Middlesbrough Economic Development Needs Assessment

Middlesbrough Borough Council

Final Report

August 2017

Prepared by

GL Hearn 280 High Holborn London WC1V 7EE

T +44 (0)20 7851 4900 glhearn.com

Middlesbrough Economic Development Needs Assessment, August 2017 Middlesbrough Borough Council, Final Report

Contents

Section Page

1 EXECUTIVE SUMMARY 8

2 INTRODUCTION 18

3 THE FUNCTIONAL ECONOMIC MARKET AREA 27

4 ECONOMIC BASELINE 39

5 COMMERCIAL PROPERTY MARKET ASSESSMENT 47

6 STAKEHOLDER CONSULTATION 72

7 ASSESSMENT OF FUTURE EMPLOYMENT LAND REQUIREMENTS 83

8 EMPLOYMENT LAND SUPPLY 99

9 SUPPLY DEMAND BALANCE 149

9 SUMMARY AND CONCLUSIONS 153

LIST OF FIGURES

COMPARISON OF EMPLOYMENT LAND SCENARIOS, 2016-34 13

WORKPLACE POPULATION OF LOCAL AUTHORITIES, 2011 28

TRAVEL TO WORK AREAS, 2011 30

GROSS MIGRATION FLOWS, 2011 32

LOCAL ENTERPRISE PARTNERSHIP (LEP) AREAS 34

RETAIL CENTRES IN TEES VALLEY (EXPENDITURE IN £MILLIONS) 35

LEISURE FACILITIES 36

TEES VALLEY TRANSPORT NETWORK 37

DECLINE IN WORKING-AGE POPULATION (AGED 16-64) IN MIDDLESBROUGH, 1995-2015 39

JOBS DENSITY, 2014 40

TRENDS IN ECONOMIC ACTIVITY, 2006-2016 41

GVA GROWTH 42

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GVA GROWTH PER SECTOR, MIDDLESBROUGH 43

MIDDLESBROUGH’S EMPLOYMENT BY BROAD SECTOR, 2016 44

MIDDLESBROUGH TOTAL BUSINESS FLOORSPACE, 2000-2012 46

PROJECTED UK GDP GROWTH 49

OFFICE DEALS MIDDLESBROUGH, 2005-2016 50

OFFICE FLOORSPACE TAKE-UP BY SIZE IN MIDDLESBROUGH (SQ M), 2005-2016 51

PROFILE OF OFFICE DEALS BY SIZE IN MIDDLESBROUGH, 2005-2016 52

NUMBER OF OFFICE TRANSACTIONS ON A SUBMARKET LEVEL IN MIDDLESBROUGH, 2005-2016 52

OFFICE FLOORSPACE TRANSACTED ACROSS SUB MARKET LEVEL, 2005-2016, (SQ M) 53

NUMBER OF OFFICE TRANSACTIONS BY LOCAL AUTHORITY, 2005-2016 54

OFFICE FLOORSPACE TRANSACTED ACROSS TEES VALLEY DURING 2005-2016, (SQ M) 55

OFFICE AVAILABILITY MIDDLESBROUGH 2016 56

OFFICE FLOOR SPACE AVAILABILITY BY STATUS AND SIZE IN MIDDLESBROUGH, SEPTEMBER 2016 57

OFFICE AVAILABILITY BY STATUS SUBMARKET LEVEL, MIDDLESBROUGH, SEPTEMBER 2016 57

OFFICE AVAILABILITY SUBMARKET LEVEL, MIDDLESBROUGH, (SQ M), SEPTEMBER 2016 58

OFFICE AVAILABILITY (SQ M), TEES VALLEY, SEPTEMBER 2016 59

OFFICE AVAILABILITY BY STATUS, TEES VALLEY (SQ M), SEPTEMBER 2016 60

INDUSTRIAL TRANSACTIONS MIDDLESBROUGH 2005-2016 61

NUMBER OF INDUSTRIAL DEALS BY SIZE AND YEAR IN MIDDLESBROUGH, 2005-2016 62

INDUSTRIAL FLOORSPACE TAKE-UP BY YEAR AND SIZE IN MIDDLESBROUGH, (SQ M) 2005-2016 63

NUMBER OF INDUSTRIAL DEALS ON A SUBMARKET LEVEL, MIDDLESBROUGH, 2005-2016 64

INDUSTRIAL FLOORSPACE TAKE-UP BY YEAR ON A SUBMARKET LEVEL, MIDDLESBROUGH, (SQ M) 2005-2016 64

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INDUSTRIAL DEALS IN TEES VALLEY BY YEAR AND LOCAL AUTHORITY, 2005-2016 65

INDUSTRIAL FLOORSPACE BY YEAR AND LOCAL AUTHORITY (SQ M), 2005-2016 66

INDUSTRIAL AVAILABILITY IN MIDDLESBROUGH, SEPTEMBER (2016) 67

INDUSTRIAL AVAILABILITY BY STATUS IN MIDDLESBROUGH (SQ M), SEPTEMBER 2016 68

AVAILABLE INDUSTRIAL FLOORSPACE BY SUBMARKET (SQ M), SEPTEMBER 2016 68

AVAILABLE INDUSTRIAL FLOORSPACE BY SUBMARKET, (SQ M), SEPTEMBER 2016 69

AVAILABLE INDUSTRIAL FLOORSPACE BY LOCAL AUTHORITY, (SQ M), SEPTEMBER 2016 70

AVAILABLE INDUSTRIAL FLOORSPACE BY STATUS AND LOCAL AUTHORITY, (SQ M), SEPTEMBER, 2016 70

TOTAL EMPLOYMENT, MIDDLESBROUGH, 1991-2034 85

TOTAL EMPLOYMENT – INDEXED, MIDDLESBROUGH AND UK, 1991-2034 86

FORECAST NET JOBS GROWTH IN MIDDLESBROUGH (2016 – 2034) 87

FORECASTS OF NET CHANGES IN EMPLOYMENT FLOORSPACE BY USE CLASS IN MIDDLESBROUGH, 2016-34 (OE) 89

NET JOBS GROWTH, TEES VALLEY 2016-2026 91

LABOUR SUPPLY SCENARIO – JOBS GROWTH, 2016-34 94

PAST EMPLOYMENT COMPLETIONS, MIDDLESBROUGH 2004/05 – 2013/14 95

COMPARISON OF EMPLOYMENT LAND SCENARIOS, 2016-34 96

EMPLOYMENT SITES OVERVIEW 100

PROFILE OF OCCUPATIONS OF WORKING-AGE RESIDENTS, MIDDLESBROUGH 2016 157

SKILLS PROFILE OF RESIDENTS, 2015 157

WORKPLACE-BASED MEDIAN WEEKLY EARNING OF FULL-TIME WORKERS158

COMPARISON OF RESIDENTS AND WORKPLACE-BASED EARNINGS, FULL-TIME WORKERS, 2015 158

EMPLOYMENT RATE, 2005/2006 – 2015/2016 159

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SELF-EMPLOYMENT 159

OFFICE FLOORSPACE, TEES VALLEY AUTHORITIES, 2000-2012 160

INDUSTRIAL FLOORSPACE, TEES VALLEY AUTHORITIES, 2000-2012 160

GROWTH IN ACTIVE ENTERPRISES, 2010-2016 162

LIST OF TABLES

FORECAST NET LAND REQUIREMENTS, MIDDLESBROUGH 2016-34 14

SITE ASSESSMENTS – SITES RECOMMENDED FOR EMPLOYMENT USES BY LOCATION 14

COMMUTING FLOWS TO MIDDLESBROUGH, 2011 28

COMMUTING SELF-CONTAINMENT, 2011 29

MIGRATION SELF-CONTAINMENT RATES (EXCLUDING LONG DISTANCE MOVES), 2011 31

AVERAGE GROSS MIGRATION FLOWS TO/FROM MIDDLESBROUGH PER ANNUM, 2011 31

ANALYSIS OF KEY MIGRATION FLOWS TO DESTINATIONS - FLOWS OVER 250 PERSONS, 2011 33

SIGNIFICANT MIGRATION FLOWS, 2014 33

ECONOMIC STRUCTURE BY BROAD SECTOR, 2016 45

BASELINE SCENARIO – NET FLOORSPACE AND LAND REQUIREMENTS, 2016-2034 90

GROWTH SCENARIO – NET JOBS GROWTH, MIDDLESBROUGH 2016-26 92

GROWTH SCENARIO – NET FLOORSPACE AND LAND REQUIREMENTS, 2016-2026 93

GROWTH SCENARIO – NET FLOORSPACE AND LAND REQUIREMENTS, 2016-2034 93

LABOUR SUPPLY SCENARIO – NET FLOORSPACE AND LAND REQUIREMENTS 2016-34 95

COMPLETIONS TREND SCENARIO – FORECAST NET LAND REQUIREMENTS 2016-34 96

FORECAST NET LAND REQUIREMENTS, MIDDLESBROUGH 2016-34 97

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SITE ASSESSMENT SUMMARY TABLE 148

IDENTIFIED NEED FOR EMPLOYMENT LAND, 2016-34 149

SITE ASSESSMENTS – VACANT AREA BY RECOMMENDED USE 149

SITE ASSESSMENTS – SITES RECOMMENDED FOR EMPLOYMENT USES BY LOCATION 150

FORECAST NET LAND REQUIREMENTS, MIDDLESBROUGH 2016-34 154

NUMBER AND CONCENTRATION OF BUSINESSES BY SECTOR, 2016 161

LIST OF INTERVIEWEES, SEPTEMBER 2016 163

LIST OF ATTENDEES AT STAKEHOLDER WORKSHOP, MARCH 2017 163

List of Appendices

APPENDIX A: ECONOMIC BASELINE CHARTS AND TABLES 157

APPENDIX B: STAKEHOLDER CONSULTEES 163

APPENDIX C: STAKEHOLDER QUESTIONNAIRE 164

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Quality Standards Control

The signatories below verify that this document has been prepared in accordance with our quality control requirements. These procedures do not affect the content and views expressed by the originator.

This document must only be treated as a draft unless it is has been signed by the Originators and approved by a Business or Associate Director.

DATE ORIGINATORS APPROVED August 2017 Aled Barcroft Steve McGavin Senior Planner Planning Director

Limitations This document has been prepared for the stated objective and should not be used for any other purpose without the prior written authority of GL Hearn; we accept no responsibility or liability for the consequences of this document being used for a purpose other than for which it was commissioned.

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1 EXECUTIVE SUMMARY

1.1 This Economic Development Needs Assessment (EDNA) has been prepared to form part of the evidence base to inform production of Middlesbrough’s Local Plan. It provides an assessment of Middlesbrough’s commercial property market which has also been informed through extensive stakeholder consultation, forecasts the Borough’s future economic growth and considers the implications this has on the Borough’s future employment land requirements. Finally, it has assessed the existing stock of employment sites within the Borough and has assessed the Borough’s employment land supply and considered the need to identify new sites for employment uses.

1.2 The EDNA will inform the preparation of the new Local Plan for Middlesbrough is currently underway. The Plan will cover the period from 2016 to 2034 and include housing, employment, retail, infrastructure and environmental matters. This study is intended to provide evidence to inform the future economic strategy and employment allocations and policies for the Local Plan.

1.3 The EDNA has been prepared in the context of National Planning Policy Framework (NPPF), which sets out Government policies for planning; and Planning Practice Guidance on Housing and Economic Development Needs Assessments and Housing and Economic Land Availability Assessments. The Planning Practice Guidance (PPG) sets out how studies such as this should be undertaken.

1.4 The EDNA takes account of the Tees Valley Combined Authority (TVCA) which was created in April 2016 to drive economic growth and job creation in the area. It combines the Tees Valley’s five local councils – Darlington, Hartlepool, Middlesbrough, Redcar & Cleveland, and Stockton-on-Tees – and Tees Valley Local Enterprise Partnership. In 2016 TVCA published the latest Strategic Economic Plan (SEP) which sets out the industrial strategy for Tees Valley for the period 2016 to 2026. The SEP sets out delivery aspirations for the creation of 25,000 additional jobs across Tees Valley and an additional growth in the Tees Valley economy of £2.8 billion by 2026.

1.5 The EDNA also takes account of local frameworks aimed to drive economic growth in Middlesbrough including the Mayor’s 2025 Vision which sets out strategic priorities for Middlesbrough, and the Middlesbrough Investment Prospectus published in 2017 which sets out the Council’s ambitions to transform Middlesbrough and its economy in the medium to long term and build on the Mayor’s 2025 Vision. The Prospectus describes how this will be achieved by diversifying Middlesbrough’s town centre economy by increasing the proportion of commercial, leisure, cultural and food and beverage floor space; the continuing redevelopment of Middlehaven to create a mixed-use education, leisure, sport and entertainment destination of national significance; and the development of Teesside Advanced Manufacturing Park, Hemlington Grange

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Business Park, Teesside Media and Innovation Village within the town centre, and expansion options for the Boho area.

The Functional Economic Market Area

1.6 Planning Practice Guidance (PPG) on Housing and Economic Development Needs Assessments sets out that the Functional Economic Market Area (FEMA) should be thought of in terms of the requirements of the market in terms of the location of premises, and the spatial factors used in analysing demand and supply.

1.7 The analysis considers commuting and migration patterns drawing on 2011 Census Data and the most up-to-date ONS Travel to Work Areas (TTWA). Both data sets indicate particularly strong linkages between Middlesbrough, Stockton-on-Tees and Redcar and Cleveland local authorities, providing clear evidence that these should be considered within the same FEMA.

1.8 The Middlesbrough and Stockton TTWA encompasses all three authorities in their entirety (as well as part of Hambleton), while Darlington and Hartlepool fall within their own TTWAs. However, detailed analysis of commuting and migration data reflects the strong links between all five Tees Valley authorities justifying the view that the area constitutes a single FEMA. The other datasets that we have reviewed also confirm this view:

• The area already have an established joint working partnership through the Tees Valley Unlimited LEP and the Tees Valley Combined Authority; • Middlesbrough is the main retail and leisure destination across the whole of the Tees Valley and exerts a significant influence across the area. Middlesbrough provides a range of key services upon which residents and businesses within the Tees Valley rely; • With the exception of the A1(M) which is a nationally significant route, transport infrastructure in the Tees Valley converges around Middlesbrough: This includes the A19, A66 and A171 and the railway network which has a number of branch lines stemming from Middlesbrough.

1.9 Considering the wide range of data as a whole suggests that the FEMA covers all of the Tees Valley authorities.

Economic Baseline

1.10 Middlesbrough has a working-age population (population aged 16-64) of 88,789. The working-age population has declined over the past 20 years by just under 3,000 people, and has seen year-on- year decline since 2011. Compared to the Tees Valley, the North East and England and Wales, Middlesbrough has a lower number of residents employed as managerial, professional, and technical occupations; and a greater proportion of lower skilled occupations such as process, plant and machine operatives and in elementary occupations. Middlesbrough’s occupational profile relates partly to that of residents’ qualification levels: In Middlesbrough 26.8% of residents aged 16-

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64 were qualified to Level 4 or above (degree level or equivalent skills). This is well below the rate across England of Wales of 36.6% and below the Tees Valley average of 30.4%.

1.11 The economic activity rate in Middlesbrough – currently 73% – is below the Tees Valley, North East and national averages. Following the recent recession, Middlesbrough’s economic activity rate declined more sharply than regional or national trends. This has since recovered, however Middlesbrough’s economic activity rate is still almost five percentage points lower than the average for England and Wales and the United Kingdom, although this difference continues to decrease.

1.12 Middlesbrough’s Gross Value Added (GVA) was just over £2.5 million in 2015. This is the second highest value of the Tees Valley authorities. The sectors which contribute most to Middlesbrough’s total GVA are the public service sector and the professional and other private services sector, which contribute 33% and 24% of Middlesbrough’s total GVA respectively.

Commercial Property Market

1.13 In total there are 68,570 in Middlesbrough in 2016. The sector with the largest representation in the Borough is Health (26%), followed by Wholesale and Retail Trade (15%), and Education (12%). In total the public sector accounts for slightly over 30,000 jobs in the Borough – equivalent to 44% of all jobs – which represents a relatively high proportion. This reflects the number of jobs at University of Teesside, Middlesbrough College and James Cook University Hospital – one of the biggest hospitals in Europe.

1.14 Within the Tees Valley, Middlesbrough has the second largest quantum of office floorspace and the fourth highest quantum of industrial floorspace in the sub-region. Since 2000 the total amount of business floorspace in Middlesbrough has remained fairly constant: There has been a modest fall from 1.36 million sq m in 2000 to 1.31 million sq m in 2012 – a loss of 5,000 sq m, equivalent to less than 1%. Office market activity has been focussed in Middlesbrough Town Centre with smaller, but still significant, activity in the Riverside Road area.

1.15 In terms of office provision, Middlesbrough’s office market is focussed in two key locations – the Town Centre and Middlehaven. These areas provide the strongest retail and leisure offer within the Tees Valley and contain key amenities and demand drivers including Teesside University, James Cook University Hospital, Middlesbrough College, and a key concentration of retail and leisure facilities. These facets provide clear unique opportunities to attract office uses – and in particular to build on the success of the Boho development.

1.16 While the quantitative assessment shows that there is an oversupply of office space in the Town Centre, the stakeholder engagement found wide agreement that the existing office stock in the Town Centre is of poor quality and dated stock which does not meet modern office requirements.

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The level of redundant office space in the Town Centre, particularly in prominent premises, impacts of the overall attractiveness of the Town Centre as a destination for new office occupiers.

1.17 Beyond the Town Centre there is a demand for office space to meet the needs of the digital and creative sector, particularly at Boho. However, there are a limited number of available office premises to meet this need.

1.18 Within the Tees Valley there is a greater quantum of available office space in Stockton-on-Tees – amounting to a total of 296,259 sq m – and this includes a much greater quantum of attractive accommodation for occupiers seeking modern office space.

1.19 Industrial activity in Middlesbrough was strongly impacted by the credit crunch in 2008 and subsequent recession. Middlesbrough saw a significant decrease in the industrial floorspace take- up in 2009 and 2010. However, since 2011 there has been a significant improvement in the industrial floorspace take-up, reaching pre-recession levels and even surpassing these in 2012. The majority of industrial activity for the period 2005-2016 was recorded in Riverside Park where 59% of the Borough’s industrial floorspace was transacted, followed by East Middlesbrough (25%).

1.20 Middlesbrough accounted for 13% of industrial floorspace transacted within the Tees Valley. In comparison, Stockton-on-Tees represented 42%, Darlington 19%, Hartlepool 18%, and Redcar and Cleveland 8%.

1.21 The available industrial floorspace in Middlesbrough is 44,728 sq m. In comparison, Stockton-on- Tees has the highest availability in Tees Valley with 180,553 sq m. The highest amount of available industrial floorspace in Middlesbrough is recorded in Riverside, followed by East Middlesbrough. The majority of the available volume (57%) is held in units (existing or otherwise) between 1,000- 10,000 sq m, and 98% of this is existing stock.

1.22 Though there is sufficient land for industrial uses, it is not of great quality. Premiums are low and there is very unlikely to be any speculative development and there is unlikely to be any new building without public subsidy.

Stakeholder Consultation

1.23 Consultation with key stakeholders has been undertaken in order to understand the attitudes and opinions of stakeholders towards the local development plan employment land allocations, responding to their needs, and ensure buy-in has been identified by Middlesbrough Council as a key part of the Economic Development Needs Assessment.

1.24

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1.25 Two methods of consultation were undertaken: • Semi-structured face to face and telephone interviews with key stakeholders. A list of all those interviewed is included in Appendix B. • A stakeholder workshop, which took place at Middlesbrough Borough Council offices on 22 March 2017. A list of all those who attended is included in Appendix B.

1.26 Amongst stakeholders the general consensus is that the Middlesbrough economy is fragile but that there is considerable potential to grow. A number of stakeholders feel that there is a lack of a strategic overview and that employment land over the plan period requires closer collaboration between Middlesbrough and the adjoining local authorities. Middlesbrough would appear best placed to lead this given its role as the retail, commercial and industrial heart of the Tees Valley.

1.27 However, the stakeholders’ consultation revealed that there are more attractive locations elsewhere in Tees Valley for occupiers seeking modern office space. Stockton-on-Tees was cited as being likely to be more attractive to new occupiers principally due to higher quality modern office premises which offer free parking provision.

1.28 A number of stakeholders feel that there is an opportunity to grow the advanced manufacturing and clean manufacturing sector. There is a consensus amongst stakeholders that the manufacturing sector is still relatively strong and there remains a skilled workforce. Beyond the Town Centre the feeling is that there needs to be a bigger push to build on the digital and creative sector office space needs in the BOHO quarter.

Assessment of Future Employment Land Requirements

1.29 The assessment of future employment land requirements considers a range of approaches as set out in the PPG. Four scenarios have been developed:

• Scenario 1 – Labour Demand Baseline Scenario • Scenario 2 – Labour Demand Growth Scenario • Scenario 3 – Labour Supply Scenario • Scenario 4 – Completions Trend Scenario

1.30 The labour demand approach considers the future level of jobs growth in Middlesbrough and identifies the quantum of land required to meet it. Two labour demand scenarios have been developed:

• Scenario 1 – The baseline labour demand scenario is based on econometric forecasts supplied by Oxford Economics (OE), dated September 2016; • Scenario 2 – The growth scenario is based on the jobs growth target identified in the Tees Valley Strategic Economic Plan produced by the Tees Valley Combined Authority.

1.31 The labour supply scenario (Scenario 3) considers a demographically derived assessment of future employment needs based on the amount of employment land required in order to meet the future

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labour supply – i.e. the resident workforce. This aligns with the objectively assessed housing need figure identified in the Strategic Housing Market Assessment (SHMA).

1.32 Scenario 4 is based on projections of Middlesbrough Borough Council data on past completions of B-class employment floorspace / land.

1.33 The four scenarios identify a range of employment land requirements for Middlesbrough over the period 2016-34 ranging from 11.9-67.0ha.

Comparison of Employment Land Scenarios, 2016-34

70

60

50

40

30

20

10 Land Requirement (ha) Land Requirement 0

-10 Scenario 1 Scenario 2 Scenario 3 Scenario 4 Baseline LEP Growth Labour Completions Scenario Scenario Supply Trend Total B-Class Uses 11.9 67.0 25.1 24.9 B1a/b: Office 4 23.4 10.7 6.7 B1c/B2: Industrial -0.7 11.5 1.2 10.4 B8: Warehouse/ Distribution 8.6 31.9 13.2 7.8

1.34 Overall, the analysis suggests a total demand for employment land in Middlesbrough would be in- line with the labour supply scenario and completions trend scenarios (Scenarios 3 and 4), which both show a need for around 25 ha of employment land. The labour supply scenario has the benefit of aligning with Middlesbrough’s housing growth, helping to ensure alignment between housing and jobs growth in the Borough. However, the past completions trend suggests the 1.2 ha of industrial land shown in the Labour Supply Scenario may constrain future growth. Therefore we would recommend providing a higher figure for industrial uses (around 10.4ha) reflecting the past completions trends and to provide additional flexibility for this type of use. This results in a total need for around 34.3 ha of employment land over the period 2016-34.

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Forecast Net Land Requirements, Middlesbrough 2016-34 Hectares B1a/b: Office 10.7 B1c/B2: Industrial 10.4 B8: Warehouse/ Distribution 13.2 Total B-Class Uses 34.3

Employment Land Supply

1.35 A range of sites across the Borough have been assessed for their suitability to support employment uses – that is Use Classes B1, B2, and B8. This section sets out the findings of the site assessments for sites with development opportunity – in other words, the sites which may potentially form part of the employment land supply. The employment sites in the Borough are divided across four main employment areas:

• Town Centre • Middlehaven • Riverside Park • East Middlesbrough

1.36 In addition there are a number of sites outside of the existing employment areas which have been identified as potential locations for employment development. These are generally out of town sites with existing non-employment uses or are allocated for employment uses in the Housing Local Plan.

1.37 Cumulatively, there is a total of 44.5 ha across the assessed sites which is considered suitable for employment uses. The greatest number of vacant and suitable sites is in Riverside Park – 8 sites constituting 55% of the Borough’s vacant and suitable employment land; there are 6 sites in East Middlesbrough constituting 20% of the Borough’s supply; there are 6 small sites in Middlesbrough Centre constituting 7% of the Borough’s supply. There is also the site at Hemlington Grange which at 7.9 ha constitutes 18% of the total supply.

