Industry Comment

Darren Wisher / Director, Regeneris Consulting

March 2007

 

Employment land assessments are veritable minefields for the unwary.

The Government’s 2004 Employment Land Review Guidance provides a useful starting point in shaping strategic employment land assessments up and down the country. But are these assessments providing robust evidence to inform regional spatial strategies and local development frameworks? Is it actually possible to predict the land requirements of the business base of 2020?

Our experience is that whilst practitioners adhere to the main principles of the guidance, a number of important factors are being overlooked and affecting results.

The crucial task of quantifying replacement demand from firms vacating older buildings is rarely tackled, and there is limited evidence on the extent to which land freed up can in practice be recycled for alternative employment uses.

Existing employment density guidance also fails to account for the potential changes in working practices that will impact on the UK in the next 15 years, whilst the requirements of the science and technology sector are too frequently subsumed within wider forecasts of traditional land use types.

 

 

 

 

 

 

 

 

 

 

 

Regeneris Consulting has been involved in the preparation of employment land reviews in a number of UK regions over recent years. Our work uses, as a starting point, the helpful guidance set out in the Government’s 2004 Employment Land Review Guidance Note. This provides a comprehensive account of the steps required to complete a successful employment land assessment, cross-referencing to tips and lessons from numerous recent examples.

As economists we appreciate that land, unlike labour, is a particularly inflexible factor of production. There is great danger in aggregating demand requirements from different sectors and users in the demand for land as if land was a homogeneous commodity: different sites have different attributes which are more, or sometimes less, suitable for different end users.

A good employment land assessment needs to as far as possible disaggregate demand and supply into different categories of uses and users. The other implication is that to allow for these micro demand and supply differences, any review needs to build in a healthy buffer.

The degree to which planning authorities should use precautionary principles in allocating employment land is also a source of much debate. Many authorities build in a substantial margin of error in considering the interaction between supply and demand, ensuring an element of additional supply over and above that which aggregate demand forecasts would suggest is required.

Why is this? The reasons are not always well articulated, but can include:

• Building in sufficient supply to accommodate accelerated growth or a scale of growth which may have been unanticipated;

• Similarly, adding in extra supply to allow for the fact that not all sites are immediately available and reflect the associated lag in the planning process;

• Assembling a balanced portfolio of sites to respond to potential structural changes in demand (e.g. shift from volume to niche manufacturing).

What is the right amount of “buffer” to reflect these precautionary factors? There is no hard and fast rule. Our experience suggests a buffer of around a third, so that for a 15-year forecasting exercise, five years’ worth of additional supply might be added on.

Aside from this broader debate, there are a number of specific issues that present a real challenge in delivering a robust employment land review:

• Challenge 1: the difficulty of quantifying the demand for land and premises from existing business who want to upgrade their accommodation. The success of many former industrial areas will be dependent on the degree to which the existing business base can re-orientate its skills and expertise to newer, higher value products and markets. Shifting the mindsets and aspirations of owners will be pivotal in achieving this transition, but the planning system also has an important role to play by ensuring there is an available stock of replacement land and premises for businesses whose markets, suppliers and working practices may be changing quite radically. The level of this replacement demand is notoriously difficult to estimate, and is often overlooked in employment land reviews. A related issue is the degree to which any vacated stock can be recycled for other employment uses, and this also rarely addressed.

• Challenge 2: being intelligent in the use of employment floorspace densities. The most widely-used guidance is that produced by English Partnerships in 2001, which was largely informed by empirical research from the late 1990s. The last 10 years has seen a massive shift in working practices, with hot-desking and portfolio working now commonplace. Yet at the same time, higher living standards might well raise expectations on space standards for office workers. The available evidence suggests these trends will only intensify through to 2020 and beyond. In predicting the likely long-term volume of employment land required in an area, we believe practitioners should be more cognisant of these changes: it is conceivable that in 2020, for a typical knowledge-based company, that two employees per workstation space could become the norm.

• Challenge 3: the difficulty in building up a clear picture of demand from newer forms of commercial activity. In many locations, the rise of employment in technology-based businesses such as biotechnology, digital media and environmental technologies is a relatively new phenomenon. There has been much talked and written about their property needs: the hype can be considerable, although the reality is that in many cases property requirements appear similar to other office-based sectors, although the locational requirements can be very specific (for instance in terms of adjacency to universities).

There are no easy answers to these questions. Work in the UK’s Science Cities will shed further light on the long-term accommodation requirements of a range of science and technology-orientated businesses.

Most of all, it is vital to embark on any employment land review with a full appreciation of the potential pitfalls and a conscious acknowledgement of the scope for margins of error.

 

Darren Wisher

 

To discuss Regeneris Consulting’s work in the field of employment land assessments, contact Darren on 0161 926 9214 or d.wisher@regeneris.co.uk.

To have your say on the issues raised in this article, email comment@regeneris.co.uk.