands of most prospective traditional office occupiers. The fact that the local B1 market remains small, and has been small historically, may suggest that it is largely in a state of equilibrium, with no speculative developments in the pipeline that are likely to stimulate the market. This is

2.

mainly a result of the low rental values between 12 and 13 per ft With improvements to the environment of Romford town Centre spurred by the Romford AAP and Development framework and introduction of Crossrail this could change. The prime office location in the Borough, Romford Town Centre retains the fundamental conditions for maintaining a presence as an outer London office location.

7

DEMAND FORECAST

7.1

Introduction

This section projects the future demand for industrial and office land in LB Havering for the period 2013 and 2031.

7.2

Methodology

Our approach to estimating demand for industrial land and office space is compliant with the National Planning Policy Framework (NPPF), National Planning Practice Guidance (NPPG), Employment Land Reviews: Guidance Note (2004) which although cancelled by the NPPG still provides a detailed guidance on ELR best practice and the GLA Land for Industry and Transport SPG (Sept 2012).

Our approach synthesises published employment projections with historic floorspace trends and local economic drivers of the property market area (PMA) in which LB Havering industrial and office markets operate, to provide a borough wide projection of employment floorspace. For industrial uses projected floorspace is converted to land demand using plot ratios. We do not convert the floorspace requirement for office space into land as plot ratios for office vary significantly, in particular storey heights, meaning that the conversion to land can be unreliable. Our methodology is set out below:

Figure 7.1 Industrial and Office Land Demand Forecasting Methodology

7.3

Property Market Area

Industrial and Office property markets rarely correspond to local government administrative boundaries. Businesses searching for sites or premises will typically consider a number of similar locations. This area is termed the ‘property market area’ (PMA). The PMA will often have similar characteristics such as the labour market structure, access to market areas and suppliers, rental values, appropriate size and grade of stock. The NPPG states that needs should be assessed in relation to the relevant functional economic market area (FEMA)36. The FEA as defined in the NPPG can be viewed as the PMA as defined in this study.

For the purpose of this study we have used data from the following local authority boundaries of a defined Property Market Area (PMA), as suggested by property market agents, to measure the trends of the above three factors:

• LB Havering;

• LB Barking and Dagenham; • LB Newham, and;

• Brentwood Borough Council.

As described at section 6.3 above Thurrock is not included in the PMA in terms of data used in the demand forecast because it was considered by market agents to be a separate sub-market due to the effects of the London Gateway. However, Thurrock does share similar characteristics to the PMA as described above. Data on historic business floorspace, historic employment and forecast employment is analysed for each of the above four PMA boroughs. The trends across the PMA for each of these factors then feeds into the overall employment land demand forecast.

7.4

Historic Trends in Floorspace

The NPPG describes how future trends for employment land should be forecast37. This includes an assessment of past take-up of employment land. The Valuation Office Agency (VOA) records the amount of floorspace in an area for tax purposes (the assessment of business rates) by building type. VOA data is considered to be a reliable source of data between 1998 and 2008. However, difficulties can occur in comparing raw VOA data due to the revaluation of properties that occurred in 2004. This causes discontinuities in the quantum of floorspace between 2004 and 2005. Also, 2008 is the latest available data which is five years old at the time of writing this report. Importantly the 2008 data does not include floorspace data collected since the current economic downturn.

To counter these issues we have used experimental commercial floorspace data released by the VOA in May 2012 and covering the period 2000 to 201238. Although the VOA states that they are currently evaluating this data set it is considered a robust enough dataset to analyse trends in employment floorspace across the PMA for the purposes of this ELR.

The historic employment floorspace trend across the PMA and LB Havering is shown at Table 7.1. Figure 7.2 shows the trends for the PMA.

36 _{NPPG, paragraph 009 Reference ID: 2a-009-20140306} 37

NPPG, paragraph 033 Reference ID: 2a-033-20140306 38 _{This is available at: http://www.voa.gov.uk/}

7.5

Table 7.1 Change in Industrial and Office Floorspace 2000 to 2012 Business Type 2000 m 2 2012 m 2 Diff (%) CAGR LB Havering Office 162,000 154,000 -4.9% -0.4% Industrial 680,000 670,000 -1.5% -0.1% PMA Office 598,000 647,000 8.2% 0.7% Industrial 3,099,000 2,791,000 -9.9% -0.9% Source: URS; VOA Business Floorspace (Experimental Statistics) 2012.

Note: CAGR: Compound Annual Growth Rate. Figures may not sum due to rounding.

Figure 7.2 Change in Industrial and Office Floorspace (‘000 m2)

- 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 PMA Offices PMA Industry

Table 7.1 and Figure 7.2 shows that there has been a decline in industrial floorspace and an increase in office floorspace across the PMA. The industrial and office trends for the PMA feed into the synthesis demand forecast as shown at section 7.7 below. This includes the CAGR of -0.9% for industrial uses and +0.7% for offices.