Site Assessments – Sites Recommended for Employment Uses by Location Location No. of Suitable Sites Sum of Area (ha) Area % East Middlesbrough 6 8.9 20% Hemlington Grange 1 7.9 18% Riverside Park 8 24.6 55% Middlesbrough Centre 6 3.0 7% Grand Total 21 44.5 100%

1.38 There is currently an oversupply of office space in Middlesbrough Town Centre with a large quantum of poor quality and dated stock which is not suitable for modern business needs, and not

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attractive to occupiers. As a result there is a large amount of vacant office space in prominent locations which further dampens demand for office uses in the Town Centre. This poor quality office space is unlikely to contribute to meeting Middlesbrough’s future office requirements and should not be counted towards the supply. We recommend that this redundant office premises are redeveloped for alternative (non-employment) uses.

1.39 Middlesbrough’s office market is focussed in two key locations – the Town Centre and Middlehaven. These areas have key strengths that make them potentially attractive locations for office development: Middlesbrough Town Centre provides a strong retail and leisure offer, and is the major destination for these activities within the Tees Valley. Middlehaven provides similar drivers of the leisure economy with Middlesbrough Football Club and the proposed Snowdome to be located in the area. The leisure and retail offer provides a unique selling point compared to elsewhere in the Tees Valley which should be leveraged to promote office demand. The development of new office space will need to be tied into wider retail/leisure redevelopments. A key aspect is improving connectivity between the Town Centre and Middlehaven areas to provide a cohesive retail / leisure / office destination. The redevelopment of the Albert Road Corridor will be key to this.

1.40 Within these areas there is 43.4 ha of land identified as suitable for mixed use development. The majority of this is at Middlehaven, with a smaller amount at Gurney Street Triangle in the Town Centre. While these sites are not recommended to be safeguarded specifically for employment uses, we would expect these sites to deliver a quantum of office space through mixed use redevelopment.

1.41 Taking these factors into account, there is a sufficient supply of land to meet the Borough’s office demand in quantitative terms.

1.42 In terms of industrial and warehouse/distribution provision, the majority of the supply (24.6 ha) is at Riverside Park. The Former Ironmasters Site provides 12 ha of suitable land, with the remainder comprising smaller (less than 3 ha) infill sites within the area. Beyond Riverside Park, there is 4.9 ha at sites within the existing industrial area in East Middlesbrough, and some smaller sites within Cannon Park Industrial Estate. Additionally, there is 7.9 ha of employment land allocated at Hemlington Grange.

1.43 In terms of quality, the majority of stakeholders interviewed generally feel that there is sufficient land for industrial uses but that it not of great quality. There is very unlikely to be any speculative development and there is unlikely to be any new building without public subsidy. In addition, sites at the existing industrial areas often require remediation and have the associated costs making them a less attractive proposition for redevelopment.

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1.44 There is a shortage of small to medium size units in the Borough and a number of stakeholders identified that there is a demand for smaller, traditional workshop units and workspace of between 500 and 5,000 sq ft. Cannon Park was cited a number of times as providing the type, size, and quality of space being sought.

1.45 The advanced manufacturing sector is seen as a growth sector being able to draw from the existing manufacturing skills base within the area as well as drawing upon the strengths of Teesside University and Middlesbrough College. Although demand for new industrial space in this sector is relatively fragile, it is reliant on the growth of existing local firms and start-up enterprises. There is demand for small workshop spaces to support the development of small businesses in this sector – similar to the Boho scheme for advanced manufacturing.

1.46 Part of Middlesbrough’s advanced manufacturing offer relates to the growth of the offshore energy sector and the opportunities to benefit from the port area. There is increasing demand for locations with river frontage and the Port is seen as major demand driver. The Council should support development which benefits from and adds to this, and conversely should resist uses which do not.

1.47 For B8 uses, while the A19 provides a good demand driver for warehouse/distribution uses, it is considered that sites closer to the A1 are more attractive to meet the sub-regional / regional B8 demand, and therefore demand in Middlesbrough is for smaller scale premises meeting the needs from local manufacturers and final mile distribution uses. There is a limited demand for large scale B8 premises, with demand more focussed on smaller B8 sites of around 2-3 ha with good access to the A19 and/or the A66.

1.48 In addition to the smaller infill sites in Middlesbrough’s existing employment areas, there is a demand for a larger site within the Borough. Sites of this larger size provide a number of benefits – being able to support larger units and provide a greater flexibility to meet occupier requirements. Additionally, larger sites provide the sufficient critical mass to create a commercially attractive and deliverable new employment area – whether this forms within or an extension to an existing employment site or at a new location creating a new business park within the Borough. It is important to provide a sufficient choice – in terms of location, type and size of plot / premises – and currently the Borough’s supply fails to provide this being too reliant on infill sites in Riverside Park. The allocation at Hemlington Grange will provide for this need and we recommend the Council continue support for a considerable quantum of employment land at this location.

Conclusions and Recommendations

1.49 Drawing upon the analysis set out above, the following considerations are recommended to support office development in Middlesbrough:

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• The office market is focussed in the Town Centre and Middlehaven areas and should build on the strengths of these areas – particularly building on the areas’ retail, leisure, and transport links; • The office strategy should be closely aligned with the retail, leisure, and regeneration strategies for the areas; • Office development will mostly be delivered as part of mixed use schemes in these areas. There is limited potential for standalone office development to come forward; • Support the redevelopment of the large redundant office buildings in the Town Centre to alternative (non-employment) uses; • New office space should focus on meeting the needs of the professional services, digital, technology, and creative sectors. This should build on the success of the Boho development. • Car parking provision is a key issue cited by occupiers choosing premises elsewhere in the Tees Valley, and should be a key consideration for new developments; • Improve connectivity between the Town Centre and Middlehaven areas; • Improved rail connectivity.

1.50 The following considerations are recommended to support industrial development in Middlesbrough:

• There is demand for small to medium size units – traditional workshop units and workspace of between 500 and 5,000 sq ft; • The advanced manufacturing sector is seen as a growth sector being able to draw from the existing manufacturing skills base and from the University and College; • There is demand for small workshop spaces to support the development of small businesses in this sector – similar to the Boho scheme for advanced manufacturing; • There is increasing demand for locations with river frontage. The Council should support development relating to the Port and resist uses in the vicinity which do not; • There is a limited demand for large scale B8 premises, with demand more focussed on smaller B8 sites of around 2-3 ha with good access to the A19 and/or the A66; • Support for a considerable quantum of employment land at Hemlington Grange.

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2 INTRODUCTION

2.1 GL Hearn has been commissioned by Middlesbrough Borough Council to undertake an Economic Development Needs Assessment to inform production of Middlesbrough’s Local Plan. The purposes of the Study are to:

• Review the characteristics and performance of Middlesbrough’s economy; • Assess commercial market trends and dynamics in the office and industrial sectors; • Assess the supply of land capable of accommodating new B-class employment development; • Consider the implications of economic dynamics in adjoining areas on the study area; • Assesses the future employment land need in Middlesbrough based on economic forecasting as well as policy-on factors; • Bring the analysis together to set out the need for additional employment land provision.

2.2 The Study has been prepared in the context of National Planning Policy Framework (NPPF), which sets out Government policies for planning; and Planning Practice Guidance on Housing and Economic Development Needs Assessments and Housing and Economic Land Availability Assessments. The Planning Practice Guidance (PPG) sets out how studies such as this should be undertaken.

Policy Review

National Planning Policy Framework

2.3 The National Planning Policy Framework (NPPF) was published in March 2012 with the aim of making planning more streamlined and accessible. The NPPF set out the Government’s planning policies for England and how these are expected to be applied.

2.4 The purpose of the NPPF and the wider planning system is to contribute towards sustainable development. The policies in the NPPF set out the government’s view on what sustainable development means in practice. There are three core dimensions to achieve this:

• an economic role – contributing to building a strong, responsive and competitive economy, by ensuring that sufficient land of the right type is available in the right places and at the right time to support growth and innovation; and by identifying and coordinating development requirements, including the provision of infrastructure; • a social role – supporting strong, vibrant and healthy communities, by providing the supply of housing required to meet the needs of present and future generations; and by creating a high quality built environment, with accessible local services that reflect the community’s needs and support its health, social and cultural well-being; and • an environmental role – contributing to protecting and enhancing our natural, built and historic environment; and, as part of this, helping to improve biodiversity, use natural resources prudently, minimise waste and pollution, and mitigate and adapt to climate change including moving to a low carbon economy.

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2.5 The NPPF requires local authorities to set a clear economic vision and strategy based on an understanding of the existing business needs, likely changes in the market and any barriers to investment. This understanding should be achieved through working with the local business community, neighbouring local authorities and the Local Enterprise Partnership (LEP).

2.6 Paragraphs 18 to 22 of the NPPF set out the Government is committed to ensuring that the planning system does everything it can to support sustainable economic growth, and that significant weight should be placed on the need to support economic growth through the planning system. It sets out a requirement for local planning authorities to plan proactively to meet the development needs of businesses and support an economy fit for the 21st Century.

2.7 In drawing up local plans, the NPPF requires local authorities to:

• Set out a clear economic vision and strategy; • Set criteria or identify strategic sites for local and inward investment; • Support existing business sectors and where possible identify and plan for new or emerging sectors likely to locate in the area. Policies should be flexible enough to accommodate needs not anticipated in the plan; • Plan positively for the location, promotion and expansion of clusters or networks of knowledge driven, creative or high technology industries; • Identify priority areas for economic regeneration, infrastructure provision and environmental enhancement; and • Facilitate flexible working practices

2.8 Paragraph 22 in the NPPF states that planning policies should avoid the long term protection of sites allocated for employment use where there is no reasonable prospect of a site being used for that purpose. Where there is no reasonable prospect of a site being used for the allocated employment use, applications for alternative uses of land or buildings should be treated on their merits having regard to market signals and the relative need for different land uses to support sustainable local communities.

2.9 Paragraph 160 and 161 set out that local planning authorities should have a clear understanding of business needs within the economic markets operating in and across their area. To do this they should work with Local Enterprise Partnerships (LEPs), the business community, county and neighbouring authorities to understand business needs, likely changes in the market and barriers to investment. They should use their evidence base to assess the land and floorspace for economic development, including the quantitative and qualitative needs for all foreseeable types of economic activity and the existing and future supply of land.

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Planning Practice Guidance

2.10 Planning Practice Guidance (PPG) was published by Government in March 2014 and is maintained as an online resource. This includes Guidance on Housing and Economic Development Needs Assessments.

2.11 This Guidance sets out that an assessment should be undertaken to identify the future quantity of land and floorspace required for economic development uses, including both the quantitative and qualitative needs for new development; to provide a breakdown of this in terms of quality and location; and to provide an indication of gaps in the current land supply.

2.12 The assessment of need is intended to be realistic, taking account of the particular nature of that area and exploring future scenarios only where these could realistically be expected to occur. The assessment is expected to consider dynamics across the Functional Economic Market Area (FEMA).

2.13 In understanding the current market in relation to economic and main town centre uses, the Guidance outlines that plan makers should liaise closely with the business community to understand their current and potential future requirements and should take account of:

• The recent pattern of employment land supply and loss to other uses (based on planning applications); • Market intelligence, including from local data and discussions with developers and property agents, recent surveys of business needs or engagement with business and economic forums; • Market signals, such as levels and changes in rental values, and differentials between land values in different uses; • The existing stock of employment land, data on take-up of sites, and public information on employment land and premises required and any evidence of over-supply and/or evidence of market failure; • Information held by other public sector bodies and utilities in relation to infrastructure constraints; and • The locational and premises requirements of particular types of business.

2.14 The Guidance states that employment land should be analysed through a simple typology of employment land by market segment and by sub-areas, where there are distinct property market areas within authorities. When examining the recent take-up of employment land, consideration should be made to projections (based on past trends) and forecasts (based on future scenarios) and identify occurrences where sites have been developed for specialist economic uses. Analysing supply and demand will allow Councils to identify whether there is a mismatch between quantitative and qualitative supply of and demand for employment sites.

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2.15 The Guidance sets out that an assessment of future needs should be based on current and robust data. Emerging sectors that are well suited to the area being covered by the analysis should be encouraged where possible. Key evidence to consider includes:

• sectorial and employment forecasts and projections (labour demand); • demographically derived assessments of future employment needs (labour supply techniques); • analyses based on the past take-up of employment land and property and/or future property market requirements; • consultation with relevant organisations, studies of business trends, and monitoring of business, economic and employment statistics.

2.16 Evidence of need and supply then need to be brought together. The Guidance outlines that the available stock of land should be compared with the particular requirements of the area so that ‘gaps’ in local employment land provision can be identified. The increasing diversity of employment generating uses requires different policy responses and an appropriate variety of employment sites.

2.17 National policy recognises that functional economies transcend local authority administrative boundaries. Responsibilities for coordinating economic development activities now rest with the Local Enterprise Partnerships.

Middlesbrough Local Plan

2.18 The current development plan for Middlesbrough is referred to as the Local Plan. Previous to this, the spatial planning framework was referred to as the Local Development Framework (LDF). However, the UK government has recently changed the terminology referring to LDFs via the Town and Country (Local Planning) (England) Regulations (2012). Thus, the suite of documents previously referred to as the LDF will now be referred to as the Local Plan.

2.19 The Local Plan is a series of Development Plan Documents setting policies for the use of land in Middlesbrough. This includes a Core Strategy (adopted 2008), Regeneration Development Plan Document (DPD) (adopted 2009), Housing Local Plan (adopted 2014), and the Tees Valley Joint Minerals and Waste DPDs.

2.20 The new Local Plan for Middlesbrough is currently under preparation. This will cover the period from 2016 to 2034 and include housing, employment, retail, infrastructure and environmental matters. This study is intended to provide evidence to inform the future economic strategy and employment allocations and policies for the Local Plan.

Middlesbrough Housing Local Plan (2014)

2.21 This document was adopted in 2014 and reviews the housing elements of the Core Strategy and Regeneration DPD. The Housing Local Plan notes that the housing strategy in these documents

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has not been successful and thus needs to be reviewed to provide updated guidance. This document provides an up-to-date reflection of the housing market post-2008 and change in national planning policy since 2010.

2.22 This document and needs to be read in conjunction with the existing Core Strategy and Regeneration DPD. Policies within this replace housing policies within the aforementioned two documents.

2.23 The Housing Local Plan supersedes the policies relating to Greater Middlehaven in the Regeneration DPD and as such, these are no longer ‘active’ policies.

Core Strategy (2008)

2.24 This document sets out the principal elements of the planning framework for Middlesbrough. This comprises of a spatial vision, strategic objectives for the area; a spatial strategy; and core policies.

2.25 The Core Strategy notes that there is a need to create local employment opportunities in areas of high unemployment and deprivation. Ideally, these should be part of mixed-use developments. The Strategy also highlights a number of more specific sites that are targeted for employment uses.

2.26 An important employment issue highlighted in the Core Strategy is the loss of the traditional industrial estates. These areas often perform an important role in the local economy providing relatively cheap premises which can particularly be utilised by start-up and local companies.

2.27 The Core Strategy sets out a number of overarching issues to be addressed with regards to economic development and employment provision:

• Reversing out-migration; • Improving the urban environment and public realm of Middlesbrough; • Continuing to support Middlesbrough’s diversifying economy by enhancing the town centre and improve the quality of its employment, land and premises portfolio; • Retention of university graduates to retain a skilled workforce, and foster future growth; • Improving and diversification of the housing stock of the area to support population growth; • Providing a high level of connectivity within Middlesbrough and beyond, to help facilitate the successful delivery of major developments and initiatives.

2.28 The Core Strategy also makes a number of policy approaches with regards to employment and economic development policy including:

• The focus for accommodating new employment development will be in the north of the town which has traditionally been the economic centre of Middlesbrough and will continue to do so. • The sites in the north of the town include: Riverside Industrial Estate, East Middlesbrough Business Action Zone, Middlesbrough town centre and Greater Middlehaven.

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• The need for diversifying the area’s economy is recognised and the Strategy provides a clear focus for investing in the digital technologies. ‘Digital City’ is the economic development initiative for the Tees Valley which aims to attract and develop these skills, led by the University of Teesside and other key stakeholders.

• The Core Strategy outlines the provision of employment land for development which is set at 85 ha for General Employment Land and 100 ha for Regional Brownfield Mixed Use Land for the period of 2004-2023. • Greater Middlehaven is to be regenerated and developed as a major mixed-use regeneration scheme. Additionally, Greater Hemlington will complement Middlehaven by providing housing and employment development by creating a sustainable urban extension. Middlesbrough town centre is the major cultural and service employment centre in the Tees Valley. As such, it is identified as being able to develop leisure, cultural, office and retail development. • The loss or reduction in current land for employment uses is to be resisted.

Regeneration Development Plan Document (2009)

2.29 The Regeneration DPD is the second part of the Local Plan. However, and as discussed in the following section, many of the policies within this document have now been superseded by the Housing Local Plan (2014) which provides a more recent review of the Council’s plans for the area to reflect changes in the economy and national planning policy.

Tees Valley: ‘Opportunity Unlimited’

2.30 Lord Heseltine was appointed by the UK Government in 2015 to undertake an independent review into the regeneration of the Tees Valley. He has made a number of recommendations in his report ‘Tees Valley: Opportunity Unlimited’ which was published in June 2016. Of the recommendations made, the following are considered to be the most pertinent:

• South Tees Development Corporation is established “as quickly as possible”; • TVCA can work use its past to its advantage, secure the interconnectivity of transport infrastructure and add a range of new industries; • Tees Valley should work with the Homes and Community Agency to identify suitable sites for Starter Home development and low-cost ownership; • The Combined Authority should make the most of the £3 billion Home Building Fund.

Tees Valley Combined Authority

2.31 Tees Valley Combined Authority (TVCA) is a body created in April 2016 designed to drive economic growth and job creation in the area. It combines the Tees Valley’s five local councils – Darlington, Hartlepool, Middlesbrough, Redcar & Cleveland, and Stockton-on-Tees – and Tees Valley Local Enterprise Partnership. This aims to combine the partnership working between the public and private sector to make key decisions on key strategies relating to economic development, transport, infrastructure and skills.

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2.32 This new statutory body provides the certainty of structure and accountability that is necessary for the devolution of significant amounts of money and levels of decision making. The devolution of power from the UK Government to TVCA was also accompanied by the establishment of a Tees Valley Investment Fund to drive economic growth.

2.33 TVCA lists the key sectors which are vital to the area and for future economic growth. These are: Professional and Business Services, Renewable Energy, Oil and Gas, Logistics, Healthcare, Digital, Chemicals and Process, Automotive and Aerospace, and Advanced Manufacturing and Engineering.

Tees Valley Strategic Economic Plan

2.34 In response to Lord Heseltine’s review of economic growth ‘No Stone Unturned’, the UK Government asked LEPs to develop multi-year Strategic Economic Plans (SEPs) to grow their local economies. These were to be used to bid for resources from the Single Local Growth Fund.

2.35 In 2016 TVCA published the latest SEP which set out the industrial strategy for Tees Valley for the period 2016 to 2026. The SEP sets out delivery aspirations for the creation of 25,000 additional jobs across Tees Valley and an additional growth in the Tees Valley economy of £2.8 billion by 2026.

2.36 The SEP identifies the Tees Valley’s world class expertise and critical mass in the chemicals, energy, health innovation and advanced manufacturing sectors. This aligns with the four prime capabilities identified by the Northern Powerhouse. By 2040, the SEP sets out that Tees Valley will contribute 10% of the total GVA growth target for the Northern Powerhouse.

2.37 The SEP sets out six strategic priorities:

• Business Growth: Further increase jobs and business density through targeted support to create and attract new companies and to grow businesses and sectors with high growth potential; • Research, Development, Innovation & Energy: Further enhance productivity in all core sectors through the commercialisation of knowledge; • Education, Employment & Skills: Ensure a labour market which meets the needs of local business and supports the lifetime opportunities of all our residents; • Place: Promote the Tees Valley as the preferred location in the UK for energy intensive indigenous firms and Foreign Direct Investment and create the conditions necessary to attract businesses and individuals with a focus on vibrant town centres; • Culture: Change the external perceptions of Tees Valley through the arts, cultural and leisure offer, create places that attract and retain businesses and business leaders, and make the area an attractive place to live, work and visit; and • Transport & Infrastructure: Facilitate local, regional, national and international road, rail and broadband connectivity through collaborative investment in physical infrastructure.

2.38 The SEP also identifies challenges to growth: the need for better connections; a workforce that is fit for purpose; and a supportive business environment.

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The Mayor’s 2025 Vision

2.39 The Mayor has set out his ‘Vision for Middlesbrough 2025’ which sets out strategic priorities for Middlesbrough under the headings ‘A Fairer Middlesbrough’, ‘A Safer Middlesbrough’, and ‘A Stronger Middlesbrough’. This includes the following priorities with regard to economic growth:

• Join with our partners across the city region to create a network of intensive, targeted support to get people into quality jobs. • Progress the Middlehaven development, restoring the area as the centre of commerce in the Tees Valley and encouraging innovative architecture, unique leisure opportunities and quality commercial spaces. • Delivering the Tees Valley Metro and other infrastructure improvements to transform connectivity within the Tees Valley and beyond, including a new Tees Crossing and a direct Middlesbrough to London train service from an improved local station.

Middlesbrough Investment Prospectus

2.40 The Middlesbrough Investment Prospectus was published in 2017 and sets out the Council’s ambitions to transform Middlesbrough and its economy in the medium to long term and build on the Mayor’s 2025 Vision.

2.41 Over the last decade, the Council has brought in more than £500 million of investment, including Middlesbrough College, Teesside University’s Campus Heart and Middlesbrough Sports Village; as well as growing creative and digital sectors and the development of the Boho Zone.

2.42 The prospectus aims to attract city-scale investment that will grow Middlesbrough’s economy and that of the wider Tees Valley City Region. This will be achieved by diversifying Middlesbrough’s town centre economy by increasing the proportion of commercial, leisure, cultural and food and beverage floor space. A targeted programme of housebuilding and business creation will aim to create 4,250 new jobs, including and 750 supply chain jobs, 1.7m sq ft of business accommodation, and the delivery of 5,500 new homes.

2.43 The Prospectus describes Middlesbrough establishing itself as the key primary retail and employment centre at the heart of the Tees Valley. The ambition is to deliver high quality, modern office space in the town centre, to incorporate a higher proportion of knowledge-based professional services.

2.44 The Prospectus sets out the vision for the continuing redevelopment of Middlehaven to create a mixed-use education, leisure, sport and entertainment destination of national significance. This includes proposals to deliver the snow centre and to expand the offer of the Middlesbrough College campus.

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2.45 The Prospectus also sets out aspirations to develop Teesside Advanced Manufacturing Park, Hemlington Grange Business Park, Teesside Media and Innovation Village within the town centre, and expansion options for the Boho area.

Middlesbrough Employment Land Study (2007)

2.46 The previous Employment Land Study was commissioned in 2007 by Middlesbrough Borough Council and completed by WA Fairhurst & Partners. The key objective of this study was to provide a key part of the LDF evidence base particularly with regard to the development of the following policies:

• A policy to safeguard allocated employment land for employment uses; and • A policy which would release part of the allocated employment land at Hemlington Grange for residential use, in order to stimulate development.

2.47 This study provided a number of conclusions and recommendations of which the most pertinent are listed below:

• The effective employment land available for Middlesbrough was approximately 44 hectares; • The quality and sustainability of these sites ranged with some having greater quality than others; • 51 hectares of employment land will be needed over the 17 year period of the LDF to meet projected demand; • There appeared to be a shortfall in the number of small sites available for B1, B2 and B8 uses;

• An over-supply of between 7 and 17 hectares was identified over the period of the LDF. However a small change in development rates could alter this to create a shortfall; and • The existing allocations of employment land should be safeguarded from alternative development to guard against potential under-supply.

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3 THE FUNCTIONAL ECONOMIC MARKET AREA

3.1 The purpose of this section is to assess the relevant Functional Economic Market Area (FEMA) within which Middlesbrough is located.

3.2 Planning Practice Guidance (PPG) on Housing and Economic Development Needs Assessments sets out what FEMAs are and provides guidance on how these should be defined. The PPG indicates that the Functional Economic Market Area should be considered in the following way:

‘The geography of commercial property markets should be thought of in terms of the requirements of the market in terms of the location of premises, and the spatial factors used in analysing demand and supply- often referred to as the functional economic market area. Factors for consideration in defining an areas’ FEMA include:

• Extent of Any Local Enterprise Partnership (LEP) within the area; • Travel to work areas; • Housing market areas; • Flow of goods, services and information within the local economy; • Service market for consumers; • Administrative Area; • Catchment areas of facilities providing cultural and social well-being; • Transport network.’

3.3 These factors are considered in this section in relation to identifying the FEMA. It should be noted not all of the key indicators are readily available and for some indicators there is no appropriate source of data (nor is it a requirement to review each and every factor). For example, the flow of goods and services is difficult to specifically quantify on a robust basis, given available datasets. For that reason we have not included this factor within our FEMA review.

3.4 There is no standard approach or data source which can be used to define a FEMA. The approach intended is to look at and consider these issues, and assess what could be considered locally appropriate.

Commuting flows

3.5 Middlesbrough is one of the key employment centres within Tees Valley. Of all the local authorities in Tees Valley, it has the second highest workplace population (at 55,558) – i.e. the number of people in work – behind Stockton-on-Tees (74,355). The third ranked authority is Darlington with 37, 919.

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Workplace Population of Local Authorities, 2011

80,000

70,000 74,350 60,000 50,000 55,550

40,000 45,150 30,000 37,900 29,150

Workplace Population Workplace 20,000 10,000 0

Source: Census, 2011

3.6 Table 3 analyses the commuting flows into Middlesbrough. This shows that 46% of commuters reside the Borough itself. Beyond this, the strongest inflows come from Stockton-on-Tees (19% of the workforce) and Redcar and Cleveland (19% of the workforce). These authorities each have a flow of around 10,000 persons per day commuting to Middlesbrough. There are then smaller scale flows (1,300-1,800) from Hambleton, County Durham, Hartlepool and Darlington.

Commuting Flows to Middlesbrough, 2011 Work in Middlesbrough Cumulative % of Origin Number % Workforce drawn Workforce from the authority Middlesbrough 25,474 46% 46% Stockton-on-Tees 10,779 19% 65% Redcar and 10,569 19% 84% Cleveland Hambleton 1,817 3% 88% County Durham 1,656 3% 91% Hartlepool 1,591 3% 93% Darlington 1,300 2% 96%

Source: Census 2011

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3.7 Looking at commuting self-containment rates at the local authority level shows that Middlesbrough has a resident based self-containment rate of 55%, while its workplace based self-containment rate is lower at 46% due to large numbers of people commuting in from surrounding areas.

3.8 In the other Tees Valley authorities the residents based self-containment rate ranges from 53% in Redcar and Cleveland up to 65% in Hartlepool. Workplace based self-containment ranges from 59% in Darlington to 71% in Hartlepool.

Commuting Self-Containment, 2011 Live and Residents Workplace Live in the Work in the work in the based Self- based Self- area area area containment containment Middlesbrough 46,354 55,558 25,474 55% 46% Stockton-on- 73,987 74,355 44,337 60% 60% Tees Redcar and 47,269 37,919 25,106 53% 66% Cleveland Darlington 41,881 45,150 26,671 64% 59% Hartlepool 32,210 29,156 20,777 65% 71%

Source: Census 2011

3.9 In considering commuting patterns, we have drawn from the ONS Travel to Work Areas (TTWA), produced in late 2015 which themselves draw on data from the 20112 Census. These are the only official and nationally consistent definition of Travel to Work Areas.

3.10 In terms of self-containment rates the notional target for a TTWA (the target ONS use) is that at least 75% of the area’s resident workforce work in the area and at least 75% of the people who work in the area also live in the area in most instances. The area must also have had a working population of at least 3,500. However, for areas where the working population in excess of 25,000, self-containment rates as low as 66.6% were accepted.

3.11 The ONS TTWAs were an attempt to identify self-contained labour market areas in which the majority of commuting occurs within the boundary of the area. It should however be recognised that in practice it is not possible to divide the UK into entirely separate labour market areas as commuting patterns are too diffuse.

3.12 The TTWAs were developed as approximations to self-contained labour markets, i.e. areas where most people both live and work. As such they are based on a statistical analysis rather than administrative boundaries. The areas were produced by analysing commuting flows from the 2011 Census.

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3.13 As illustrated in Figure 3, there are three TTWAs covering Tees Valley:

• Middlesbrough and Stockton TTWA – covering the authorities of Middlesbrough, Stockton-on- Tees, Redcar and Cleveland in their entirety, as well as the north eastern part of Hambleton; • Darlington TTWA – covering the authority of Darlington in its entirety and small parts of Richmondshire and County Durham; • Hartlepool TTWA – covering the authority of Hartlepool in its entirety and a small part of County Durham.

Travel to Work Areas, 2011

Source: Census 2011

Migration Flows and patterns

3.14 Migration flows reflect the population’s movement between areas and thus it is a key factor in considering the geography of housing and economic markets. In order to understand the functional inter-relationships across local authority boundaries, Census data on internal migration flows between the relevant local authority areas has been analysed.

3.15 Our analysis firstly looks at the self-containment rate of movements to and from each local authority. Although the term long distance is not defined in the guidance, we have defined this as any move to/from the area outside of North East and Yorkshire and the Humber.

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3.16 For each local authority, we have calculated both the percentage of those already living in the authority who moved elsewhere within that authority (outward self-containment), and the percentage of those who moved to the authority who were already residents (inward self- containment). Excluding long distance moves, Middlesbrough has a self-containment of 73% for both inward and outward migration.

Migration Self-Containment Rates (Excluding Long Distance Moves), 2011 % of those moving from the % of those moving to the

Borough Borough

(Outward) (Inward) Middlesbrough 73% 73% Stockton-on-Tees 75% 76% Redcar and Cleveland 80% 76% Hartlepool 85% 85% Darlington 76% 76%

Source: Census 2011

3.17 Table 6 sets out gross migration flows to/from Middlesbrough. This shows the authorities with the largest gross migration flows and gross flows expressed per 1,000 head of combined population.

Average Gross Migration Flows To/From Middlesbrough Per Annum, 2011 Gross Migration Combined Local Authority Flow To/From Gross per ‘000 Head Population Middlesbrough Stockton-on-Tees 2,186 330,022 6.6 Redcar and Cleveland 1,775 273,589 6.5 County Durham 468 651,654 0.7 Newcastle upon Tyne 335 418,589 0.8 Darlington 303 243,976 1.2 Hambleton 267 227,552 1.2 Hartlepool 251 230,440 1.1

Source: Census 2011

3.18 Middlesbrough’s largest flows are with Stockton-on-Tees and Redcar and Cleveland. These authorities have the highest gross flows in real terms (2,186 and 1,775 moves per annum) as well as in terms of per head of population (6.6 and 6.5 moves per 1,000). The gross migration flows are shown in Figure 4.

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Gross Migration Flows, 2011

Source: ONS, 2011

3.19 We have used the Census data to analyse the hierarchy of flows from different local authorities. This is shown in Table 7 overleaf. Middlesbrough is the primary destination of out-migrants from Stockton-on-Tees and Redcar and Cleveland, and sees considerable flows from County Durham. Similarly, Stockton-on-Tees and Redcar and Cleveland are the primary destinations for out- migration from Middlesbrough.

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Analysis of Key Migration Flows to Destinations - Flows over 250 Persons, 2011 Origin Destination 1st 2nd 3rd 4th 5th 6th

Middlesbrough Stockton-on- Redcar County Durham Tees (935) and (284) Cleveland (908)

Stockton-on-Tees Middlesbrough Redcar County Durham Darlington Hartlepool Hambleton (1,251) and (440) (352) (264) (257) Cleveland (510)

Redcar and Middlesbrough Stockton- Cleveland (867) on-Tees (386)

Darlington County Stockton- Richmondshire Durham (657) on-Tees (320) (340)

Hartlepool County Durham (354)

Source: Census, 2011

3.20 ONS identifies what it considers to be the statistically significant migration flows to and from each area. Table 8 shows the significant migration flows into and out from each local authority area for 2014. This shows that Middlesbrough has significant migration (both inward and outward) with Stockton-on-Tees and Redcar and Cleveland, while both Stockton-on-Tees and Redcar and Cleveland show significant inward and outward migration with Middlesbrough.

Significant Migration Flows, 2014

Inward Migration Outward Migration Middlesbrough Stockton-on-Tees Stockton-on-Tees Redcar and Cleveland Redcar and Cleveland Stockton-on-Tees Middlesbrough Middlesbrough Redcar and Cleveland Hartlepool Darlington Hambleton County Durham Newcastle upon Tyne Redcar and Cleveland Middlesbrough Middlesbrough Darlington Stockton-on-Tees County Durham County Durham Richmondshire Hartlepool Stockton-on-Tees Stockton-on-Tees County Durham County Durham Source: ONS

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Local enterprise partnership areas

3.21 Figure 5 shows the extent of the LEP administrative geographies. The Tees Valley Unlimited LEP covers the local authorities of Middlesbrough, Stockton-on-Tees, Redcar and Cleveland, Darlington and Hartlepool.

3.22 Other neighbouring LEPs include York, North Yorkshire and East Riding, which covers Craven, Hambleton, Harrogate, Richmondshire, Ryedale, Scarborough, Selby, York, and East Riding; and North East LEP, which covers the local authority areas of County Durham, Gateshead, Newcastle upon Tyne, North Tyneside, Northumberland, South Tyneside and Sunderland.

Local Enterprise Partnership (LEP) Areas

Source: LEPs

3.23 Additionally, the Tees Valley Combined Authority (TVCA), the statutory body for Tees Valley, has been established in 2016. TVCA unites the five local authorities- Middlesbrough, Stockton-on-Tees, Redcar and Cleveland, Darlington and Hartlepool, with the purpose to

‘Make decisions on key strategies relating to economic development, transport, infrastructure and skills. It creates a single voice for the area on these key matters, providing greater power and resources for the Tees Valley area.’

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3.24 The TCVA has integrated the Tees Valley LEP as a key part of its functioning, and it also aims to build on the economic foundations set up by the LEP:

‘The overall aim of Tees Valley Combined Authority and the Tees Valley Local Enterprise Partnership is to maximise the amount of investment in Tees Valley, to achieve our economic growth ambitions and build on our strengths making sure we take advantage of any opportunity to create more jobs and success for the area.’

Service Market for Consumers

3.25 Figure 6 shows the retail destinations in the North East by expenditure (£millions, 2011 prices). This shows that the primary retail destination in Tees Valley is Middlesbrough (£430 million). The other retail destination shown in Tees Valley is Darlington (£360 million).

3.26 In the wider surrounding area, the main retail destination is Newcastle upon Tyne (£1,240 million), followed by Gateshead (£750 million).

Retail Centres in Tees Valley (Expenditure in £millions)

Source: CACI Retail Footprint (2011)

Catchment areas of facilities providing cultural and social well-being

3.27 Figure 7 plots the key leisure facilities in Tees Valley. Shown are bowling alleys, cinemas, leisure centres and roller skating rinks.

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3.28 The map shows a generally higher density of leisure facilities around Middlesbrough and Stockton- on-Tees. There is also a smaller concentration of leisure centres in Hartlepool.

Leisure Facilities

Source: GL Hearn

Transport Network

3.29 Figure 8 shows the major road and rail transportation network across the North East. This clearly shows two distinct areas of concentrated transport links – one covering Tyne and Wear, and one covering Tees Valley. The Tees Valley transportation network provides A-Road and local rail coverage linking all five of the Tees Valley authorities.

3.30 The A1(M) is the major road transport route through the region and passes through Darlington. Additionally, there are a number of A-Roads which surround Tees Valley and connect it to the surrounding areas, including the A66, A19 and A689.

3.31 In addition Durham Tees Valley Airport in Darlington provides connections to destinations such as Amsterdam, Aberdeen and Bournemouth.

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Tees Valley Transport Network

Source: GL Hearn

Conclusions on the FEMA

3.32 The analysis considers commuting and migration patterns drawing on 2011 Census Data and the most up-to-date ONS Travel to Work Areas. Both data sets indicate particularly strong linkages between Middlesbrough, Stockton-on-Tees and Redcar and Cleveland local authorities, providing clear evidence that these should be considered within the same FEMA.

3.33 The Middlesbrough and Stockton TTWA encompasses all three authorities in their entirety (as well as part of Hambleton), while Darlington and Hartlepool fall within their own TTWAs. However, detailed analysis of commuting and migration data reflects the strong links between all five Tees Valley authorities justifying the view that the area constitutes a single FEMA.

3.34 The other datasets that we have reviewed also confirm this view:

• The area already have an established joint working partnership through the Tees Valley Unlimited LEP and the Tees Valley Combined Authority; • Middlesbrough is the main retail and leisure destination across the whole of the Tees Valley and exerts a significant influence across the area. Middlesbrough provides a range of key services upon which residents and businesses within the Tees Valley rely;

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• With the exception of the A1(M) which is a nationally significant route, transport infrastructure in the Tees Valley converges around Middlesbrough: This includes the A19, A66 and A171 and the railway network which has a number of branch lines stemming from Middlesbrough.

3.35 Considering the wide range of data as a whole suggests that the FEMA covers all of the Tees Valley authorities. The remainder of this EDNA has been prepared with this FEMA in mind and, in accordance with the PPG, the assessment of Middlesbrough’s commercial property market dynamics and future employment needs have been assessed in relation to, and within the context of, this FEMA.

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4 ECONOMIC BASELINE

4.1 Middlesbrough grew rapidly as a centre for heavy industry in the 19th Century. During this period, steel and shipping building industries expanded along the river. However, like other cities of a similar nature during this time, these industries decline in the latter half of the 20th Century causing many social and economic problems. For example, the Middlesbrough Dock closes after 140 years of active service during this period leaving large vacant sites and disused buildings – especially around the riverside.

4.2 The Tees Valley economy is now growing strongly and developing into a modern, diverse and resilient modern-day economy. Tees Valley is home to key manufacturing industries and large world leading employers.

Labour Market

Working Age Population

4.3 Middlesbrough has a working-age population (population aged 16-64) of 88,789. The working-age population has declined over the past 20 years by just under 3,000 people, and has seen year-on- year decline since 2011. The proportion of people of working age (63.6%) is slightly higher than the Tees Valley (62.3%) and the UK (63.3%) averages.

Decline in Working-Age Population (Aged 16-64) in Middlesbrough, 1995-2015

94,000

92,000 91,782

90,000

88,000 88,789

86,000

84,000

82,000 Working Age Population: Aged 16-24 Aged Population: Age Working

80,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: ONS Population Estimates

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4.4 ONS Jobs Density Statistics measure the relationship between workforce jobs in a local authority and the resident population aged 16-64. This is a measure of the density of employment in an area. In 2014, Middlesbrough had a jobs density of 0.75. This was above the Tees Valley and North East averages (both 0.70); but below the average for England and Wales which stood at 0.82.

Jobs Density, 2014

0.84 0.82 0.82

0.80

0.78

0.76 0.75

0.74

0.72 0.70 0.70 Jobs Desnity Desnity Jobs 0.70

0.68

0.66

0.64 Middlesbrough Tees Valley England and Wales North East

Source: ONS Jobs Density

4.5 In terms of occupations1, compared to the Tees Valley, the North East and England and Wales, Middlesbrough has a lower number of residents employed as managers, directors and senior officials; professional occupations; associate professionals and tech occupations; and administrative and secretarial occupations. A greater proportion of Middlesbrough’s population work in lower skilled occupations such as process, plant and machine operatives and in elementary occupations.

4.6 Middlesbrough’s occupational profile relates partly to that of residents’ qualification levels 2 . In Middlesbrough 26.8% of residents aged 16-64 were qualified to Level 4 or above (degree level or equivalent skills). This is well below the rate across England of Wales of 36.6% and below the Tees Valley average of 30.4%. Conversely, Middlesbrough has a higher proportion of residents with no formal qualifications: 11.6% in Middlesbrough compared to 10.3% across Tees Valley and 8.5% across England and Wales.

1 See Figure 52 in Appendix A 2 See Figure 53 in Appendix A

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4.7 The Borough’s occupation and qualification profile is reflected in the earnings of full-time workers with jobs in Middlesbrough in 2010 and 20153. In 2015 earnings of those working in Middlesbrough were lower than those of the Tees Valley as a whole, England and Wales and the United Kingdom. However, it was slightly higher than the combined North East. Between 2010 and 2015 earnings in Middlesbrough increased by £60.90 (13.8%) whilst nationally earnings increased by £29.20 (5.85%). However, the weekly earnings in Middlesbrough still fall short of the United Kingdom average by a difference of £28.20.

4.8 In Middlesbrough, there is a significant difference between the workplace-based earnings and residence-based earnings. This suggests significant in-commuting of those in higher paid jobs. This trend is reflected across the whole Tees Valley area and North East England, but is the reverse is seen across England and Wales.

Economic Activity

4.9 Figure 11 shows trends in economic activity. The Economic Activity Rate describes the proportion of residents aged 16-64 who are in employment or in search of work. The economic activity rate in Middlesbrough – currently 73% – is below the Tees Valley, North East and national averages. The economic activity rate declined to 66.7% which was during the recessionary period. This has since recovered to the current rate which has been the peak of economic activity in the past ten years. However, Middlesbrough’s economic activity rate is still almost five percentage points lower than the average for England and Wales and the United Kingdom.

Trends in Economic Activity, 2006-2016

80 78 76 74 72 Middlesbrough 70 Tees Valley 68 66 North East 64 England and Wales Economically % Economically Active 62 United Kingdom 60

Source: ONS Annual Population Survey

3 See Figure 54 in Appendix A

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4.10 In Middlesbrough the employment rate4 dropped nearly five percentage points between 2009/2010 (61.1%) and 2010/2011 (56.3%)5. It has now recovered to 65.8% in the latest data for 2015/2016. However, this is still below the employment rate for the Tees Valley (69.0%) and the UK Average (73.7%). Despite this, Middlesbrough has continued to make ground on the Tees Valley in the last few years with the differences in employment rate continuing to decrease.

4.11 Turning to self-employment, the Annual Population survey data indicates that around 5.9% of Middlesbrough residents aged 16-64 are self-employed6. This compares to a national average of 10.3%; The Tees Valley mean of 7.0% and the North East average of 7.0%. Since the recession, there has been some modest growth in self-employment. However, Middlesbrough was the only area, compared to the regional and national levels, which experienced a sharp decline in self- employment levels: between 2009-2010 (4.8%) and 2010-2011 (3.7%). Since 2008-2009, the UK as a whole has experienced a year-on-year increase in self-employment levels.

Economic Structure

4.12 Figure 12 shows the growth in Gross Value Added (GVA)7 for each for the Tees Valley authorities. This shows that in 2015 Middlesbrough’s GVA was just over £2.5 million. This is the second highest value of the Tees Valley authorities after Stockton-on-Tees (just over £3.5 million). Middlesbrough’s GVA saw strong growth in the period 2001-2005 but saw a decline following the credit crunch in 2008. Since then GVA has plateaued but has seen more modest growth in recent years.

GVA Growth

£4,000

£3,500

£3,000

£2,500 Stockton-on-Tees Middlesbrough £2,000 Darlington £1,500 Redcar & Cleveland £1,000 Hartlepool £millions (2010 prices) £millions (2010 £500

£0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Experian

4 The proportion of people aged 16-64 who are in employment. 5 See Figure 56 in Appendix A 6 See Figure 57 in Appendix A 7 GVA is the measure of the value of goods and services produced in an area, industry or sector of an economy, in economics.

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4.13 Figure 13 shows Middlesbrough’s growth in GVA divided per sector. This shows the overall GVA provided by each sector, and highlights each sector’s contribution to Middlesbrough’s economy in terms of GVA. This shows that the sectors which contribute most to Middlesbrough’s total GVA are the public service sector and the professional and other private services sector. These contribute 33% and 24% of Middlesbrough’s total GVA respectively.

GVA Growth Per Sector, Middlesbrough

£3,000

£2,500

£2,000

£1,500

£1,000 £millions (2013 prices) £millions (2013

£500

£0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Agriculture and Mining Manufacturing Electricity, Gas and Water Construction Wholesale and Retail Trade Transport, Warehouse and Postal Accommodation and Food Sevices Media and IT Professional and Scientific Services Business Support Services Public Administration and Defence Education Health Creative and Recreation Other

Source: OE

4.14 Figure 14 shows Middlesbrough’s employment in 2016 broken down by broad sector. In total there are 68,570 in Middlesbrough in 2016. The sector with the largest representation in the Borough is Health (17,920 jobs), followed by Wholesale and Retail Trade (10,200 jobs), and Education (8,400 jobs). In total the public sector accounts for slightly over 30,000 jobs in the Borough – equivalent to 44% of all jobs.

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Middlesbrough’s Employment by Broad Sector, 2016

Total Employment - 4,000 8,000 12,000 16,000 20,000

Agriculture and Mining - Manufacturing 2,620 Electricity, Gas and Water 380 Construction 3,940 Wholesale and Retail Trade 10,200 Transport, Warehouse and Postal 1,890 Accommodation and Food Sevices 3,620 Media and IT 1,560 Professional and Scientific Services 6,750 Business Support Services 4,560 Public Administration and Defence 3,720 Education 8,400 Health 17,920 Creative and Recreation 1,780 Other 1,240

Source: OE

4.15 Table 9 shows Middlesbrough’s economic structure, broken down by broad sector, and compared to the UK. This shows the percentage of jobs in each sector in Middlesbrough and the UK. It also shows Middlesbrough’s location quotient compared against the UK. The location quotient is a measure of the relative strength of a sector compared to the UK. A location quotient of 1.00 means that Middlesbrough has the same proportion of jobs in that sector as is the national average. A location quotient of more than 1.00 means there is a higher proportion of jobs in that sector – i.e. a relative strength compared to the national rate. A location quotient of less than 1.00 means that there is a smaller proportion of jobs in Middlesbrough compared to the national rate.

4.16 The location quotient analysis highlights Middlesbrough’s high proportion of jobs in the public sector. Over a quarter of jobs in the Borough are in the Health sector – this is more than double the national rate for this sector. Middlesbrough also has higher proportions of jobs in Education (12% in Middlesbrough vs 9% nationally) and Public Administration and Defence (5% in Middlesbrough vs 4% nationally). This reflects the number of jobs at University of Teesside, Middlesbrough College and James Cook University Hospital – one of the biggest hospitals in Europe.

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4.17 Middlesbrough also has a slightly higher representation in Wholesale and retail trade than the national average. All other sectors show a lower representation in Middlesbrough than seen across the UK as a whole.

Economic Structure by Broad Sector, 2016 Location Middlesbrough UK Quotient Agriculture and Mining 0% 1% 0.00 Manufacturing 4% 8% 0.49 Electricity, Gas and Water 1% 1% 0.56 Construction 6% 7% 0.87 Wholesale and Retail Trade 15% 15% 1.01 Transport, Warehouse and Postal 3% 5% 0.60 Accommodation and Food Services 5% 7% 0.79 Media and IT 2% 4% 0.56 Professional and Scientific Services 10% 14% 0.72 Business Support Services 7% 9% 0.77 Public Administration and Defence 5% 4% 1.27 Education 12% 9% 1.42 Health 26% 12% 2.11 Creative and Recreation 3% 3% 0.89 Other 2% 3% 0.65 Total 100% 100% 1.00

Source: OE

Business Base

4.18 Figure 15 shows the change in business floorspace in Middlesbrough, according to data from the Valuations Office Agency (VOA), over the period 2000 to 2012. Overall, the total amount of business floorspace in Middlesbrough has remained fairly constant during this period. There has been a modest fall from 1.36 million sq m in 2000 to 1.31 million sq m in 2012 – a loss of 5,000 sq m, equivalent to less than 1%.

4.19 Over this period however Middlesbrough has seen a change in the structure of its business floorspace. The Borough has seen a loss of 77,000 sq m of industrial space (including both factories/workshops and warehouse units) and a loss of 25,000 sq m of office space. Conversely,

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the Borough has seen an increase of 14,000 sq m of retail floorspace and 41,000 sq m of ‘other’ business floorspace8.

Middlesbrough Total Business Floorspace, 2000-2012

700

600

500

400 Retail Office 300 Industrial

Thousand sq m Thousand 200 Other

100

0

Source: VOA

4.20 Within the Tees Valley, Middlesbrough has the second largest quantum of office floorspace and the fourth highest quantum of industrial floorspace in the sub-region9. Stockton-on-Tees has the largest quantum of both office and industrial floorspace in the sub-region.

4.21 The latest ONS UK Business Counts data (2016) identifies 3,120 enterprises in Middlesbrough, with a total of 4,170 local units (recognising that some business may have more than one business location). The evidence suggests a relative concentration of businesses in the following sectors:

• Professional, Scientific and technical; • Education; • Mining, quarrying and utilities; and • Manufacturing10.

4.22 The ONS UK Business Counts data conveys that there has been growth in the number of trading businesses in Middlesbrough between 2010 and 201611. The number of enterprises increased from 2,340 in 2010 to 3,120 in 2016 – an increase of 780 businesses (33%). Middlesbrough has experienced a similar growth pattern over the last six years to that seen regionally and nationally highlighting the influence of the macro-economic conditions on this metric.

8 ‘Other’ business floorspace includes a wide range of uses including non-residential institutions, assembly and leisure uses. 9 See Figure 58 in Appendix A 10 See Table 22 in Appendix A 11 See Figure 60 in Appendix A

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5 COMMERCIAL PROPERTY MARKET ASSESSMENT

5.1 This section provides an assessment of the office and industrial property market in the FEMA. This assessment has been undertaken using a variety of sources including take-up and availability data from Estate Gazette’s EGi database and CoStar commercial property database, a review of the latest commercial property literature and stakeholder/property agents’ consultation.

5.2 The Office for Budget Responsibility (OBR) published its Economic and Fiscal Outlook in March 2016. In the short time since the November 2015 forecast, economic developments have disappointed and the outlook for the economy and the public finances looks materially weaker. It should be noted that the March 2016 forecasts predated the Brexit vote.

5.3 Commodity prices, stock markets, and bond yields have fallen sharply. The oil price assumption is 36% lower in dollar terms than OBR’s previous forecast (published November 2015) and equity prices are almost 8% lower. The economy is now shown to have lost momentum through 2015, despite the boost from the fall in the oil price since late 2014. Nationally, GDP growth in 2015 (full year estimate) is now estimated at 2.2%, while GDP Growth in 2016 is forecast at 2.1%.

5.4 Whole economy prices (as measured by growth in the GDP deflator) have also been much weaker than expected. As a result, nominal GDP growth in the third and fourth quarters of 2015 was significantly lower than expected: just 0.4%, against ORB’s forecast of 1.8%. This was due to net trade and private investment being weaker than expected.

5.5 With real GDP only growing modestly at the end of last year, but employment and total hours growing strongly, productivity fell sharply. Output per hour fell by 1.2% in the fourth quarter. That fall has reversed almost all the productivity growth seen in the first three quarters of 2015.

5.6 OBR’s latest forecasts also saw them revise down their estimates of potential productivity growth, which in turn reduces the sustainable level of GDP and the forecast for GDP growth over the next five years. The outlook for productivity growth is both the most important and the most uncertain judgement in most economic forecasts. The pick-up in productivity growth in mid-2015 seemed to corroborate the expectation that the post-crisis drag on productivity growth would ease as the financial system returned to full health. However, the fall in output in the fourth quarter of 2015 has resulted in the OBR revising down the estimate of productivity growth so that it remains somewhat below its pre-crisis average.

5.7 OBR estimates that the UK economy was running about 0.3% below potential in the final quarter of 2015. Taken together with lower potential output growth, that has led to the real GDP growth downwards. OBR expects growth to average 2.1% a year over the next five years, down from 2.4% in their previous forecast.

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Potential Impacts of Brexit

5.8 Since the decision was made in June 2016 to leave the European Union, the economic outlook is currently very uncertain. The various forecasting advisory firms such as Oxford Economics, Cambridge Econometrics and Experian are re-evaluating the impacts that Brexit may have on the UK’s economy in the upcoming years.

5.9 Potential impacts will become clearer as we get a better understanding of the terms of departing from the European Union (EU) and the renegotiated trade agreements. However, Cambridge Econometrics notes that the UK is now beginning to feel the short-term ramifications of the Brexit Vote. The UK can continue to expect dampened growth as business investment and household consumption weaken.

5.10 Research from Oxford Economics provides 9 different scenarios based on alternative assumptions about the trade relationship that could be eventually be negotiated between the UK and the EU. These are modelled on different trade agreements between the EU and other nations, for example, trade agreements based on the Norway option, Swiss option or Turkish option. Furthermore, Brexit will present the UK government with new-found policy freedom over a number of different areas. The impact on regulatory, migration and fiscal policy choices will also have to be taken into account and the impact those will have on economic conditions.

5.11 Any new trade barriers risk curbing growth: if the UK no longer has access to the EU Single Market the UK’s attractiveness for Foreign Direct Investment may also fall. This could be exacerbated by the fact that the free movement of capital is also likely to be more restricted. Consequently, the UK’s sectoral competitiveness and productivity may also suffer. Generally, all of the models considered show that volumes of trade will be lower after Brexit than if the UK were to remain in the EU. Export Demand from the EU is likely to fall, however it is possible that demand will increase from outside the EU. However, it is not expected to compensate for the reduction in EU Demand (Cambridge Econometrics, august 2016).

5.12 Of the scenarios modelled by Oxford Economics, the best case scenario (or the most optimistic) sees a 0.1% decline in GDP in real terms compared to a baseline of continued EU membership. The worst case scenario (most pessimistic) is associated with a decline of almost 4% in GDP in real terms compared to a baseline of continued EU membership.

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Projected UK GDP Growth

Source: Oxford Economics / Haver Analytics

5.13 Amongst all the forecast scenarios there were a number of common findings:

• Whichever trade settlement is adopted and whichever scenario comes to pass, there will be a long-term structural impact on the UK and EU economies; • Across the board, all scenarios show a degree of trade reduction in which UK trade volumes fall as a share of GDP. This reflects the increased cost of trade between the UK and the EU, which encourages firms in both the UK and the rest of the EU towards domestically-produced goods; • The boost to net trade from a weaker pound is expected to be more than offset by a slowdown in consumer spending growth and a decline in business investment; • Employment levels fall as cautious firms cut back on hiring. Employment levels are 1.3% below base case by the end of 2022; and • The Post-referendum forecast shows a strong increase in GDP growth after 2019. This assumes aggressive action from the Bank of England’s Monetary Policy Committee and fiscal support aided by the scrapping of the current goal of a budget surplus by 2019-20 – an approach supported by Theresa May.

5.14 There will be impacts to a number of sectors including:

• In general, the industrial sector (excluding extraction) is at greatest risk; whilst manufacturing and construction are the two sectors expecting to face the largest impact of Brexit; and • Among the service sectors, the financial services are most at risk.

5.15 Taking a global perspective there are a number of pertinent points:

• Overall, in terms of economic performance, impact of the changes will be stronger for the UK than for the rest of the world; • A modest slowdown in the Eurozone is forecasted with growth reducing to 1.6% in 2017 and 1.5% in 2018; and • Growth outside of the EU is broadly unaffected.

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Middlesbrough Office Market

Office Deals

5.16 This section provides an in-depth assessment of the office market in Middlesbrough. With regards to the quantitative data it should be noted that although these are the most comprehensive lists available, it has not been possible to include all transactions are included. GL Hearn has used Geographic Information System (GIS) to accurately present the analysis at a local authority level.

5.17 Figure 17 provides an overview of the location of take-up activity over the period 2005 – 2016 in Middlesbrough. For this period, there were a total of 206 deals in Middlesbrough, an average of 17 per year, covering a known floor space of 178,408 sq m.

Office Deals Middlesbrough, 2005-2016

Source: GL Hearn Analysis of EGi & CoStar Data

5.18 In Middlesbrough, the highest volume of office floorspace take-up in a single year was recorded in 2005 with 43,182 sq m transacted. This was followed by 39,480 sq m in 2016. This reflects two substantial sales in 2005 of office units over 10,000 sq m, one of which occurred again in 2016.

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Office Floorspace Take-up by Size in Middlesbrough (sq m), 2005-2016

50,000

45,000 10,000+ 40,000 sqm 35,000 1,000- 10,000 sqm 30,000 500-1,000 25,000 sqm

20,000 185-500 sqm

Floorspace (sq m) (sq Floorspace 15,000 Less than 10,000 185 sqm

5,000

0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: GL Hearn Analysis of EGi & CoStar Data

5.19 The majority of transactions in Middlesbrough (53%) involved trading smaller office spaces, the majority being smaller than 185 sq m (Figure 19). Since 2012, there has been a slight growth in the larger office spaces (185-500 sq m), and since 2014 there was an increase in offices larger than 1,000 sq m.

5.20 There has been a slight change in the average size of office floorspace take up in Middlesbrough. For the 2005-2016 period the average office space in Middlesbrough was 892 sq m while for the 2010-2016 the average office size was 860 sq m. Figure 18 profiles take-up over time and by floorspace in each size band.

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Profile of Office Deals by Size in Middlesbrough, 2005-2016

45

40

35

30 10,000+ sqm 25 1,000-10,000 20 sqm 500-1,000 sqm

Number of Deals of Number 15 185-500 sqm

10 Less than 185 sqm 5

0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: GL Hearn Analysis of EGi & CoStar Data

5.21 Figure 20 illustrates the distribution of office take-up by submarket12. The highest amount of office deals within the period 2005-2016 was recorded in Middlesbrough Town Centre (112 in total). This has been followed by 24 deals in Riverside Park and 20 in East Middlesbrough.

Number of office transactions on a submarket level in Middlesbrough, 2005-2016

120 2016 100 2015 80 2014 60 2013 2012 40 2011 NUmber of Deals of NUmber 20 2010 0 2009 2008 Other 2007 2006 Middlehaven Town Centre Town Riverside Park 2005 East Middlesbrough

Source: GL Hearn Analysis of EGi & CoStar Data

12 Submarket analysis has been undertaken with the submarkets defined according to Local Plan (2014).

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5.22 The highest volume of office floorspace transacted within the submarket level was in Town Centre (130, 299 sq m), followed by Riverside Park (15,324 sq m) and Middlehaven (15,821 sq m). This is illustrated in figure 21.

Office Floorspace transacted across sub market level, 2005-2016, (sq m)

140,000

120,000 2016 2015 100,000 2014 80,000 2013 60,000 2012 40,000 2011 Floorspace (sq.m) Floorspace 20,000 2010 2009 0 2008

Other 2007 2006 Middlehaven Town Centre Town

Riverside Park 2005

East Middlesbrough Source: GL Hearn Analysis of EGi & CoStar Data

5.23 Figure 22 illustrates the number of deals in each authority within Tees Valley over the last 10 years period to September 2016. In total 1089 deals have been recorded for 2005- 2016 for Tees Valley (Middlesbrough, Stockton-on-Tees, Redcar and Cleveland, Darlington and Hartlepool). Middlesbrough has 206 deals recorded during that period of time. In comparison, Stockton-on-Tees recorded 439, followed by Darlington (319). The smallest activity occurred in Redcar and Cleveland where only 53 transactions have been recorded.

5.24 An average of 17 deals per year was recorded in Middlesbrough, while the total Tees Valley average was 91. In the last five years (2012-2016) the average for Middlesbrough was 25 deals per year, while for Tees Valley 142 per year. The strongest performance for Middlesbrough could be observed in 2015 with 42 deals carried out. This was followed by 28 deals in 2013 and 22 transactions in 2014, indicating that the recent years the activity in office space has increased substantially.

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Number of office transactions by local authority, 2005-2016 500 450 400 2016 350 2015 300 2014 250 2013 200 2012

Number of Deals of Number 150 2011 100 2010 50 2009 0 2008 2007 2006 Hartlepool Darlington 2005 Middlesbrough Stockton-on-Tees Redcar and Cleveland

Source: GL Hearn Analysis of EGi & CoStar Data

5.25 Between 2005 and 2016 more than 928,389 sq m of office floorspace was transacted in Tees Valley, the average per year being 74,540 sq m per annum. Figure 23 provides a detailed breakdown of the total amount of office transactions in each local authority in Tees Valley. For Middlesbrough, the total amount of office floorspace transacted for the period was 178,408 sq m, the average per annum being 14,635 sq m. In comparison, for the same period, Darlington recorded a total of 325,580 sq m and Stockton-on- Tees 313,149 sq m office floorspace transacted. The smallest volumes of floorspace transacted were in Hartlepool (33,363 sq m) and Redcar and Cleveland (77,543 sq m).

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Office Floorspace transacted across Tees Valley during 2005-2016, (sq m)

350,000

300,000 2016 250,000 2015

200,000 2014 2013 150,000 2012 100,000 2011 Floorspace (sq m) (sq Floorspace

50,000 2010 2009 0 2008 2007 2006 Hartlepool Darlington 2005 Middlesbrough Stockton-on-Tees

Redcar and Cleveland Source: GL Hearn Analysis of EGi & CoStar Data

5.26 The largest single transaction in Middlesbrough (with a recorded floorspace) over the last 10 years or so was 73-75 Albert Road (15,707 sq m) at a price of £16.5 million in 2005. This transaction occurred again in 2016. In comparison, the largest single transaction in Tees Valley was in Darlington – Lingfield Point, (130,063 sq m) for £22 million in 2013.

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Office Availability

5.27 Figure 24 illustrates the location of available office space across the study area as recorded in EGi and CoStar databases in September 2016. This indicates new builds, under renovation, proposed units that are currently in design process and existing office spaces. Currently there is a total of 390,207 sq m available floorspace in Tees Valley. For Middlesbrough, this is 43,289 sq m.

Office Availability Middlesbrough 2016

Source: GL Hearn Analysis of EGi & CoStar Data

5.28 Figure 25 shows the availability of office floorspace categorized by size and status in Middlesbrough. The majority of the available volume (63%) is in units between 1,000-10,000 sq m and is currently existing, followed by units 500-1,000 sq m (20%). Small units below 185 sq m represent 6% of the total available office floorspace in Middlesbrough. There are currently no available units above 10,000 sq m in Middlesbrough. The majority of the available office units are existing and new, with no units recorded as proposed or under renovation.

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Office Floor space availability by status and size in Middlesbrough, September 2016

30,000

25,000 Under Renovation 20,000 Proposed

15,000 Unknown

10,000 New

Floorspace (sq m) (sq Floorspace 5,000 Existing

0 sqm sqm sqm 500-1,000 10,000+ sqm 185-500 sqm 1,000-10,000 Less than 185 Source: GL Hearn Analysis of EGi & CoStar Data

5.29 Figure 26 shows that the highest amount of available office floor space by submarket in Middlesbrough. The majority is located within the Town Centre (24,600 sq m), followed by Riverside Park (8,927 sq m).

Office availability by status Submarket level, Middlesbrough, September 2016 30,000

25,000 Under Renovation 20,000 Under Construction 15,000 Proposed

10,000 Unknown Floorspace (sq m) (sq Floorspace 5,000 New

Existing 0 Other East Middlehaven Town Centre Town Riverside Park Middlesbrough Source: GL Hearn Analysis of EGi & CoStar Data

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5.30 On a submarket level in Middlesbrough, the distribution of office availability is illustrated in Figure 27, and it indicates the highest amount of available offices between 1,000 -10,000 sq m is within the Town Centre (21, 381 sq m), followed by Riverside Park (4,911 sq m).

Office Availability Submarket level, Middlesbrough, (sq m), September 2016

30,000

25,000

20,000 10,000+ sqm

15,000 1,000-10,000 sqm 500-1,000 sqm 10,000 185-500 sqm Floorspace (sq m) (sq Floorspace 5,000 Less than 185 0 sqm Other East Middlehaven Town Centre Riverside Park Riverside Middlesbrough Source: GL Hearn Analysis of EGi & CoStar Data

5.31 While the quantitative assessment shows that there is an oversupply of office space in the Town Centre, the stakeholder engagement (see Section 5) found wide agreement that the existing office stock in the Town Centre is of poor quality and dated stock which does not meet modern office requirements. The 19 storey Centre North East office building on Albert Road and two large office buildings in the Gurney street Triangle (see Section 7) are prominent examples of this in the Town Centre which have remained vacant for a considerable time. The level of redundant office space in the Town Centre, particularly in such prominent premises, impacts of the overall attractiveness of the Town Centre as a destination for new office occupiers.

5.32 Beyond the Town Centre there is a demand for office space to meet the needs of the digital and creative sector, particularly at Boho. However, there are a limited number of available office premises to meet this need.

5.33 Within the Tees Valley there is a greater quantum of available office space in Stockton-on-Tees – amounting to a total of 296,259 sq m – and this includes a much greater quantum of attractive accommodation for occupiers seeking modern office space. The general consensus of the stakeholders consulted was that Stockton-on-Tees was a more attractive location for new occupiers.

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5.34 The largest office units marketed in Stockton-on-Tees are the North Shore Development, which is currently existing and vacant, while the Princes Wharf unit is in design status, and the total combined office space they will provide is 171, 498 sq m.

Office Availability (sq m), Tees Valley, September 2016 350,000

300,000 10,000+ sqm 250,000 1,000-10,000 200,000 sqm 1,000-10,000 150,000 sqm 500-1,000 sqm 100,000 185-500 sqm Floorspace (sq m) (sq Floorspace 50,000

0 Tees Hartlepool Darlington Cleveland Redcar and Stockton-on- Middlesbrough

Source: GL Hearn Analysis of EGi & CoStar Data

5.35 The largest available volume of floorspace within Tees Valley is illustrated in Figure 29. The highest volume of existing stock is located within Stockton-on-Tees (171,113 sq m), followed by Middlesbrough (38,236 sq m) and Darlington (31,338 sq m). The highest availability of new built floorspace is in Middlesbrough (5,053 sq m). This is followed by Stockton-on-Tees (2,713 sq m) and Redcar and Cleveland (185 sq m).

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Office availability by status, Tees Valley (sq m), September 2016

350,000

300,000 Unknown

250,000 Under 200,000 Renovation Proposed 150,000 New 100,000

Floorspace (sq m) (sq Floorspace Existing 50,000

- Hartlepool Darlington Cleveland Redcar and Middlesbrough

Stockton-on-Tees Source: GL Hearn Analysis of EGi & CoStar Data

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Industrial Market Review

Industrial Deals

5.36 Figure 30 profiles the spatial distribution of industrial transactions since 2005 in Middlesbrough. For the period 2005-2016, in Middlesbrough there was a total of 365 recorded industrial deals relating to 270,899 sq m of floorspace. The average figures per annum for the period 2005-2016 is 30 deals at 22,395 sq m floorspace. For the shorter term (2012-2016) this increased notably to an average of 54 deals per annum totalling an average of 33, 733 sq m of floorspace.

Industrial transactions Middlesbrough 2005-2016

Source: GL Hearn Analysis of EGi & CoStar Data

5.37 Figure 31 presents the number of industrial deals by size and year in Middlesbrough. With 85 deals the highest numbers of transactions were recorded in 2015. This was followed by 72 in 2014 and 62 in 2013. Between 2005 and 2007 there were only 35 transactions in total. In comparison, for Tees Valley, the highest number of transactions happened in 2015 (299 deals), followed by 2013 and 2014 each with 246 deals.

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Number of Industrial deals by size and year in Middlesbrough, 2005-2016

90

80

70

60 10,000+ sqm 50 1,000-10,000 sqm 40 500-1,000 sqm

Number of Deals of Number 185-500 sqm 30 Less than 185 20 sqm

10

0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: GL Hearn Analysis of EGi & CoStar Data

5.38 For Middlesbrough, 44% of all the deals related to stock smaller than 185 sq m per unit floorspace between 2005 and 2016. In contrast, 21% of all deals were between 185 and 500 sq m, 15% in units between 500 and 1,000 sq m, and 19% in units between 1,000 and 10,000 sq m. Deals larger than 10,000 sq m equated to only 1%. Size details for 3 transactions were not disclosed.

5.39 Figure 32 presents the industrial floorspace purchased per annum by size band in Middlesbrough. In total 64% of floorspace purchased in the last 10 years related to units between 1,000 and 10,000 sq m in size. This is followed by 14% of industrial floorspace transactions of units between 500- 1,000 sq m.

5.40 In comparison, within Tees Valley 45% of floorspace transacted in the last 10 years related to units between 1,000 and 10,000 sq m. This is followed by 38% of floorspace transactions of units above 10,000 sq m.

5.41 The highest number of industrial purchases in Middlesbrough was in 2014. This totalled over 39,885 sq m (15%). This was followed by 2012 with approximately 36,302 sq m (13%) The total

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industrial floorspace purchased between 2012 and 2016 (last 5 years) represented 62% of all floorspace transacted in since 2005.

5.42 Figure 32 illustrates the Recessionary Impacts after 2008. A significant decrease can be witnessed in the industrial floorspace take-up in 2009 and 2010. However, in 2011 there has been a significant improvement in the industrial floorspace take-up, reaching pre-recession levels and even surpassing these in 2012.

Industrial floorspace take-up by year and size in Middlesbrough, (sq m) 2005- 2016

45,000

40,000

35,000 10,000+ sqm

30,000 1,000-10,000 sqm 25,000 500-1,000 sqm 185-500 sqm 20,000 Less than Floorspace (sq m) (sq Floorspace 15,000 185 sqm

10,000

5,000

0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: GL Hearn Analysis of EGi & CoStar Data

5.43 On a submarket level in Middlesbrough, the highest number of industrial deals for the period 2005- 2016 was recorded in Riverside Park (237), followed by East Middlesbrough (50). The distribution is illustrated in Figure 33.

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Number of Industrial deals on a Submarket level, Middlesbrough, 2005-2016

250 2016 200 2015 2014 150 2013 100 2012 2011 Number of Deals of Number 50 2010

0 2009 2008

Other 2007 2006 Middlehaven Town Centre Town

Riverside Park 2005 East Middlesbrough

Source: GL Hearn Analysis of EGi & CoStar Data

5.44 The highest amount of floorspace transacted within Middlesbrough’s submarket level was recorded in Riverside (158,649 sq m), followed by East Middlesbrough (66,124 sq m). Figure 34 represents this distribution within the submarket area level.

Industrial floorspace take-up by year on a Submarket level, Middlesbrough, (sq m) 2005-2016

180,000 160,000 2016 140,000 2015 120,000 2014 100,000 2013 80,000 2012 60,000 2011

Floorspace (sq m) (sq Floorspace 40,000 2010 20,000 2009 0 2008

Other 2007

East 2006 Middlehaven Town Centre Town 2005 Riverside Park Middlesbrough

Source: GL Hearn Analysis of EGi & CoStar Data

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5.45 Figure 35 illustrates the number of industrial deals across Tees Valley, The highest concentration of industrial transactions were recorded in Stockton-on-Tees (338) followed by Middlesbrough (278). The largest amount of floorspace was transacted in Stockton-on-Tees (437, 259 sq m), followed by Darlington (259,815 sq m) and Hartlepool (229, 046 sq m). In Middlesbrough, the transacted amount of floorspace was 183, 865 sq m.

5.46 Figure 35 presents the number of deals broken down by year and local authority for the 2005 to 2016 period. The largest number of transactions were located in Stockton-on-Tees, (34%), followed by Middlesbrough (24%) and Darlington (18%). The fewest transactions were recorded in Redcar and Cleveland (11%).

5.47 In 2014, Hartlepool recorded the largest transaction in the study area in terms of floorspace, the Former Metal Recycling Facility (60,702 sq m). In terms of price the most expensive purchase was Wynyard Avenue in Stockton-on-Tees (£6.6 million) in 2014. In Middlesbrough, the largest industrial transaction was Raleigh Court, (11,027 sq m), which was also the most expensive transaction for the authority- £4 million.

Industrial Deals in Tees Valley by year and local authority, 2005-2016 600 2016 500 2015 2014 400 2013 2012 300 2011 200

Number of Deals of Number 2010 2009 100 2008

0 2007 2006 2005 Hartlepool Darlington Cleveland Redcar and Middlesbrough

Stockton-on-Tees Source: GL Hearn Analysis of EGi & CoStar Data

5.48 Figure 36 presents the spatial distribution of the industrial floorspace within Tees Valley by year for the same period. Middlesbrough accounted for 13% of industrial floorspace transacted within the

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wide area. In comparison, Stockton-on-Tees represented 42%, Darlington 19% and Hartlepool 18%. The smallest amount of industrial floorspace transacted was in Redcar and Cleveland (8%).

Industrial floorspace by year and local authority (sq m), 2005-2016

1,000,000 900,000 2016 800,000 2015 700,000 2014 600,000 2013 500,000 400,000 2012 300,000 2011 Floorspace (sq m) (sq Floorspace 200,000 2010 100,000 2009 0 2008

2007

Hartlepool Darlington 2006

Middlesbrough 2005 Stockton-on-Tees

Redcar and Cleveland Redcar and Source: GL Hearn Analysis of EGi & CoStar Data

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Industrial Availability

5.49 As of September 2016, there is 44,728 sq m of industrial floorspace available within Middlesbrough. In comparison, Tees Valley accounts for 375,925 sq m of industrial floorspace available. Around 57% of the advertised floorspace in Middlesbrough was in industrial units between 1,000 and 10,000 sq m. In addition, 21% was in the units between 500 and 1,000 sq m. Less than 2,000 sq m of the available floorspace relates to units smaller than 185 sq m.

Figure 37 shows the spatial distribution of the available industrial floorspace within the wider area as registered on EGi and CoStar databases in September 2016.

Industrial availability in Middlesbrough, September (2016)

Source: GL Hearn Analysis of EGi & CoStar Data

5.50 Figure 38 shows the available industrial floorspace by size and status for Middlesbrough. The majority of the available volume (57%) is held in units (existing or otherwise) between 1,000 and 10,000 sq m. Existing stock represents 98% of this volume, while the volumes in design process are only 2%.

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Industrial Availability by status in Middlesbrough (sq m), September 2016

30000

25000

20000

15000 Under Renovation 10000 Proposed

Floorspace (sq m) (sq Floorspace Unknown 5000 New 0 Existing 10,000+ sqm 185-500 sqm 500-1,000 sqm 500-1,000 1,000-10,000 sqm Less than 185 sqm Source: GL Hearn Analysis of EGi & CoStar Data

5.51 On a submarket level in Middlesbrough, the highest amount of available industrial floorspace between 1,000- 10,000 sq m is recorded in Riverside (12,711 sq m), followed by East Middlesbrough (6,912 sq m). This is illustrated in Figure 39.

Available Industrial floorspace by submarket (sq m), September 2016

25,000

20,000

15,000

10,000+ sqm 10,000 1,000-10,000 sqm

Floorspace (sq m) (sq Floorspace 500-1,000 sqm 5,000 185-500 sqm

0 Less than 185 sqm Other Middlehaven Town Centre Town Riverside Park East Middlesbrough

Source: GL Hearn Analysis of EGi & CoStar Data

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5.52 In term of available industrial floorspace by status, on a submarket level the highest concentration of existing stock is located in Riverside (22,871 sq m), followed by East Middlesbrough (9,942 sq m). In terms of new stock, the highest concentration is again in Riverside (830 sq m). Figure 40 illustrates the distribution by status on a submarket level within Middlesbrough.

Available Industrial floorspace by submarket, (sq m), September 2016

25,000

20,000

15,000

Under Renovation 10,000 Proposed

Floorspace (sq m) (sq Floorspace Unknown 5,000 New Existing 0 Other Middlehaven Town Centre Town Riverside Park

East Middlesbrough Source: GL Hearn Analysis of EGi & CoStar Data

5.53 The available industrial floorspace in Middlesbrough is 44,728 sq m. In comparison, in Stockton-on- Tees it is 180,553 sq m. The remaining available stock is distributed within the wider area. Hartlepool presented the smallest volume of available industrial floorspace in the study area (36,584 sq m).

5.54 The largest available sites currently being advertised are in Stockton-on-Tees, which includes two sites each advertised as 37,161 sq m of floorspace for design and build: Land to the East of Fleck Way and to the West of Earlsway, and land at Dukesway, Stockton-on-Tees.

5.55 The largest existing unit in Middlesbrough is the site on Depot Road (4,030 sq m).The largest existing units are being marketed as available within the wider area are the 18,181 sq m land off A1085 in Redcar and Cleveland and a 15,074 sq m unit at Macklin Avenue in Stockton-on-Tees.

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Available Industrial floorspace by local authority, (sq m), September 2016

200,000 180,000 160,000 140,000 120,000 10,000+ sqm 100,000 80,000 1,000-10,000 60,000 sqm 500-1,000

Floorspace (sq m) (sq Floorspace 40,000 sqm 20,000 185-500 sqm 0 Less than 185 sqm Hartlepool Darlington Cleveland Redcar and Middlesbrough

Stockton-on-Tees Source: GL Hearn Analysis of EGi & CoStar Data

5.56 Figure 42 presents the available industrial floorspace by type and local authority within Tees Valley , 76% (284,266 sq m) of the available stock being advertised as existing and 22% (81,852 sq m) was advertised as proposed. In addition, only 1 %( 5,163 sq m) was newly built.

Available Industrial floorspace by status and local authority, (sq m), September, 2016

200,000 180,000 160,000 140,000 120,000 100,000 Under Renovation 80,000 Proposed 60,000 Unknown Floorspace (sq m) (sq Floorspace 40,000 New 20,000 0 Existing Hartlepool Darlington Cleveland Redcar and Middlesbrough

Stockton-on-Tees Source: GL Hearn Analysis of EGi & CoStar Data

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5.57 In Middlesbrough, 98% of the available industrial floorspace is existing and only 2% is newly built. There are no units advertised to be in a design process. In contrast, for both Stockton-on-Tees (57%) and Darlington (91%) the available stock is mainly within the existing stock, while 41% and 5% respectively are currently in design process.

5.58 It should be noted that Stockton-on-Tees has the largest percentage of “available” existing and “under design” stock. The majority of this floorspace is held in buildings which are larger than 10,000 sq m.

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6 STAKEHOLDER CONSULTATION

6.1 Consultation with key stakeholders has been undertaken in order to understand the attitudes and opinions of stakeholders towards the local development plan employment land allocations, responding to their needs, and ensure buy-in has been identified by Middlesbrough Council as a key part of the Economic Development Needs Assessment.

6.2 Two methods of consultation were undertaken: • Semi-structured face to face and telephone interviews with key stakeholders. A list of all those interviewed is included in Appendix B. • A stakeholder workshop, which took place at Middlesbrough Borough Council offices on 22 March 2017. A list of all those who attended is included in Appendix B.

6.3 The series of structured interviews took place with key stakeholders in the Middlesbrough economy in order to identify their views on the allocation of employment land over the plan period. Twenty two telephone interviews were carried out during September 2016, each lasting between 30 minutes and one hour. The interviews were conducted by Steve McGavin, Planning and Development Director at GL Hearn. Each person interviewed was asked the same twelve questions which are set out in Appendix C. This section provides a summary of the stakeholder views for each of the twelve questions.

1. How would you describe the current state of the Middlesbrough economy and how effective is the economic strategy which underpins this?

6.4 The general consensus is that the Middlesbrough economy is fragile with a number of underlying issues still to be tackled but that it has a lot going for it, with considerable potential to grow.

6.5 There is strong support for the Council in terms of trying to do something and an appreciation from stakeholders that they are being engaged with in this EDNA exercise. There is also recognition that the Council cannot solve all the economic issues on its own, particularly with resources being stretched.

6.6 There is no awareness of an Economic Strategy for Middlesbrough and only very limited awareness of the Tees Valley Combined Authority and Tees Valley Local Enterprise Partnership.

6.7 A number of respondents feel that there is a lack of a strategic overview and that employment land over the plan period requires closer collaboration between Middlesbrough and the adjoining local authorities.

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2. What are the strengths and weaknesses of the Middlesbrough economy and the economic strategy?

6.8 The university and college are seen as being significant assets to the Middlesbrough economy and in particular their roles in driving the growth of the digital technology sector.

6.9 The redevelopment of Middlehaven is generally viewed positively. A small number of respondents question whether this is currently an attractive investment proposition for the market without subsidy. A small number of respondents also comment on the apparent overreliance on the University and the student population in the Town Centre.

6.10 The engineering and the advanced manufacturing sectors are viewed as contributing to a strong economy which still occupies a significant amount of land. Advanced manufacturing particularly focussed around the Teesside Advanced Manufacturing Park is seen as strength. A number of respondents feel Middlesbrough needs to capitalise more on its strong manufacturing history and skill base around making things.

6.11 Teesport is seen as a significant asset with a number of Middlesbrough businesses involved directly or indirectly with the port mainly focussed around the logistics sector.

6.12 The quality of the Town Centre retail offering is generally viewed positively with strong support for the growth of niche, independent retailing areas in the Bedford and Baker Street corridors. A small number of respondents feel more effort should be made to attracting a John Lewis or Waitrose as a catalyst to further improving the retail offer.

6.13 There is criticism of the absence of an evening economy in the Town Centre and in particular a need to attract more quality food and beverage occupiers.

6.14 A large number of respondents feel that there is too much poor quality office stock in the Town Centre which impacts negatively on the perception of the town amongst residents, shoppers and potential investors.

6.15 Road transport connections are seen as an asset to the local economy. A number of comments were made on the need to improve the railway station, increase the frequency of direct trains to London and also to consider more rail freight connections to and from the Port.

6.16 A number of respondents feel that it is important to tackle some of the underlying deprivation challenges which undermine the economy and in particular poor health and economic indicators.

6.17 The impact of the SSI closure appears to have had less impact than expected.

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6.18 The economy is still very dependent on the Public Sector with large numbers of people employed by the NHS and Council. A number of respondents feel that there is a need to focus more on attracting professional sectors to the town such as accountants, lawyers and surveyors.

3. Please provide your views on the current economic sectors:

Retail

6.19 Generally the retail offer in the Town Centre is seen as being reasonably strong with most major national brands being represented in the three main shopping centres. The number of vacant units in the Town Centre was commented on with a number of respondents citing direct competition from Teesside Retail Park as the cause. A few respondents feel that the retail offer should be consolidated and less spread out.

6.20 Baker Street is viewed positively with respondents welcoming further development of small, niche independent shops in the Town Centre.

Industrial

6.21 There is a consensus that the manufacturing sector is still relatively strong and there remains a skilled workforce. A number of respondents feel that there is an opportunity to grow the advanced manufacturing and clean manufacturing sector.

6.22 Demand for new industrial space is not strong and is reliant on the growth of existing local firms. There is very unlikely to be any speculative development. There is some demand for modern stock but respondents feel that there is unlikely to be any new building without public subsidy.

6.23 A number of respondents identify a shortage of small to medium size units but feel it may be difficult to justify new development as yields are not attractive. Cannon Park was cited a number of times as providing the type and size of space being sought.

6.24 Further investment in the oil and gas sector is seen to be on hold but as still having a large market share locally.

Office

6.25 There is strong agreement that there is an oversupply of office space, with the office market being stagnant. There is widespread concern about there being too much dated poor quality stock in the Town Centre which is not fit for modern office needs. Respondents feel that there is unlikely to be any new build without grant funding. A respondent felt that since the demise of One North East no

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redevelopment grants are available. Empty rates relief is also cited as a further barrier to development.

6.26 When discussing the weak office market a number of respondents feel that there are more attractive locations elsewhere in Tees Valley for occupiers seeking modern office space. Stockton was cited as being likely to be more attractive to new occupiers.

6.27 A number of respondents express concern about an overconcentration of redundant office buildings in the Town Centre which are in the ownership of one company. There is a strong feeling that the redundant office space in the town needs to be repurposed into residential, student accommodation or leisure use.

6.28 Beyond the Town Centre the feeling is that there needs to be a bigger push to build on the digital and creative sector office space needs in the BOHO quarter.

Tourism and Leisure

6.29 The tourism market is not seen as being strong but that it has potential to grow. The delivery of the Snowdome proposal is seen by a number of respondents as being critical to growing the tourism market.

6.30 It is felt that Middlesbrough Football Club’s promotion to the Premier League has helped to raise the profile of the town.

6.31 Some respondents feel that greater collaboration is needed with Tees Valley and North Yorkshire to put Middlesbrough on the tourism map. Better marketing is needed of things like Captain Cook heritage and the transporter bridge as well as proximity to North York moors and Durham.

Hotels

6.32 Generally there is a feeling that there is an emerging hotel market but that the offer is currently limited to budget hotels primarily serving the business sector. As a result there is a shortage of hotel accommodation in Middlesbrough and in Tees Valley. Respondents feel that this more accommodations can be developed as the tourism market grows.

Knowledge Based Industry

6.33 A number of respondents feel that this sector should be prioritised on the back of heavy investment by the university and college. There is a feeling that more links should be made with business, particularly in the advanced manufacturing sector with a focus on spin off and start up enterprises.

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6.34 The strong and steady take up of incubation space by start-up businesses in the BOHO quarter is viewed positively. Some respondents also feel there should be a spread of this sector into the Town Centre while others feel demand may have plateaued.

4. How do you see these economic sectors changing over the period to 2033? What are likely to be the growth sectors over this period?

6.35 Given the length of the plan period and the rapid pace of change driven by technology it is clearly challenging to accurately predict what the key growth sectors will be until 2033. Nonetheless respondents inputted positively and there is some degree of coming together over probable growth sectors.

6.36 A number of respondents feel that there is likely to be significant growth in the logistics sector, particularly around the Riverside and port areas. With many businesses increasingly seeking locations with river frontage the Port is seen as huge asset going forward and that more needs to be done to support growth here. There is a feeling that some existing uses like scrapyards don’t need to be there.

6.37 The Offshore sector is also seen as a potential growth area in this location and that this would further capitalise on the skilled and experienced manufacturing skillset.

6.38 Leisure is also seen as a growth sector particularly in the Town Centre on the back of a change in retailing habits and to a lesser extent around the football stadium as part of an entertainment complex. Further leisure growth is also likely to take place at Middlehaven but respondents feel that this is heavily reliant on the Snowdome development taking place as a catalyst for more tourism and leisure. Further hotel development is seen as being dependent on tourism and leisure related to day visitors and business.

6.39 The growth in the Knowledge based industries is seen as likely by a number of respondents. As well as continuing to support advanced manufacturing, specific mentions are also made of Health and digital technology; 3D printing a very futuristic machine driven technology; specialist technologies and reengineering (bio engineering).

6.40 The continued growth of manufacturing is thought likely by several respondents with a number feeling that manufacturing would continue through making the most of new technologies. As there are still three steel rolling mills in Tees Valley which employ people from Middlesbrough new investment into new steel technologies is seen as desirable.

6.41 A number of respondents feel that a strategy is needed going forward and the there is a need to work collaboratively with other local authorities in order not to chase the same prize.

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5. How much land should the local plan provide for industrial and office uses over the plan period?

6.42 There is a clear view that there is an oversupply of employment land. For industrial land respondents generally feel that there is plenty of land but that it not of great quality. A number of respondents advocate that the type of land brought forward is more important than the amount.

6.43 The overwhelming view in terms of office space is that there is an oversupply of space with a significant amount of low quality redundant office space in the Town Centre. As rents are depressed there is unlikely to be any take up and as a result most respondents feel this space needs to be redeveloped or knocked down with other uses taking up the space.

6.44 Again a number of respondents feel that there is no clear strategy between the five authorities and that more smart thinking and collaboration is needed. Both Hartlepool and Redcar are mentioned as also having a massive oversupply of employment land. Middlesbrough is seen as being short of housing land.

6. What is your view on the current supply of office space in Middlesbrough? Is there enough office space? Is this of sufficient quality? What are the constraints to development?

6.45 There is a unanimous view that that there is too much office space in Middlesbrough that is dated, of poor quality and which is not fit for modern office occupier needs.

6.46 A number of respondents feel that there are better locations such as Stockton offering more modern space with free parking.

6.47 As demand is weak and land values don’t allow for speculative development it is strongly felt that some of the redundant Town Centre office space needs to be reused for other uses such as residential, student residential or hotels. This is seen as being unlikely without public sector intervention.

6.48 The new office development in Centre Square is mentioned by three respondents who all feel that it is not needed.

6.49 The digital sector is seen to be relatively well catered for in the Middlehaven area. There is scope for more office development here but commercially it doesn’t work without public sector intervention.

6.50 Albert Road and the multi-story office block is seen as being symptomatic of the issue and the highly visible Town Centre location of much of the stock is seen as off putting to residents and investors alike.

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6.51 A couple of respondents feel that there is a need for some decentralisation of government departments from London and the South East of England to stimulate office demand.

7. What is your view on the current supply of general industrial space in Middlesbrough? Is their enough industrial space? Is this of sufficient quality? What are the constraints to development?

6.52 Unlike office space where there is clear agreement on the issue, this is not the case with industrial space. There are mixed views on whether there is sufficient space available. There is agreement that there is an absence of good quality space and that low property values will mean that there is no business case for investment. The cost of remediation of a number of sites is also seen as a significant barrier to development.

6.53 There is some concern that there is not enough good quality space or large sites and that there is a specialist market for larger sites that Middlesbrough should consider being able to cater for. Existing sites such as the former steelworks at Riverside may offer potential but only with some investment.

6.54 There is likely to be some demand from the processing and chemical manufacturing sectors for new industrial space depending on world markets.

6.55 A number of respondents also feel there is a demand for smaller, traditional, trade type units and workspace between 500 and 5,000 sq ft. Again without public subsidy this demand is unlikely to be met.

6.56 There is agreement that the Port shouldn’t be looked at in isolation but needs to be integrated with the wider Middlesbrough economy.

6.57 Riverside Park is viewed as being relatively successful and that it has been developed quite well with significant potential for advanced manufacturing uses. The construction of the link bridge from Newport Bridge into the Riverside is viewed positively. Enterprise zones have also been helpful.

6.58 There is some concern that should Nissan have pulled out of Sunderland it would have had a negative impact on the supply chain and impact on Middlesbrough industries.

8. What is your view on the current supply of storage and distribution space in Middlesbrough? Is their enough storage and distribution space? Is this of sufficient quality? What are the constraints to development?

6.59 Generally the view is that there are not enough large sites of the right quality available but that equally there are no current large scale active requirements. Others feel that many active requirements are felt to be for smaller sites of 2 to 3 ha.

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6.60 There is a consensus that the Port area has been relatively successful with this market, particularly for warehousing, although questions were raised about whether there are enough large sites of the right quality here. Some respondents feel that better rail connections for rail freight would improve things further.

6.61 A few respondents feel that big retail distribution centres may take more space at the docks as regional centres.

6.62 A number of respondents believe that there is a limited stock in Middlesbrough and elsewhere in Tees with only small pockets of available land in places like Cannon Park.

6.63 Some respondents feel storage and distribution facilities are better clustered around good road links around the A19 corridor and that there are much better locations closer to the A1 than Middlesbrough.

9. Existing undeveloped employment land in Middlesbrough is principally located in five locations. What do you think should be the main employment uses in each of these areas over the plan period?

Town Centre

6.64 The consensus is that the Town Centre should remain the principal retail destination for Middlesbrough and Tees Valley. There is also support for the retention of some office use and for consideration to be given to leisure and professional services uses. A small number of respondents also felt consideration should be given to residential uses particularly to the south of the Town Centre.

6.65 A number of respondents feel a better approach to parking is needed to compete with the Tees Valley Retail Park.

6.66 There is almost universal agreement that there should be rationalisation, reuse or redevelopment of some or all of the vacant office and retail space.

6.67 A number of respondents feel that more needs to be done to improve the quality of the built environment with safety and cleaning improvements also needed. The Bedford and Baker Street initiatives are seen as very positive with calls for more of this type of niche, independent retailing needed to give the Town Centre a unique USP.

6.68 There is also strong support for better links and connectivity between the Town Centre and the Middlehaven developments.

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Greater Middlehaven

6.69 The majority of the responses favour the area’s continued development as an office location primarily for the digital technology sector but also as having opportunities for leisure developments. The role of the college in the development of the area is complemented. Boho is seen as being very positive.

6.70 Greater private investment is seen as important. There is some doubt expressed about the ability of the market to deliver the future development ambitions. A number of respondents cite the fact that much of the office development has been publicly funded as an example of this. Some respondents feel that the development has stalled and requires more critical mass.

6.71 There is support for more digital technology businesses being attracted to the area.

6.72 The delivery of the Snowdome proposal is seen as being vital to the future regeneration of the area and to act as a catalyst for other leisure uses.

6.73 Better integration with the Town Centre is seen as being important with the Albert Road corridor performing a key part of this.

Riverside Park

6.74 The majority of respondents feel that this area should focus around industry. Warehouse, office space and advanced manufacturing are all seen as sectors to focus on. A number of respondents feel that there is a need to improve the quality of the environment and the river edge in particular.

6.75 There is support for better public transport links to the area as the area is still seen as being a bit isolated. The link between the Town Centre, Middlehaven and Riverside is seen as important.

Greater Hemlington

6.76 The majority of respondents feel that this area should be a focus for residential development. It is seen to be an attractive location for residential led development. There are a small number of employment land opportunities that could be developed. While some respondents feel that this is no longer an employment location, others cited the availability of employment sites and good access as opportunities.

6.77 As there are a number of large sites here close to the A19 it is felt that logistics type development could be appropriate. Access to Hemlington Grange Business Park is regarded as being good. With good access to the motorway network there is also office potential in some areas.

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East Middlesbrough

6.78 There is a consensus that further regeneration efforts are required in this area with some underlying social and economic issues to be addressed. Housing led regeneration in this location is seen as having had mixed success.

6.79 Infrastructure improvements are seen as being important. The clearance of some of the older industrial sheds is suggested.

6.80 A number of respondents point to the need for greater collaboration with Redcar and Cleveland Council.

6.81 Suggestions are made that food production sector could be developed if the area is marketed appropriately. Further opportunities for residential development are also suggested.

10. What are the main barriers to development in each of these areas. Infrastructure constraints? Quality of land? Market demand? Accessibility? Other?

6.82 The main barrier to development is seen as being the lack of market demand and the lack of development finance to develop sites. Development is seen by many as not being commercially viable. The value of land is seen as a problem with the cost of developing and availability of finance. Remediation costs are seen as being significant and examples of this were given as being in some cases four times the value of the purchase price of land.

6.83 A small number of respondents feel that the reputation of the area was still a barrier and that more needs to be done to change perceptions with a focus on promoting Middlesbrough’s positive attributes.

6.84 The issue of one landlord holding a lot of redundant office space in the Town Centre is seen as a barrier to development.

6.85 Infrastructure is generally not seen as being a major barrier to development but the appearance of the train station and quality of railway stock from Darlington are regarded by many as being poor.

6.86 There is a feeling that the large number of master plans for Middlehaven need to be joined up.

11. What interventions should be considered to encourage economic development and to help bring sites forward?

6.87 There are many positive suggestions put forward to encourage economic development and bring sites forward.

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6.88 Better and improved train connections to London and improvements to Middlesbrough railway station are seen as being important by a number of respondents.

6.89 A number of respondents feel that more and better incentives are needed to stimulate demand and investment. An evergreen investment fund is put forward as is more assistance to make development viable. The use of CPO powers to address some of the redundant office space in the Town Centre is suggested as is the need to suspend of rates liabilities on new projects and more grants for building refurbishments.

6.90 More Enterprise Zones are also put forward as are more rates incentives.

6.91 A large number of respondents feel that better collaboration between the local authorities and businesses is important and that there should be a focus on an agreed strategy and vision for the region with Middlesbrough at the heart of this. There is also a suggestion of closer working between the Port and Middlesbrough Council and between the HCA and Middlesbrough Council.

6.92 More investment in the Town Centre is seen as priority by a number of respondents. Some respondents feel that there is a need for more free parking in the Town Centre to help it compete with out of town competition. Tackling vacant retail space is also mentioned and replacing it with other uses.

6.93 A number of respondents feel that it is important to encourage central government to export more jobs from London and the south east. Salford Quays was seen as a good example of this.

6.94 The need for a flagship development is also suggested.

12. Are there any other issues that you would like to raise about the Middlesbrough economy now and going into the future?

6.95 Middlesbrough should aspire to be the sub regional capital and there is a need to sell Middlesbrough more as it has great potential. There is some recognition of the Tees Valley but also that Middlesbrough, and in particular the Council, needs to drive its own agenda for Middlesbrough.

6.96 There is a need for a coordinated, long term plan for the area aligned to infrastructure.

6.97 There is a need to make more of the port and the riverside setting.

6.98 There is support for the building of a large distribution facility which would attract occupiers but a need for assistance with the cost of building.

6.99 Recognition of the type of funding available and what it can be used for in the future is important.

6.100 Investment in technology linked to manufacturing should be a priority.

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7 ASSESSMENT OF FUTURE EMPLOYMENT LAND REQUIREMENTS

7.1 In this section we consider demand for employment land and floorspace over the plan period 2016- 2034. The section considers requirements for employment land in the B1, B2 and B8 use classes. The analysis is of ‘demand’ for employment land and therefore does not take account of any supply-side factors such as existing employment land allocations or commitments – these are considered in Section 7.

7.2 When considering the scale of future needs the Planning Practice Guidance (PPG, 2014) requires consideration of quantitative and qualitative need. This entails estimating the scale of future needs broken down by different market segments, such as different B use classes. The PPG recommends the use of a number of different techniques to estimate future employment land requirements. The following section considers the following scenarios:

• Scenario 1 – Labour Demand Baseline Scenario • Scenario 2 – Labour Demand Growth Scenario • Scenario 3 – Labour Supply Scenario • Scenario 4 – Completions Trend Scenario

7.3 The labour demand approach considers the future level of jobs growth in Middlesbrough and identifies the quantum of land required to meet it. Two labour demand scenarios have been developed:

• Scenario 1 – The baseline labour demand scenario is based on econometric forecasts supplied by Oxford Economics (OE), dated September 2016; • Scenario 2 – The growth scenario is based on the jobs growth target identified in the Tees Valley Strategic Economic Plan produced by the Tees Valley Combined Authority.

7.4 The labour supply scenario (Scenario 3) considers a demographically derived assessment of future employment needs based on the amount of employment land required in order to meet the future labour supply – i.e. the resident workforce. This aligns with the objectively assessed housing need figure identified in the Strategic Housing Market Assessment (SHMA).

7.5 Scenario 4 is based on projections of Middlesbrough Borough Council data on past completions of B-class employment floorspace / land.

7.6 There are relative benefits of each approach. Econometric forecasts take account of differences in expected economic performance moving forward relative to the past, overall in regard to the sectoral composition of growth. However a detailed model is required to relate net forecasts to use classes and to estimate gross floorspace and land requirements. In contrast, past take-up is based on actual delivery of employment development; but does not take account of the implications of

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growth in labour supply associated with housing growth nor any differences in economic performance relative to the past. It is also potentially influenced by past land supply policies.

Scenario 1 – Labour Demand Baseline Scenario

7.7 The starting point for the baseline labour demand scenario is the OE jobs growth forecasts. These forecast jobs growth broken down across industrial sectors up to 2034. The OE forecast provides a breakdown of jobs growth at 2-digit SIC level which provides data across 85 sectors.

7.8 Figure 43 shows the historic and forecast total employment in Middlesbrough as shown in the OE forecasts. This shows a high level of volatility in total jobs numbers throughout the 1990s, with job numbers dropping to a low of 60,700 in 2001. The first half of the 2000s saw strong growth in employment in the Borough, reflecting strong economic performance nationally. Middlesbrough’s employment peaked at 73,200 in 2007. The impacts of the 2008 credit crunch can be seen as Middlesbrough saw year on year job losses from 2008 to 2013 as the UK economy underwent a lengthy recession. Employment levels bottomed out in 2013 when employment in the Borough was 64,100. In the last few years, Middlesbrough has seen growth in total employment and in 2016 the figure stands at 68,600. Again, this trend reflects improvements in employment seen at a national level.

7.9 This shows that while there has been an element of volatility in the past employment trends, generally the level of employment in Middlesbrough has remained relatively constant in a range between 60,000 and the low 70,000s. Figure 43 also shows the total employment growth forecast in the OE forecasts to 2034. Over this period, total employment is forecast to remain broadly level at just under 70,000. By 2034 total employment in Middlesbrough is forecast to be 69,100. This is 500 jobs above the 2016 figure.

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Total Employment, Middlesbrough, 1991-2034

80,000

75,000

70,000

65,000

60,000

55,000 Total Employment 50,000

45,000

40,000

Source: OE

7.10 Figure 44 shows the total employment trend in Middlesbrough compared to the trend across the UK. To enable comparison, both figures have been indexed. The index uses 1.00 which is equal the average employment level for the respective areas over the period 1993 to 2010. This period being chosen as it’s broadly representative of a complete market cycle.

7.11 In Middlesbrough the total jobs figure for 2034 is 2% above the 1993-2010 average, indicating a modest level of forecast employment growth. This can be compared to UK growth over the same period. Nationally, the OE forecast shows the total jobs figure for 2034 is 23% above the 1993-2010 average. Comparison of the compound annual growth rates over the 2016-34 period shows a growth rate in Middlesbrough of 0.04%, which is considerably below the UK growth rate of 0.46%.

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Total Employment – Indexed, Middlesbrough and UK, 1991-2034

1.30

1.20

1.10

1.00 Middlesbrough 0.90 UK

0.80

Index: 1.00 = Average 1993-2010 1.00 = Average Index: 0.70

0.60

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 Source: OE

7.12 Figure 45 shows the forecast jobs growth in Middlesbrough over the period 2016 to 2034, divided across 15 broad sectors. This shows significant net growth in the following sectors:

• Business Support Services (640 jobs); • Construction (630 jobs); • Professional and Scientific Services (560 jobs); • Health (400 jobs); • Creative and Recreation (240).

7.13 Conversely, the OE forecast shows a significant net loss in the following sectors:

• Manufacturing (-730 jobs); • Public Administration and Defence (-640 jobs); • Education (-480 jobs).

7.14 Looking at manufacturing in more detail shows losses in all manufacturing sub-sectors over this period. The manufacturing sub-sectors with the largest forecast losses are Manufacture of Chemicals (-190 jobs); Manufacture of Fabricated Metal Products (-160 jobs); and Manufacture of Food Products (-160 jobs).

7.15 Overall, this results in a forecast net jobs growth of 540 jobs over the period 2016-34.

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Forecast Net Jobs Growth in Middlesbrough (2016 – 2034)

-800 -600 -400 -200 0 200 400 600 800

Agriculture and Mining Manufacturing Electricity, Gas and Water Construction Wholesale and Retail Trade Transport, Warehouse and Postal Accommodation and Food Sevices Media and IT Professional and Scientific Services Business Support Services Public Administration and Defence Education Health Creative and Recreation Other Total

Total Employment FTE

Source: OE

7.16 Figure 45 also shows the net jobs growth for Full-Time Equivalent (FTE) jobs per sector. GLH has converted forecasts for total employment into forecasts for FTE employment through analysis of the proportion of full- and part-time jobs in Middlesbrough on a sector by sector basis. Accounting for FTE jobs, the OE model thus forecasts a net increase of 450 FTE jobs over the period 2016 to 2034.

7.17 The sectors most impacted by the conversion to FTE are those with the larger proportions of part- time employment: Business Support Services, Health, Education, Public Administration and Defence, and Creative and Recreation.

Translating Sectors to Use Classes

7.18 GLH has considered the proportion of employment in each of these sectors which is likely to take place in office or R&D floorspace (Use Classes B1a and B1b), light industrial floorspace (Use Class B1c), general industrial floorspace (Use Class B2), and warehouse / distribution floorspace (Use Class B8). We have calibrated our standard model which relates sectors and use classes for the Middlesbrough economy through interrogation of the composition of employment in key sectors at

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4-digit SIC level. This is used to derive the following forecasts of net growth in FTE employment by use class over the plan period.

7.19 This shows that over the period 2016-34 Middlesbrough is forecast to see a net growth of 470 jobs which occupy office (B1a and B1b) floorspace, as well as a net growth of 370 jobs in jobs which do not require any employment (B Class) floorspace. Conversely, there is a forecast net loss of 360 jobs requiring industrial (B1c or B2) floorspace, and a net loss of 30 jobs requiring warehouse (B8) space.

Employment Densities and Plot Ratio

7.20 To these figures we have applied standard employment densities taking account of the HCA Employment Densities Guide: 3nd Edition (Bilfinger GVA and the Homes and Communities Agency, 2015). We have converted figures to provide employment densities for gross external floor areas on the following basis:

• General Offices (B1a): The 2015 Employment Densities Guide provides a range of plot ratios for B1a uses – broken down by sub-sector. The sub-sectors are Corporate; Professional Services; Public Sector; Technology, Media, and Telecoms; Financial and Insurance; and Call Centres. These have employment ratios ranging from 8-13 sq m (NIA) per FTE employee. We have assumed that the gross external area of buildings is on average 20% higher than the net internal area; • Research and Development Offices (B1b): The 2015 Employment Densities Guide includes employment densities for research and development (B1b) uses (unlike the 2010 guide). The guide sets out that the sector can be considered to be split into two key directions; an innovation and science focussed direction which is associated with the knowledge economy and life sciences activity, and a more traditional industrial focussed direction which fits alongside manufacturing. An average of 60 sq m GEA per FTE employee has been assumed, assuming that the gross external area of buildings is on average 20% higher than the net internal area; • Light Industrial (B1c): an average of 49.4 sq m GEA per employee, assuming that the gross external area of buildings is on average 5% higher than the net internal area; • General Industrial (B2): an average of 37.8 sq m GEA per employee, assuming that the gross external area of buildings is on average 5% higher than the gross internal area; • Warehouse/ Distribution (B8): an average of 71 sq m GEA per employee. This is slightly below the middle of the range of employment densities for B8 activities, reflecting the lower proportion of large scale and high bay warehousing in the City.

7.21 Applying these employment densities to the OE forecast of net growth in jobs in B-class activities, we can derive forecasts for net changes in employment floorspace over the 2016-34 period. This comprises:

• A net requirement for an additional 7,700 sq m of office (B1a and B1b) floorspace; • A net requirement for a loss of 14,300 sq m of industrial (B1c and B2) floorspace; and • A net requirement for a loss of 2,000 sq m of warehouse / distribution (B8) floorspace.

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Forecasts of Net Changes in Employment Floorspace by Use Class in Middlesbrough, 2016-34 (OE)

15,000

10,000

5,000

2031-2034 - 2026-2031 2021-2026 2016-2021 Floorspace (sq m) (sq Floorspace -5,000

-10,000

-15,000 B1a/b B1c/B2 B8

Source: GL Hearn

7.22 To calculate the land requirements to support these net changes, we have applied the following plot ratios13:

• 0.35 for B1a/b office and R&D uses; • 0.4 for B1c and B2 industrial uses; and • 0.4 for B8 warehouse / distribution floorspace.

7.23 In identifying how much land to allocate for development, we consider that it would be prudent to include a ‘margin’ to provide for some flexibility, recognising:

• The potential error margin associated with the forecasting process; • To provide a choice of sites to facilitate competition in the property market; • To provide flexibility to allow for any delays in individual sites coming forward.

7.24 To quantify this we have calculated a 5-year margin based on past employment land take-up. In our experience a 5-year margin provides a reasonable level of additional flexibility to sufficiently address the above considerations.

13 Informed by the Employment Land Reviews – Guidance Note, A Report to the Office of the Deputy Prime Minister from Environmental Resources Management (December 2004).

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7.25 This generates the following requirement for net additional employment land to support the Oxford Economics employment growth forecast:

Baseline Scenario – Net Floorspace and Land Requirements, 2016-2034 Sq m Hectares B1a/b: Office 7,700 4.0 B1c/B2: Industrial -14,300 -0.7 B8: Warehouse/ Distribution -2,000 8.6 Total B-Class Uses -8,600 11.9

7.26 In total, the OE baseline forecast produces a net employment land requirement of around 12 hectares of employment land and a net loss of 8,600 sq m of employment floorsapce. The forecasts do suggest a structural change in Middlesbrough’s economy with a growth in demand for office and warehouse/distribution land coupled with a loss of demand for industrial space.

7.27 The above figures are net changes and do not take account of replacement demand, such as from existing companies requiring upgraded floorspace.

Scenario 2 – Labour Demand Growth Scenario

7.28 An alternative labour demand scenario has been developed based on the jobs growth targets in the Tees Valley Strategic Economic Plan produced by the Tees Valley Combined Authority. This sets out the industrial strategy for Tees Valley over the period from 2016-2026.

7.29 The SEP identifies a total jobs growth of 25,000 across the Tees Valley over this period. This is broken down by sector as shown in the figure overleaf. The majority of sectors show a net jobs growth over this period with the exception of ‘Other Manufacturing’ (i.e. all manufacturing excluding Advanced Manufacturing).

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Net Jobs Growth, Tees Valley 2016-2026

Jobs Growth -6,000 -4,000 -2,000 0 2,000 4,000 6,000 8,000

Low Carbon / Process, chemical and energy 2,000

Advanced Manufacturing 1,500

Other Manufacturing -4,000

Construction 3,000

Professional and business services 7,000

Logistics 3,000

Digital 3,000

Higher Education 1,000

Health and social care 3,500

Services 2,000

Culture and leisure 3,000

Source: Tees Valley Combined Authority

7.30 The question of how this jobs growth is disaggregated across the Tees Valley authorities has been considered by the five local authorities, all of which have been consulted as part of preparation of this assessment, and all attended the stakeholder workshop in March 2017.

7.31 There is broad agreement among the authorities that 25% of the total jobs growth in the Tees Valley identified in the SEP should take place in Middlesbrough. This takes into account the existing sectoral and locational strengths of each local authority – the existing business base, sectoral focus, and economic growth potential. Growth in Middlesbrough is particularly focussed on sectors such as Higher Education, Digital, and Health and Social Care. This reflects the presence of Teesside University and Middlesbrough College; successful growth in the digital and creative media sectors at the Boho Zone; and future NHS expansion plans. There is a lower proportion of growth in the manufacturing, chemical processing and energy sectors, reflecting that the relative strengths in these sectors lie elsewhere in the sub-region.

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Growth Scenario – Net Jobs Growth, Middlesbrough 2016-26 Sector % of TV total in Middlesbrough Jobs Growth in Middlesbrough

Low Carbon / Process, 15% 300 chemical and energy Advanced Manufacturing 15% 225 Other Manufacturing 13% -520 Construction 23% 690 Professional and business 23% 1,610 services Logistics 21% 630 Digital 29% 870 Higher Education 36% 360 Health and social care 26% 910 Services 25% 500 Culture and leisure 25% 750 Total 25% 6,325

7.32 This results in a net jobs growth in Middlesbrough of 6,325 jobs over the period 2016-2026. This is considerably higher than the level of growth shown in the OE baseline forecasts of 540 jobs over the period 2016-34, and a growth of 840 jobs over the period 2016-26 (the OE forecasts show decline in total jobs numbers over the latter part of the plan period).

7.33 The SEP considers the 25,000 jobs growth target as “an ambitious yet achievable target”. It notes that if Tees Valley were to match the UK anticipated rates of growth over the next ten years, the number of employees would increase by just under 11,000. To reach the 25,000 target, Tees Valley will therefore have to considerably out-perform the UK growth rate in a number of sectors, and see significantly smaller declines in others14.

7.34 The SEP target would represent transformative growth for the Tees Valley. A large proportion of the employment growth will depend upon investment in new, modern industrial and office accommodation with first class digital connectivity, growth in education, culture and leisure providing new opportunities to renew town centres across the sub-region.

7.35 Translating Sectors to Land Requirements using the same methodology and assumptions as used in the baseline labour demand scenario, the SEP jobs growth target has been converted to floorspace and land needs. This results in a need for 37.2 ha of employment land, or 87,700 sq m of employment floorspace, as shown in the table overleaf.

14 Tees Valley SEP 2016-26, page 18.

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Growth Scenario – Net Floorspace and Land Requirements, 2016-2026 Sq m Hectares B1a/b: Office 39,100 13.0 B1c/B2: Industrial 14,000 6.4 B8: Warehouse/ Distribution 34,600 17.7 Total B-Class Uses 87,700 37.2

7.36 This land requirement is considerably higher than that identified in the baseline labour demand scenario (11.9 ha) despite it covering a shorter period (2016-26 instead of 2016-34). Extrapolating this level of growth for the plan period 2016-34 results in a need for 67 ha of employment land.

Growth Scenario – Net Floorspace and Land Requirements, 2016-2034 Sq m Hectares B1a/b: Office 70,380 23.4 B1c/B2: Industrial 25,200 11.5 B8: Warehouse/ Distribution 62,280 31.9 Total B-Class Uses 157,860 67.0

Scenario 3 – Labour Supply Scenario

7.37 The labour supply scenario provides an alternative approach for considering employment land need based on providing for the labour force growth resulting from the forecast population growth. The benefit of this approach is greater alignment between the council’s housing and employment need figures.

7.38 The starting point for the labour supply approach is the demographically-led population growth figures in the Middlesbrough Strategic Housing Market Assessment 2016 (SHMA) (ORS, December 2016). The SHMA identifies that over the period from 2016-34, Middlesbrough’s population is forecast to grow by 15,324 persons, and the Borough’s economically active population is forecast to grow by 6,246 persons.

7.39 We can estimate the number of jobs that would be required to support this level of workforce growth by applying the following modelling assumptions15:

• An unemployment rate of 6.2%; • An in-commuting ratio of 10.8% (i.e. the number of workforce jobs is 10.8% higher than the number of residents jobs); and • A double jobbing rate of 4.3% (i.e. 4.3% of the working population work more than one job).

15 The source of all listed modelling assumptions is Oxford Economics.

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7.40 Applying these assumptions, the level of population growth forecast in the SHMA implies a growth of 6,771 jobs in Middlesbrough over the period 2016-34. This is broadly in-line with the level of jobs growth in the growth labour demand scenario (6,325 jobs) albeit for a longer period.

7.41 However, the sectoral breakdown of jobs in the two scenarios is different. The labour supply scenario models the number of jobs which would be required to support the growing population which implies a significant growth in sectors such as healthcare, education, retail and the service sectors. Having modelled the growth in these sectors, the remaining jobs growth is calculated using a synthesis of the OE baseline and LEP growth sectoral growth figures.

7.42 This results in the sectoral jobs growth as shown in the figure below. The sectors with the largest levels of jobs growth are:

• Health (1,780 jobs); • Professional and Scientific Services (1,430 jobs); • Construction (1,000 jobs); • Education (800 jobs); and • Business Support Services (770 jobs).

7.43 As with the OE forecast, there are forecast jobs losses in manufacturing (-780 jobs) and Public Administration and Defence (-630 jobs).

Labour Supply Scenario – Jobs Growth, 2016-34

Jobs Growth -1,000 -500 - 500 1,000 1,500 2,000 Agriculture and Mining - Manufacturing -780 Utilities 20 Construction 1,000 Wholesale and Retail Trade 480 Transport, Warehouse and Postal 300 Accommodation and Food Sevices 360 Media and IT 490 Professional and Scientific Services 1,430 Business Support Services 770 Public Administration and Defence -630 Education 800 Health 1,780 Creative and Recreation 690 Other 60

Source: GL Hearn

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7.44 Translating Sectors to Land Requirements using the same methodology and assumptions as used in the labour demand scenarios, the above jobs growth has been converted to land needs. This results in a need for 25.1 ha of employment land and 40,700 sq m of employment floorspace.

Labour Supply Scenario – Net Floorspace and Land Requirements 2016-34 Sq m Hectares B1a/b: Office 30,900 10.7 B1c/B2: Industrial -6,800 1.2 B8: Warehouse/ Distribution 16,600 13.2 Total B-Class Uses 40,700 25.1

Scenario 4 – Completions Trend Scenario

7.45 An alternative modelling approach has been taken based on the historic trend of completions of employment premises in Middlesbrough and extrapolating these forward. This is based on monitoring data recorded by Middlesbrough Borough Council over the 10 year period since 2004/05. This is shown in the figure below, broken down by class of employment use.

7.46 The completions trend data shows that in the latest four years development of employment land has been limited, however in the years prior to this the level of completions was considerably higher – particularly from 2007-2010. The period covered includes years either side of the credit crunch in 2008, and while the figures do not obviously correlate to the macro-economic conditions, this period is considered to provide a reasonable time period from which to base a projection.

Past Employment Completions, Middlesbrough 2004/05 – 2013/14

4 3.5 3 2.5 2 1.5 Area (ha) Area 1 0.5 0

B1a B1b B1c B2 B8

Source: Middlesbrough Borough Council

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7.47 Extrapolating from the ten year completions trend provides an estimate for future employment land requirements over the period 2016-34. These are shown in the table below. This suggests the need for 24.9 ha of employment land over this period. However, contrary to the other scenarios, the completions trend scenario shows the largest demand for industrial land (10.4 ha) with a smaller forecast demand for warehouse/distribution land (7.8 ha) and office land (6.7 ha).

Completions Trend Scenario – Forecast Net Land Requirements 2016-34 Hectares B1a/b: Office 6.7 B1c/B2: Industrial 10.4 B8: Warehouse/ Distribution 7.8 Total B-Class Uses 24.9

Future Employment Land Requirements – Summary of Scenarios

7.48 This section has considered four approaches to estimating future demand for employment land in Middlesbrough. The resulting levels of quantitative need are shown in Figure 50.

Comparison of Employment Land Scenarios, 2016-34

70 60 50 40 30 20 10 0 Land Requirement (ha) Land Requirement -10 Scenario 1 Scenario 2 Scenario 3 Scenario 4 Baseline LEP Growth Labour Completions Scenario Scenario Supply Trend Total B-Class Uses 11.9 67.0 25.1 24.9 B1a/b: Office 423.410.76.7 B1c/B2: Industrial -0.7 11.5 1.2 10.4 B8: Warehouse/ Distribution 8.631.913.27.8

7.49 The LEP Growth Scenario (Scenario 2) shows the highest need for employment land of the four scenarios. It shows a need for 67.0 ha: 23.4 ha for office uses, 11.5 ha for industrial, and 31.9 ha for warehouse / distribution uses. This scenario aligns with the LEP jobs growth target set out in the Strategic Economic Plan and, as acknowledged in the SEP, represents an ambitious level of growth.

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It also diverges considerably from past trends in the Borough as reflected in the other three scenarios.

7.50 Conversely, the Baseline Scenario (Scenario 1) shows a total need for 11.9 ha of employment land: 4 ha for office uses, a net loss of -0.7 ha for industrial and 8.6 ha for warehouse / distribution uses. This scenario is considerably lower than the other scenarios. Most notably, the forecasts underpinning the scenario forecast a total growth of just 500 jobs over this period – much lower than the LEP target or the growth in labour force implied by the demographic-led labour supply approach (both around 6,500).

7.51 The Labour Supply Scenario (Scenario 3) identifies a total need for 25.1 ha of employment land: 10.7 ha for office uses, 1.2 ha for industrial and 13.2 ha for warehouse / distribution uses. The overall quantum of employment land need forecast in the labour supply scenario is similar to that of the completions trend forecast (Scenario 4). The completions trend forecast however shows a greater need for industrial uses (10.4 ha) and a smaller requirement for office (6.7 ha) or warehouse / distribution (7.8 ha). This to some extent reflects the changing nature of Middlesbrough’s economy as it continues to transition from a greater focus on manufacturing industries to a growing service and digital economy. The recent (past ten years) completions data does demonstrate that there is still a requirement for industrial land in the Borough, however the jobs growth forecasts and aspirations of the SEP mean that these needs will increasingly be met elsewhere in the Tees Valley in the future.

7.52 Overall, the analysis suggests a total demand for employment land in Middlesbrough would be in- line with the labour supply scenario and completions trend scenarios (Scenarios 3 and 4), which both show a need for around 25 ha of employment land. The labour supply scenario has the benefit of aligning with Middlesbrough’s housing growth, helping to ensure alignment between housing and jobs growth in the Borough. However, the past completions trend suggests the 1.2 ha of industrial land shown in the Labour Supply Scenario may constrain future growth. Therefore we would recommend providing a higher figure for industrial uses (around 10.4ha) reflecting the past completions trends and to provide additional flexibility for this type of use. This results in a total need for around 34.3 ha of employment land over the period 2016-34 (as shown in Table 16).

Forecast Net Land Requirements, Middlesbrough 2016-34 Hectares B1a/b: Office 10.7 B1c/B2: Industrial 10.4 B8: Warehouse/ Distribution 13.2 Total B-Class Uses 34.3

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7.53 However, the Council may wish to provide more land for employment uses to match the growth aspirations of the LEP Growth Scenario. This suggests a need for up to 37.2 ha over the period 2016-26, and a growth of 67.0 ha by 2034. The LEP Growth Scenario particularly shows higher demand for office and warehouse/distribution land and so the Council may wish to allocate a greater quantum of land for these uses to support the economic growth set out in the SEP.

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8 EMPLOYMENT LAND SUPPLY

8.1 This section of the report provides a review of the supply of employment land within Middlesbrough. All have been assessed for their suitability to support employment uses – that is Use Classes B1, B2, and B8. This section sets out the findings of the site assessments for sites with development opportunity – in other words, the sites which may potentially form part of the employment land supply.

8.2 The employment sites in the Borough are divided across four main employment areas:

• Town Centre • Middlehaven • Riverside Park • East Middlesbrough

8.3 In addition there are a number of sites outside of the existing employment areas which have been identified as potential locations for employment development. These are generally out of town sites with existing non-employment uses or are allocated for employment uses in the Housing Local Plan.

8.4 Figure 51 shows the location of these employment areas and the sites which have been assessed as part of this Employment Land Study.

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Employment Sites Overview

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Sites in East Middlesbrough

Cargo Fleet

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 3.8 3.8 Previously Developed Land

8.5 Large site on the western edge of the East Middlesbrough Industrial Estate. The site is located in a prominent location on the junction of Cargo Fleet Lane and South Bank Road, close to the junction with the A66.

8.6 To the north of the site is the large Univar site, as well as several car dealerships. South of the site is the large Blakemore Cash and Carry warehouse.

8.7 The previously developed site has been cleared and is currently vacant. The site is in use for informal car parking and van hire parking.

8.8 The East Middlesbrough Industrial Estate mostly comprises smaller industrial units under a range of employment uses. The majority of occupiers are small local businesses. Generally, the quality of units is reasonable and the environmental quality is good. The area has a higher than average vacancy rate with a considerable number of units vacant and being advertised to let at the date of

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assessment. There are two other vacant plots within the Industrial Estate (Westerby Road and Sotherby Road) but both are considerably smaller than the Cargo Fleet Site.

Recommendation: The site provides a relatively large development site in a prominent location within East Middlesbrough Industrial Estate. It would be suitable for small B1, B2, or B8 uses, to easily integrate into the existing industrial estate.

Sotherby Road and Westerby Road

Site Name Site Area (ha) Vacant Area (ha) Nature of Vacant Land Sotherby Road 0.27 0.27 Previously Developed Land Westerby Road 0.38 0.38 Previously Developed Land

8.9 Two small infill sites within the East Middlesbrough Industrial Estate. The sites are both currently undeveloped and vacant.

8.10 The East Middlesbrough Industrial Estate mostly comprises smaller industrial units under a range of employment uses. The majority of occupiers are small local businesses. Generally, the quality of units is reasonable and the environmental quality is good. The area has a higher than average

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vacancy rate with a considerable number of units vacant and being advertised to let at the date of assessment.

8.11 Recommendation: Two small infill sites within the existing industrial estate. It would be suitable for small B1c, B2, or B8 uses, to easily integrate into the existing industrial estate.

North of A1085 / West of Murdock Road

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 0.56 0.56 Previously Developed Land

8.12 The site is located near the eastern edge of the Borough boundary with Redcar and Cleveland located beside the A1085. This is currently overgrown and it is unclear if this has been previously developed. This site covers an area of 0.56ha. The site is flat, and can be accessed via a small road off of Longlands Road/A1085.

8.13 The site is located on the southern edge of the East Middlesbrough Industrial Estate although the site is bounded on its northern edge by a row of terraced housing. These look directly on to the site the western boundary is crossed by overheard power/phone cables.

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8.14 To the west, and north west, of the site there is a football facility including a sports pitch, changing facilities, car park and a unit multi-use unit which has a day care centre and offices for Top Corner Sports UK Ltd. To the east, the site there are a number of terraced industrial units which form part of a wider industrial estate. To the south, across Longlands Road, there is a large residential estate.

8.15 The site forms part of a wider industrial area, with the exception of the terraced housing and sports facilities. Therefore, it would seem reasonable to assume that the site could present an opportunity for the expansion of this industrial estate. The site is located five minutes from the A66 which provides excellent transport links to the strategic road and motorway network. Bus stops providing transport services are located beside the site on Longlands Road.

8.16 Recommendation: The site lies on the edge of the East Middlesbrough Industrial Estate although surrounding sites are not under employment uses. This reduces the commercial attractiveness of the site and may restrict the potential for B2 uses at the site. Recommend the Council do not protect the site for employment uses and take a flexible approach to development proposals for the site.

Middlesbrough Warehousing

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Site Area (ha) Vacant Area (ha) Nature of Vacant Land 2.4 2.4 Previously Developed Land

8.17 This is a large, previously developed site within Lawson Industrial Estate to the east of the Town Centre. This side is currently vacant and covers an area of 2.42 ha.

8.18 The site comprises two parts: a previously developed piece of land which is currently derelict with hardstanding and some walls remaining in situ. Behind this to the north is cleared land which has some advertisement boards on it fronting on to the A66.

8.19 The industrial estate is of poor quality and had a number of vacant units within it. Occupiers of the estate include Jewson, Enterprise Rent-a-Car, and Travis Perkins. A residential housing estate immediately borders the west of the subject site. To the south of the site is a travelling show person’s site. There are a number of local amenities to the east within the residential area, a Lidl Supermarket to the south and a number of other fast food takeaways to the north.

8.20 The site has excellent accessibility with the industrial estate located just off the A66 meaning there is connections to the strategic road and motorway network. Site access is currently via Brewsdale Road or South Bank Road.

8.21 Recommendation: Previously developed industrial site on the edge of Lawson Industrial Estate. The site is partially cleared. The surrounding industrial estate is in a poor state of repair and building and environmental quality is poor. The site is considered to have marginal commercial attractiveness for employment uses and GL Hearn recommend the Council take a flexible approach, and consider development for alternative (non-B Class) uses at the site.

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Tame Road South

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 0.48 0.48 Previously Developed Land

8.22 This is a small, previously developed site located within Lawson Industrial Estate. The site is currently vacant and covers an area of 0.48 ha. The site is flat and previously developed with access available from Tame Road.

8.23 Lawson Industrial Estate is of poor quality and had a number of vacant units within it. Occupiers of the estate include Jewson, Enterprise Rent-a-Car, and Travis Perkins.

8.24 The site has excellent accessibility with the industrial estate located just off the A66 meaning there is connections to the strategic road and motorway network. There are a number of local amenities to the east within the residential area, a Lidl Supermarket to the south and a number of other fast food takeaways to the north.

Recommendation: The site presents an infill site within the existing industrial estate. It would be suitable for small B2 or B8 uses, to easily integrate into the existing industrial estate.

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Former Integral Site East and West

Site Area (ha) Vacant Area (ha) Nature of Vacant Land Former Integral Site East 2.5 2.5 Previously Developed Land Former Integral Site West 1.6 1.6 Previously Developed Land

8.25 Site located in East Middlesbrough close to the junction with the A66 and Cargo Fleet Lane (A171). The site (shown in red on the map above) is divided into two halves – east and west. The eastern site covers an area of 2.5 ha and contains a large warehouse unit which is in a state of dereliction, as well as considerable areas of hardstanding surrounding this. The site is vacant and in a generally poor state of repair.

8.26 The western site comprises undeveloped land located between the large warehouse to the east and the recently built retail park to the east (shown in blue hatching on the map above). The land to the west of the site has recently been redeveloped to create a retail park which has such occupiers such as KFC and Costa. As part of this retail park there is an unoccupied supermarket unit which backs onto the Land at Marsh Road site.

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8.27 The sites are located in a mixed use area. Surrounding uses include several car showrooms, car wash, petrol filling station, and various retail uses. To the south/ south east of the site are the East Middlesbrough and Lawson Industrial Estates, however the sites are detached from existing employment uses.

8.28 The main barrier to developing the sites is the existing warehouse unit. This is a poor state of repair and would require extensive work or demolition to bring the site into use, thus reducing the attractiveness of the eastern site for redevelopment, in comparison to other sites in the area.

8.29 The western site comprises a parcel of undeveloped land between the large warehouse and new supermarket units, with both of these units backing onto the site. Though the site bounds the A66 to the south there is no site access from this and site access could either be through the eastern site or via Marsh Road to the west. Given the western site’s location and access issues it is difficult to see the site coming forward for redevelopment in isolation from the eastern site. Potentially, the sites could be combined to provide a larger developable plot.

8.30 Recommendation: Two sites in a largely mixed use area in Eastern Middlesbrough surrounded by a range of non-B Class (sui generis and retail) uses. To bring the eastern site into use would require demolition of existing derelict unit. This makes the site less commercially attractive than other sites in this vicinity. The western site is unlikely to be redeveloped in isolation. Recommend the Council take a flexible approach to consider a range of alternative (non-B Class) uses at the site to encourage comprehensive redevelopment of the sites.

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Land to the East and West of Shepherdson Way

Site Name Site Area (ha) Vacant Area (ha) Nature of Vacant Land Land West of 3.3 2.8 Previously Developed Shepherdson Way Land Land East of 1.2 1.2 Previously Developed Shepherdson Way Land

8.31 Two sites located to the east of Middlesbrough town centre located either side of Shepherdson Way (shown in red on the map above). Both sites are currently vacant and undeveloped. The developable area of the western site is approximately 2.8 ha. The eastern site covers an area of 1.2ha. Site access is in place via a roundabout located beside the eastern edge of the site.

8.32 The sites are located to the east of a chemical plant and as such fall within the Health and Safety Executive (HSE) consultation zone. This may limit the development potential of the site for sensitive uses, although this is less likely to impact on industrial uses, and may limit the size and scale of potential development.

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8.33 The land to the east / south east of the site has recently been redeveloped to create a retail park (shown in blue hatching on the map above) which has such occupiers such as KFC and Costa. As part of this retail park there is an unoccupied supermarket unit.

8.34 Shepherdson Way provides access over the railway line, which lies just north of the site, to the riverside, Middlehaven, and the northern edge of the Town Centre. The A66 runs east/west to the south of the site providing excellent accessibility from this site as a major transport route.

8.35 Recommendation: Two vacant sites, immediately available for development, on the edge of the recently owned retail park, and in a very accessible location. The sites would be suitable for office park or light industrial uses (B1a/b/c).

Sites in Middlehaven

Central Industrial Area

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 20.7 20.7 Previously Developed Land

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8.36 A large generally flat area covering a large area of previously developed land in the centre of the Middlehaven area. The area comprises a number of plots, divided by the existing road network, the majority of which have been cleared and are now vacant.

8.37 Over the past decade Middlehaven has been the focus of intensive regeneration activities by the public sector, including the Middlehaven Partners, which are the Middlesbrough Council and The Homes and Community Agency (HCA, formerly English Partnerships) who own much of the land in the area.

8.38 Greater Middlehaven is allocated in the Housing Local Plan as an area for mixed use development which will include housing, office, retail, leisure, and educational uses. Housing Local Plan Policy H2 sets out the delivery schedule for Middlehaven over the period 2012-2029 of 450 residential dwellings and 140,000-190,000 sq m of non-residential floorspace including, offices, leisure and educational uses.

8.39 Parts of the area have already seen redevelopment for a range of uses: the new Middlesbrough College building; the Boho development focussed on providing office space for digital and media companies; the Manhattan Gate office development and the completion of the 80 unit Community in a Cube (CIAC) building.

8.40 The office space which has recently been delivered in the area is of a good quality. The Boho Zone, at the southern edge of the area, offers office space aimed at the digital media, digital technology and creative sectors. This provides accommodation for SMEs – units of 35-2,150 sq m, as well as more informal space for start-up companies, incubation space, and flexible space providing short- term leases.

8.41 Recommendation: The redevelopment of Middlehaven is a key priority in Middlesbrough. GL Hearn supports the proposals for a comprehensive mixed use redevelopment of the area. While there is not the demand to support largescale B1 office development in the area – the labour demand forecasts suggest that a relatively small proportion of the allocated non- residential uses will be required for employment uses. The Council should ensure that redevelopment proposals include B1 development to complement the existing digital and creative hub in the area. This could include a range of B1a, B1b, and B1c uses.

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West of Dock

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 2.1 2.1 Previously Developed Land

8.42 Cleared and vacant waterside site within the Greater Middlehaven area. The site is located to the east of the new Middlesbrough College building and north / west of the dock.

8.43 An outline planning application (16/5068/OUT) was submitted in July 2016 for the erection of snow and leisure centre (D2) with retail (A1) and restaurant (A3) facilities and associated car parking and landscaping. Currently, this application is pending determination.

8.44 Recommendation: As with the other sites within Greater Middlehaven, GL Hearn support the mixed use redevelopment of the area and recommend this site be allocated for mixed use to support residential, office, and leisure uses.

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Windward Way

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 1.9 1.9 Previously Developed Land

8.45 Cleared and vacant waterside site within the Greater Middlehaven area. The site is located on the south side of the dock. The site is currently cleared and vacant.

8.46 The site is bounded by two high quality developments – To the east of the site is the Hudson Quay office building offering Grade A waterfront office space. There is currently 500 sq m of office floorspace available and being advertised in the building. To the west of the site is the CIAC (Community in a Cube) apartment building. Further to the west is the new Middlesbrough College building.

8.47 Recommendation: As with the other sites within Greater Middlehaven, GL Hearn support the mixed use redevelopment of the area and recommend this site be allocated for mixed use to support residential, office, and leisure uses.

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Dock Point

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 14.9 14.9 Previously Developed Land

8.48 This site is located to the north of the Town Centre on a former dock yard/harbour site. The site has previously been developed with a number of vacant buildings and warehouses which are currently not occupied. The site covers an area of 14.85ha.

8.49 The vacant buildings which are currently on this site are of poor quality, as is the environmental quality of the site as a whole. The site is bounded to the south and west by similar sites which are vacant. The Riverside Football Stadium is to the south east. To the south west is the modern Middlesbrough College and an area which has recently undergone a number of public realm improvements. The site is bounded to the north and east by the River Tees.

8.50 This is a very large site which has the potential to form an important part of the Greater Middlehaven Regeneration Area which forms an import part of the Middlesbrough Spatial Strategy in the Housing Local Plan (2014) which lists this site as ‘Tees River Front’ and states that residential/employment uses would be appropriate on this site.

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8.51 The Middlehaven Development Framework (2012) sets out a vision for this area to become a lively extension to Middlesbrough Town Centre. This has seen over £160 million of investment with a number of developments locating here including: the Riverside Stadium, the new Middlesbrough College, hubs for digital enterprises, Middlesbrough’s Police Headquarters and youth facilities amongst other uses.

8.52 Recommendation: This site has the potential to be an important part of the regeneration of Middlehaven, and complement the redevelopment undertaken to date to create complete redeveloped area around this part of the riverside. Thus, the site could a mix of retail, office and leisure uses. GL Hearn recommends the Council support mixed use redevelopment of the site. Redevelopment of the site should be as part of the wider Middlehaven regeneration programme.

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Sites in Riverside Park

Land North East of Brighouse Business Village, Riverside Park Road

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 1.3 1.3 Previously Developed Land

8.53 The site is an undeveloped infill site within the Riverside Park employment area. Riverside Park is a large employment area located to the north west of the Town Centre and to the west of Middlehaven. The area is bounded to the north and west by the River Tees and contains a number of sides with waterfront access. The area is well connected to the strategic road network via the A66 which runs to the south of the industrial area.

8.54 Riverside Park is home to a wide range of employment uses. This includes the very large AV Dawson multimodal terminal which provides linkages between road, rail, and water. The area also comprises a large number of B2/B8 units as well as a number of smaller ‘courtyard’ style industrial and office parks within the area.

8.55 Generally, the occupancy rate of the industrial and warehouse units in Riverside Park is good and while there were some vacancies being advertised at the date of assessment we would consider

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this to be at a healthy level. However, there was a considerably higher level of vacancy among the office units in the area.

8.56 The majority of office accommodation in Riverside Park is ‘courtyard’ style one- or two-storey units surrounding areas of car parking, essentially providing office park type accommodation albeit in a location close to the Town Centre. The majority of stock dates from the 1990s and is now reasonably dated.

8.57 Recommendation: The site is an undeveloped infill site within the Riverside Park. The area is considered to be a well-functioning employment area which offers good quality industrial / warehouse sites and should be retained as such. The site should be protected for employment uses and any proposals for a change of use to non-B Class uses should be resisted.

Tees Valley Wildlife Trust Land, Riverside Park Road

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 2.2 2.2 Previously Developed Land

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8.58 The site is an undeveloped infill site within the Riverside Park employment area. Riverside Park is a large employment area located to the north west of the Town Centre and to the west of Middlehaven. The area is bounded to the north and west by the River Tees and contains a number of sides with waterfront access. The area is well connected to the strategic road network via the A66 which runs to the south of the industrial area.

8.59 Riverside Park is home to a wide range of employment uses. This includes the very large AV Dawson multimodal terminal which provides linkages between road, rail, and water. The area also comprises a large number of B2/B8 units as well as a number of smaller ‘courtyard’ style industrial and office parks within the area.

8.60 Generally, the occupancy rate of the industrial and warehouse units in Riverside Park is good and while there were some vacancies being advertised at the date of assessment we would consider this to be at a healthy level. However, there was a considerably higher level of vacancy among the office units in the area.

8.61 The majority of office accommodation in Riverside Park is ‘courtyard’ style one- or two-storey units surrounding areas of car parking, essentially providing office park type accommodation albeit in a location close to the Town Centre. The majority of stock dates from the 1990s and is now reasonably dated.

8.62 Recommendation: The site is an undeveloped infill site within the Riverside Park. The area is considered to be a well-functioning employment area which offers good quality industrial / warehouse sites and should be retained as such. The site should be protected for employment uses and any proposals for a change of use to non-B Class uses should be resisted.

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Site K, Startforth Road

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 1.8 1.8 Previously Developed Land

8.63 The site is an undeveloped infill site within the Riverside Park employment area. Riverside Park is a large employment area located to the north west of the Town Centre and to the west of Middlehaven. The area is bounded to the north and west by the River Tees and contains a number of sides with waterfront access. The area is well connected to the strategic road network via the A66 which runs to the south of the industrial area.

8.64 Riverside Park is home to a wide range of employment uses. This includes the very large AV Dawson multimodal terminal which provides linkages between road, rail, and water. The area also comprises a large number of B2/B8 units as well as a number of smaller ‘courtyard’ style industrial and office parks within the area.

8.65 Generally, the occupancy rate of the industrial and warehouse units in Riverside Park is good and while there were some vacancies being advertised at the date of assessment we would consider this to be at a healthy level. However, there was a considerably higher level of vacancy among the office units in the area.

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8.66 The majority of office accommodation in Riverside Park is ‘courtyard’ style one- or two-storey units surrounding areas of car parking, essentially providing office park type accommodation albeit in a location close to the Town Centre. The majority of stock dates from the 1990s and is now reasonably dated.

8.67 Recommendation: The site is an undeveloped infill site within the Riverside Park. The area is considered to be a well-functioning employment area which offers good quality industrial / warehouse sites and should be retained as such. The site should be protected for employment uses and any proposals for a change of use to non-B Class uses should be resisted.

Barker & Stonehouse (North of Drake Court), Riverside Park Road

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 2.9 2.9 Previously Developed Land

8.68 The site is an undeveloped infill site within the Riverside Park employment area. Riverside Park is a large employment area located to the north west of the Town Centre and to the west of Middlehaven. The area is bounded to the north and west by the River Tees and contains a number

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of sides with waterfront access. The area is well connected to the strategic road network via the A66 which runs to the south of the industrial area.

8.69 Riverside Park is home to a wide range of employment uses. This includes the very large AV Dawson multimodal terminal which provides linkages between road, rail, and water. The area also comprises a large number of B2/B8 units as well as a number of smaller ‘courtyard’ style industrial and office parks within the area.

8.70 Generally, the occupancy rate of the industrial and warehouse units in Riverside Park is good and while there were some vacancies being advertised at the date of assessment we would consider this to be at a healthy level. However, there was a considerably higher level of vacancy among the office units in the area.

8.71 The majority of office accommodation in Riverside Park is ‘courtyard’ style one- or two-storey units surrounding areas of car parking, essentially providing office park type accommodation albeit in a location close to the Town Centre. The majority of stock dates from the 1990s and is now reasonably dated.

8.72 Recommendation: The site is an undeveloped infill site within the Riverside Park. The area is considered to be a well-functioning employment area which offers good quality industrial / warehouse sites and should be retained as such. The site should be protected for employment uses and any proposals for a change of use to non-B Class uses should be resisted.

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Barker & Stonehouse (South of Drake Court), Riverside Park Road

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 1.5 1.5 Previously Developed Land

8.73 The site is an undeveloped infill site within the Riverside Park employment area. Riverside Park is a large employment area located to the north west of the Town Centre and to the west of Middlehaven. The area is bounded to the north and west by the River Tees and contains a number of sides with waterfront access. The area is well connected to the strategic road network via the A66 which runs to the south of the industrial area.

8.74 Riverside Park is home to a wide range of employment uses. This includes the very large AV Dawson multimodal terminal which provides linkages between road, rail, and water. The area also comprises a large number of B2/B8 units as well as a number of smaller ‘courtyard’ style industrial and office parks within the area.

8.75 Generally, the occupancy rate of the industrial and warehouse units in Riverside Park is good and while there were some vacancies being advertised at the date of assessment we would consider this to be at a healthy level. However, there was a considerably higher level of vacancy among the office units in the area.

8.76 The majority of office accommodation in Riverside Park is ‘courtyard’ style one- or two-storey units surrounding areas of car parking, essentially providing office park type accommodation albeit in a

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location close to the Town Centre. The majority of stock dates from the 1990s and is now reasonably dated.

8.77 Recommendation: The site is an undeveloped infill site within the Riverside Park. The area is considered to be a well-functioning employment area which offers good quality industrial / warehouse sites and should be retained as such. The site should be protected for employment uses and any proposals for a change of use to non-B Class uses should be resisted.

South of Simcox Court

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 1.9 1.9 Previously Developed Land

8.78 The site is an undeveloped infill site within the Riverside Park employment area. Riverside Park is a large employment area located to the north west of the Town Centre and to the west of Middlehaven. The area is bounded to the north and west by the River Tees and contains a number of sides with waterfront access. The area is well connected to the strategic road network via the A66 which runs to the south of the industrial area.

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8.79 Riverside Park is home to a wide range of employment uses. This includes the very large AV Dawson multimodal terminal which provides linkages between road, rail, and water. The area also comprises a large number of B2/B8 units as well as a number of smaller ‘courtyard’ style industrial and office parks within the area.

8.80 Generally, the occupancy rate of the industrial and warehouse units in Riverside Park is good and while there were some vacancies being advertised at the date of assessment we would consider this to be at a healthy level. However, there was a considerably higher level of vacancy among the office units in the area.

8.81 The majority of office accommodation in Riverside Park is ‘courtyard’ style one- or two-storey units surrounding areas of car parking, essentially providing office park type accommodation albeit in a location close to the Town Centre. The majority of stock dates from the 1990s and is now reasonably dated.

8.82 Recommendation: The site is an undeveloped infill site within the Riverside Park. The area is considered to be a well-functioning employment area which offers good quality industrial / warehouse sites and should be retained as such. The site should be protected for employment uses and any proposals for a change of use to non-B Class uses should be resisted.

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Land Between Romaldkirk Road and Forty Foot Road

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 1.0 1.0 Previously Developed Land

8.83 The site is an undeveloped infill site within the Riverside Park employment area. Riverside Park is a large employment area located to the north west of the Town Centre and to the west of Middlehaven. The area is bounded to the north and west by the River Tees and contains a number of sides with waterfront access. The area is well connected to the strategic road network via the A66 which runs to the south of the industrial area.

8.84 Riverside Park is home to a wide range of employment uses. This includes the very large AV Dawson multimodal terminal which provides linkages between road, rail, and water. The area also comprises a large number of B2/B8 units as well as a number of smaller ‘courtyard’ style industrial and office parks within the area.

8.85 Generally, the occupancy rate of the industrial and warehouse units in Riverside Park is good and while there were some vacancies being advertised at the date of assessment we would consider this to be at a healthy level. However, there was a considerably higher level of vacancy among the office units in the area.

8.86 The majority of office accommodation in Riverside Park is ‘courtyard’ style one- or two-storey units surrounding areas of car parking, essentially providing office park type accommodation albeit in a

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location close to the Town Centre. The majority of stock dates from the 1990s and is now reasonably dated.

8.87 Recommendation: The site is an undeveloped infill site within the Riverside Park. The area is considered to be a well-functioning employment area which offers good quality industrial / warehouse sites and should be retained as such. The site should be protected for employment uses and any proposals for a change of use to non-B Class uses should be resisted.

Former Ironmasters Site

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 12.0 12.0 Previously Developed Land

8.88 The site is a large undeveloped site on the southern end of the Riverside Park employment area. A plot to the north east of the site has recently been redeveloped to create a research and development facility which is now occupied by TWI. The site comprises the rest of the former Ironmasters Site and remains undeveloped.

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8.89 Riverside Park is a large employment area located to the north west of the Town Centre and to the west of Middlehaven. The area is bounded to the north and west by the River Tees and contains a number of sides with waterfront access. The area is well connected to the strategic road network via the A66 which runs to the south of the industrial area.

8.90 Riverside Park is home to a wide range of employment uses. This includes the very large AV Dawson multimodal terminal which provides linkages between road, rail, and water. The area also comprises a large number of B2/B8 units as well as a number of smaller ‘courtyard’ style industrial and office parks within the area.

8.91 Generally, the occupancy rate of the industrial and warehouse units in Riverside Park is good and while there were some vacancies being advertised at the date of assessment we would consider this to be at a healthy level. However, there was a considerably higher level of vacancy among the office units in the area.

8.92 The majority of office accommodation in Riverside Park is ‘courtyard’ style one- or two-storey units surrounding areas of car parking, essentially providing office park type accommodation albeit in a location close to the Town Centre. The majority of stock dates from the 1990s and is now reasonably dated.

8.93 Recommendation: The site is an undeveloped infill site within the Riverside Park. The area is considered to be a well-functioning employment area which offers good quality industrial / warehouse sites and should be retained as such. The site should be protected for employment uses and any proposals for a change of use to non-B Class uses should be resisted.

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Sites in Central Middlesbrough

Centre Square East

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 3.4 1.3 Potential Redevelopment Opportunity

8.94 Town Centre site comprising civic buildings and open space in the heart of Middlesbrough’s civic core. The site comprises several buildings: the Tees Valley Combined Court Centre sits in the north of the site and the smaller former register office to the west of this in the north west corner of the site (shaded in blue hatching on the map above). To the south of these is a large area of high quality public open space. The site is bounded by a range of uses including office, leisure, and residential.

8.95 Centre Square East was allocated in the Middlesbrough Regeneration Development Plan Document (adopted February 2009) Policy Reg 25 for the creation of:

“A modern civic open space, surrounded by high quality development complementing mima, will be created within the Centre Square East area as identified on the proposals map. Appropriate uses include:

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• hotel; • residential; • offices; • leisure; • retail (A1, A2, A3 and A4 uses); and • cultural.”

8.96 The Tees Valley Combined Court Centre is a large modern building of good quality and the public open space to the south of this is landscaped creating a high quality public realm. However, the Register Office building is of poorer quality and this provides a potential redevelopment opportunity. The Council is currently pursuing plans to sell the site for redevelopment to create a 200,000 sq ft state-of-the-art office block.

8.97 Recommendation: The site is excellently located with the Town Centre, not only benefiting from the amenities and public transport links of the wider Town Centre, but also proximity to high quality civic and office buildings and high quality public realm of Centre Square. The site provides a unique redevelopment opportunity in Middlesbrough and GL Hearn support the redevelopment proposals to create high quality office space at the site.

Gurney Street Triangle

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Site Area (ha) Vacant Area (ha) Nature of Vacant Land 3.8 None Potential Redevelopment Opportunity

8.98 The Gurney Street Triangle area forms a Town Centre quarter in the north east of Middlesbrough Town Centre bounded by Corporation Road and Gurney Street to the south, Albert Road to the west, and Wilson Street to the north/east. The area is home to a wide range of uses including office, retail, hotel, residential, and areas of car parking.

8.99 In terms of existing employment uses in the area, there is the Council offices building on Corporation Road which is currently being advertised to let; and a nine storey 1960s office building on Wilson Street which is currently vacant and also being advertised; there are also several smaller office buildings fronting onto Albert Road.

8.100 In addition to the employment uses, the central part of the area comprises residential blocks, there is also a Jurys Inn hotel and car parking. There is also a student accommodation block adjoin the site to the south.

8.101 The area is in a very accessible location close to the amenities and public transport links of Middlesbrough Town Centre. To the east of the site is the junction with the A66 providing excellent vehicular access.

8.102 The general quality of the built environment and public realm is poor. The area suffers from poor legibility and linkages to the surrounding Town Centre the result being that, with the exception of the units fronting onto Corporation Road and Albert Road, the prominence of the building in the area is poor. This results in reducing the commercial attractiveness of the location.

8.103 The area was allocated in the Middlesbrough Regeneration Development Plan Document (adopted February 2009) Policy Reg 26 which states:

“If redeveloped successfully it can help create a vitally important and attractive link between the cultural and civic area of the town centre, the historic heart around the station and Middlehaven.”

8.104 Policy 26 states that Planning permission will be granted for a high quality, mixed use development including the following uses: • residential; • car parking; • office; and • active ground floor ancillary retail.

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8.105 Recommendation: Mixed use area within the Town Centre which is of mixed character and quality. GL Hearn recommends regeneration of the area is supported through mixed use development. However, safeguarding for specific uses is likely to hold back redevelopment of the area. Existing employment uses should not be specifically protected.

Former Odeon Site and Former Cleveland Scientific Institute Site

Site Name Site Area (ha) Vacant Area (ha) Nature of Vacant Land Former Odeon Site 0.18 0.18 Currently in use as car park Former Cleveland 0.08 0.08 Currently in use as car Scientific Institute Site park

8.106 Two sites in Middlesbrough Town Centre opposite the Tees Valley Combined Court. The Former Odeon site is located to the north west of the junction of Corporation Road and Wilson Street and covers an area of 0.18 ha. The Former Cleveland Scientific Institute Site is located to the south of

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Corporation Street at the junction with Oak Street and covers an area of 0.08 ha. Both sites are currently in use as surface level car parking.

8.107 Considering the location within the Town Centre, and the surrounding uses, an office development would be the most suited here. However, consideration would have to be given to whether the loss of this sites would impact negatively on car parking provision within the town centre

8.108 Recommendation: The sites are accessible, centrally located close to public transport; and provide an infill opportunity for redevelopment for office use.

Former Police Station Site, Dunning Street

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 0.23 0.23 Currently in use as car park

8.109 This site is currently in use as a car parking facility for the Town Centre. The site is rectangular shape and covers an area of 0.23 ha.

8.110 The site is surrounded on all sides by a range of uses: Tees Valley Magistrates Court to the West, residential uses to the East, community and public space to the north, and student halls to the south.

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The site is flat and of moderate quality with a disused and vacant building sitting in the middle of this.

8.111 Considering that this is a town centre site, and a number of uses surround it, an office development would be the most suited here. However, consideration would have to be given to whether the loss of this site would impact negatively on car parking provision within the town centre

8.112 Recommendation: The site is accessible, centrally located close to public transport; and provides an infill opportunity for redevelopment for office use.

Land Opposite Zetland Car Park

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 0.58 0.58 Previously Developed Land

8.113 This site is located to the north of the Town Centre boundary. The site has a narrow rectangular shape occupied by a range of small scale occupier. Uses at the site include Garages/MOT testing garages, vacant units and small car parks. The site covers an area of 0.58 ha.

8.114 The site lies parallel to the A66 which is just south with access via North Road. The site benefits from excellent public transport and road connections; as well as being less than a five minute walk

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to the town centre. Middlesbrough Train Station is also located just to the east of the site. The surrounding area has a number of similar uses with a multi-storey car park directly in front, a further car park to the west, and further garage industrial uses to the west.

8.115 The quality of the current units/car parks on the site are poor and may need refurbishing for future use. The area includes a number of small infill sites, currently used as informal car parking, which could present future development opportunity.

8.116 Recommendation: Site on the edge of the Town Centre, however the area is not considered commercially attractive and is unlikely to attract development for Town Centre uses. Alternative (non-B Class) uses should be considered at this site to ensure continued productive use of the site.

Marsh Road

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 1.2 1.2 Undeveloped Land

8.117 This site is located to the north of the Town Centre boundary. This site is located just west of the Land Opposite Zetland Car Park. This is a strip of undeveloped land which is currently overgrown

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and bounds the A66 which is to the south. The site slopes up from road level up to the A66. Foliage on this sites blocks the view of the A66. The site covers an area of 1.2 ha.

8.118 The site is unsurfaced grassland. The western portion of this land is used as informal car parking for neighbouring uses. These include units which are predominantly car garages. The quality of environment is generally poor and the units in the surrounding area are generally in a poor state of repair.

8.119 The site benefits from being located beside the A66 and Middlesbrough which is located to the east. The site also benefits from excellent public transport and road connections; as well as being less than a five minute walk to the town centre.

8.120 Recommendation: The gradient of the site and proximity to the A66 raises questions of the site on the edge of the Town Centre, the site is not considered commercially attractive and is unlikely to attract development for Town Centre uses. The Council should consider a flexible approach to uses at the site including non-B Class employment related uses similar to those existing in the surrounding area (e.g. garages/MOT testing).

Wood Street Car Park

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Site Area (ha) Vacant Area (ha) Nature of Vacant Land 0.39 0.39 Previously Developed Land

8.121 This site is currently in use as a car parking facility for Middlesbrough Train Station. This is a surfaced and demarcated car park which is of good quality. The site covers an area of 0.39 ha.

8.122 The site is located just to the east of the train station and north of the town centre. Adjacent to the site is a small Network Rail industrial site. Behind the site to the north, is a redeveloped part of Middlesbrough with mew public space, offices and Middlesbrough College. The town centre and train station can be easily accessed from this site.

8.123 Recommendation: This site is currently used as a surfaced and demarcated car park used by the railway station. The site’s availability for employment redevelopment is therefore questionable.

Cannon Park Way Car Park

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Site Area (ha) Vacant Area (ha) Nature of Vacant Land 0.44 0.44 Previously Developed Land

8.124 The site is located within Cannon Park Industrial Estate to the west of Middlesbrough Town Centre. It is bounded by the A66 to the north while a residential area lies to the south of the industrial estate. The site is covers an area of 0.44ha.

8.125 The site is vacant and is currently in use as a car park, used as a park and ride for people attending Teesside University. It is flat and surrounded by Industrial Units/Warehouses to the east, west and south.

8.126 The site is located to the south of the A66 and access can be gained from this via the B1272. This provides excellent transport links to the strategic road and motorway network. Access can also be gained from the East by the A1032 via Newport Road.

8.127 Cannon Park is a good quality industrial area with a high occupancy rate, the quality of buildings and the general environment is generally good. The area benefits from on-site car parking and overspill car parking in nearby streets.

8.128 Recommendation: Cannon Park is a good quality, well-functioning industrial estate with high occupancy and good access to the strategic road network. This site presents an opportunity for redevelopment for B2 or B8 uses and should be retained as such. Proposals for change of use for alternative uses should be resisted.

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Cannon Park West

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 0.81 0.81 Previously Developed Land

8.129 This site is located on the western edge of Cannon Park Industrial Estate to the west of Middlesbrough Town Centre. It is bounded by the A66 to the north west and employment uses to the east and south. The site covers an area of 0.81ha and is currently vacant and cleared.

8.130 The site is located close to the A66 and access can be gained from this via the B1272. This provides excellent transport links to the strategic road network.

8.131 Cannon Park is a good quality industrial area with a high occupancy rate, the quality of buildings and the general environment is generally good. The area benefits from on-site car parking and overspill car parking in nearby streets.

8.132 Recommendation: Cannon Park is a good quality, well-functioning industrial estate with high occupancy and good access to the strategic road network. This site presents an opportunity for redevelopment for B2 or B8 uses and should be retained as such. Proposals for change of use for alternative uses should be resisted.

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Sites in Other Locations

Marshalling Yards

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 13.8 None N/A

8.133 The site is located to the western edge of Middlesbrough Borough close to the boundary with Stockton-on-Tees. The site is located in between the River Tees (to the North) and the A66 (to the South), to the north west of the junction between the A66 and A19. The narrow Old River Tees also runs through the site in a north/south direction to the West. The site covers an area of 13.83ha.

8.134 The site is currently in use as a railway storage facility/freight yard and comprises a large area of railway sidings with a number of retired trains and vacant offices/porta cabins also situated on the land.

8.135 Any future development at the site would rely on Network Rail’s development plans. Development for B Class employment uses would require considerable work to remove the existing rail infrastructure and potentially redirecting the railway. The existing buildings at the site are of a poor

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quality and would not suit any future employment uses. In addition there would likely be land remediation work. Access to the site is poor via an unsurfaced road at the end of Maze Lane. A new site access would need to be created to support more intensive use at the site.

8.136 The site is detached from the rest of Middlesbrough. Nearby, to the south of the A66, lie a number of retail and leisure facilities within the Teesside Shopping Park. This includes a cinema, restaurants, retail units/warehouses and a supermarket.

8.137 Recommendation: This is a large site in a very accessible location, and would be suitable for redevelopment for largescale B2 or B8 uses. However, there are considerable barriers to development of the site, not least the removal of the existing railway infrastructure and potential redirecting of the railway. As such, the site can at best be considered a long term redevelopment opportunity and cannot be considered part of the available supply of employment land.

Teesside Park South

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 6.0 6.0 N/A

8.138 The site is located to the western edge of Middlesbrough Borough close to the boundary with Stockton-on-Tees. The site is located to the south of the Cinema and leisure complex at Teesside

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Retail Park. The cinema / leisure building fronts onto the carpark to the north and the site is located to the rear of this building.

8.139 Access into the site is through the Teesside Retail Park to the south west. A single access road serves the sites which joins the A66. The current access situation means that the site is unlikely to be commercially attractive for employment uses as vehicles would have to navigate the internal retail park roads to access the site. Additionally, there does not appear to be opportunity to create a separate access into the site from either the A66 or A19.

8.140 Recommendation: Due to the site’s location and access issues, it is not considered suitable for B Class employment uses. Recommend the site is considered for alternative uses.

Land Enclosed by A1044

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 1.9 1.9 Greenfield

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8.141 A greenfield site which is situated towards the southern end of the settlement boundary. The site covers an area of 1.92 ha and is currently undeveloped. There is a slight gradient on the land but it is generally flat.

The site is enclosed by the A1044 at the junction with the A174 and is bounded by the spur road which surrounds the site. The site therefore provides limited commercial attractiveness for redevelopment and would be considered an ‘in-fill’ opportunity. However given the site’s location which is in a largely rural location detached from any existing employment (or related) uses, it is considered unlikely that development for commercial uses will come forward at this site, despite its proximity to the A174.

8.142 Recommendation: Due to the site’s location, it is not considered a commercially attractive site for B Class employment uses.

Hemlington Grange

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 7.9 7.9 Greenfield

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8.143 This site is undeveloped greenfield site located adjacent to the southern edge of the settlement boundary. Stainton Way bounds the site on its northern edge and provides the main access to its southern edge via a small, narrow road which also leads to the Unicorn Centre site, which borders the site to the south.

8.144 Site access is via a narrow and rough track which is adequate for existing uses but would need improving if use of the site intensifies. Three residential properties neighbour the site to the south and have views into the site area. There are further residential areas to the north along Stainton Way.

8.145 The site is allocated for employment uses in the Housing Local Plan (Policy H24). Permitted uses include B1, B2 and B8. This is part of the wider residential led allocation at Hemlington Grange (Policy H23) which will provide 1,230 new dwellings.

8.146 The site is located on the edge of Hemlington which is a primarily residential area in south Middlesbrough. Access to the site is via Stainton Way which joins the A174 approximately 1 mile to the north.

8.147 Recommendation: Greenfield site allocated for employment use in the Housing Local Plan as part of the wider residential-led allocation at Hemlington Grange. Development on this site should come forward as part of the wider allocation.

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Unicorn Centre

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 8.0 8.0 Greenfield

8.148 The site is predominantly greenfield land in use as an equestrian centre for disabled people run by a charity. The site is mainly undeveloped however there are several equestrian buildings on the southern section of the site. The site covers an area of 7.98ha and is bounded on all sides by open agricultural land. The site lies to the south of the Hemlington Grange site and could be considered as a potential expansion to employment development at the Hemlington Grange site.

8.149 The site has roughly a rectangular shape with the western and northern boundaries bordered by foliage. The site is serviced by a small road, narrow road which adjoins Stainton Way. This is adequate for existing users but is narrow and a rough track. Three residential properties neighbour the site to the south and have views into the site area. The site is predominantly used for the purposes of the equestrian centre and for the grazing of the animals of the centre. There are further residential areas to the north along Stainton Way.

8.150 The site is located on the edge of Hemlington which is a primarily residential area in south Middlesbrough. Access to the site is via Stainton Way which joins the A174 approximately 1 mile to the north. The site is not considered to be a commercially attractive location for employment uses and there are other sites closer to the major routes (A174 and A19) and in more prominent locations which would be considered more commercially attractive locations for development.

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8.151 Recommendation: The greenfield site is surrounded on all sides by open agricultural land. The site is not suitable for development in isolation but could form a potential extension to the Hemlington Grange Site. This means the site can only be considered as a very long-term development prospect and can’t be counted towards the current supply of employment land.

Land North of Low Lane (Stainton Vale Farm)

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 79.1 79.1 Greenfield

8.152 Large, generally flat, greenfield site on the south western edge of the Borough located next to the junction between the A19 and the A174. The site is predominantly undeveloped greenfield land under agricultural use. There is a hotel / leisure resort located on the eastern side of the site.

8.153 The site is beyond the settlement boundary of Middlesbrough and is surrounded on all sides by open agricultural land. Any development at the site would have to be subject to suitable landscape impact assessments. To the west of the A19 is Teesside Industrial Estate which is a large area of primarily B2 and B8 uses. While this industrial estate is generally performing well, there are several vacant developable plots within the estate.

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8.154 Vehicular access to the site is via Low Lane (B1380) which joins the A174 to the north east, although this junction only supports westbound traffic towards the A19.

8.155 The site provides a very large site in an attractive location and, from a commercial perspective, would be an attractive location for a range of employment uses. However, there are other sites nearby which are similarly attractive but benefiting from greater planning certainty.

8.156 Recommendation: The site is well located with good links to the strategic road network, and would be an attractive site for employment uses. Given the investment required to bring this site forward, it can be considered as a potential long term prospect but does not form part of the existing employment land supply.

Land South of Low Lane

Site Area (ha) Vacant Area (ha) Nature of Vacant Land 33.2 33.2 Greenfield

8.157 As with the above site (Land North of Low Lane (Stainton Vale Farm)) this site comprises a large, generally flat, greenfield site on the south western edge of the Borough located close to the junction between the A19 and the A174. The site is undeveloped greenfield land under agricultural use.

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8.158 The site is in a less prominent location than the site to the north and is therefore considered less commercially attractive.

8.159 As with the site to the north, vehicular access to the site is via Low Lane (B1380) which joins the A174 to the north east, although this junction only supports westbound traffic towards the A19.

8.160 Recommendation: The site is excellently located with good links to the strategic road network, and would be an attractive site for employment uses. In addition the Land to the North of Low Lane is a more prominent location bounding the A19 and A174 and is considered more commercially attractive. Given the investment required to bring this site forward, it can be considered as a potential long term prospect but does not form part of the existing employment land supply.

Site Assessment Summary

8.161 The site assessment process has considered a range of existing and potential employment sites across Middlesbrough and assessed their potential for supporting future employment development. This has identified a total of 21 sites across the Borough where employment uses would be suitable and commercially attractive to support future development for employment uses. Collectively these sites comprise 41.2 ha.

8.162 In addition to this there is 43.4 ha of land which is identified as suitable for mixed use development. This recommendation is for sites where employment uses may be appropriate as part of a wider development but should not be safeguarded specifically for employment uses. The majority of this (39.6 ha) is at Middlehaven, along with 3.8 ha in Middlesbrough Town Centre. We would expect an element of employment uses to be delivered at such sites.

8.163 Finally, three of the Borough’s larger greenfield sites provide the potential for larger scale development for employment uses. However, given the infrastructure required to bring these sites forward, these sites will not contribute to meeting the Borough’s existing need, nor are likely to come forward within the plan period. Therefore these sites represent longer term development prospects and should not be considered to contributing to the Borough’s current employment land supply.

8.164 Table 17 provides a summary of the employment site assessments.

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Site Assessment Summary Table Vacant Area Recommended Use Sites in East Middlesbrough Land East of Shepherdson Way 1.2 B1 Land West of Shepherdson Way 2.8 B1 Middlesbrough Warehousing 2.4 Flexible Tame Road (south) 0.48 B2 / B8 Former Integral Site East 2.5 Flexible Former Integral Site West 1.6 Flexible Cargo Fleet 3.8 General B Class Westerby Road 0.38 B1c / B2 / B8 Sotherby Road 0.27 B1c / B2 / B8 North of A1085 / West of Murdock Road 0.56 Flexible Sites in Middlehaven Windward Way 1.9 Mixed Use Central Industrial Area 20.7 Mixed Use Dock Point 14.9 Mixed Use West of Dock 2.1 Mixed Use Sites in Middlesbrough Centre Cannon Park Way Car Park 0.44 B2 / B8 Cannon Park West 0.81 B2 / B8 Former Odeon Site 0.18 B1a/b Former Cleveland Scientific Institute Site 0.08 B1a/b Former Police Station Site, Dunning Street 0.23 B1a/b Gurney Street Triangle 3.8 Mixed Use Centre Square East 1.3 B1a/b Land Opposite Zetland Car Park 0.58 Flexible Marsh Road 1.2 Flexible Wood Street Car Park 0.39 Non B Sites in Riverside Park Land North East of Brighouse Business Village, 1.3 General B Class Riverside Park Road Tees Valley Wildlife Trust Land, Riverside Park 2.2 General B Class Road Site K, Startforth Road 1.8 General B Class Barker & Stonehouse (North of Drake Court), 2.9 General B Class Riverside Park Road Barker & Stonehouse (South of Drake Court), 1.5 General B Class Riverside Park Road South of Simcox Court 1.9 General B Class Former Ironmasters Site 12 General B Class Land Between Romaldkirk Road and Forty Foot 1 General B Class Road Sites in other locations Marshalling Yards 13.8 Non B Land North of Low Lane (Stainton Vale Farm) 79.1 Potential Long Term Prospect Land South of Low Lane 33.2 Potential Long Term Prospect Unicorn Centre 8 Potential Long Term Prospect Teesside Park - Southern Section 6 Non B Land Enclosed by A1044 1.9 Non B Hemlington Grange 7.9 General B Class

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9 SUPPLY DEMAND BALANCE

9.1 Section 6 identified the need for around 34 ha of employment land in Middlesbrough over the period 2016-34. This is broken down by use class in the table below.

Identified Need for Employment Land, 2016-34 Use Identified Need (ha) B1a/b: Office 10.7 B1c/B2: Industrial 10.4 B8: Warehouse/ Distribution 13.2 Total B-Class Uses 34.3

9.2 The site assessment process (section 7) has identified a range of sites which GL Hearn consider suitable for employment uses. Cumulatively, these sites comprise 44.5 ha. This figure is broken down by specific use classes in the table below. There is 32.5 ha identified as suitable for ‘General B Class’ use – i.e. would be suitable for office, industrial, or warehouse/distribution development.

Site Assessments – Vacant Area by Recommended Use Recommended Use Sum of Vacant Area (ha) General B Class 32.5 B1 4.0 B1a/b 1.8 B1c / B2 / B8 4.5 B2 / B8 1.7 Flexible 8.8 Mixed Use 43.4 Non-B Class 22.1 Potential Long Term Prospect 120.3

B Class Total 44.5

9.3 Table 20 shows the sum of the vacant site areas at sites recommended for B Class employment uses broken down by broad location. This shows the greatest number of vacant and suitable sites is in Riverside Park – 8 sites constituting 55% of the Borough’s vacant and suitable employment land; there are 6 sites in East Middlesbrough constituting 20% of the Borough’s supply; there are 6 small sites in Middlesbrough Centre constituting 7% of the Borough’s supply. There is also the site at Hemlington Grange which at 7.9 ha constitutes 18% of the total supply.

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Site Assessments – Sites Recommended for Employment Uses by Location Location No. of Suitable Sites Sum of Area (ha) Area % East Middlesbrough 6 8.9 20% Hemlington Grange 1 7.9 18% Riverside Park 8 24.6 55% Middlesbrough Centre 6 3.0 7% Grand Total 21 44.5 100%

Office Space

9.4 There is currently an oversupply of office space in Middlesbrough Town Centre with a large quantum of poor quality and dated stock which is not suitable for modern business needs, and not attractive to occupiers. As a result there is a large amount of vacant office space in prominent locations which further dampens demand for office uses in the Town Centre. This poor quality office space is unlikely to contribute to meeting Middlesbrough’s future office requirements and should not be counted towards the supply. We recommend that this redundant office premises are redeveloped for alternative (non-employment) uses.

9.5 Middlesbrough’s office market is focussed in two key locations – the Town Centre and Middlehaven. These areas have key strengths that make them potentially attractive locations for office development: Middlesbrough Town Centre provides a strong retail and leisure offer, and is the major destination for these activities within the Tees Valley. Middlehaven provides similar drivers of the leisure economy with Middlesbrough Football Club and the proposed Snowdome to be located in the area. The leisure and retail offer provides a unique selling point compared to elsewhere in the Tees Valley which should be leveraged to promote office demand. The development of new office space will need to be tied into wider retail/leisure redevelopments. A key aspect is improving connectivity between the Town Centre and Middlehaven areas to provide a cohesive retail / leisure / office destination. The redevelopment of the Albert Road Corridor will be key to this.

9.6 Within these areas there is 43.4 ha of land identified as suitable for mixed use development. The majority of this is at Middlehaven, with a smaller amount at Gurney Street Triangle in the Town Centre. While these sites are not recommended to be safeguarded specifically for employment uses, we would expect these sites to deliver a quantum of office space through mixed use redevelopment.

9.7 Taking these factors into account, there is a sufficient supply of land to meet the Borough’s office demand in quantitative terms.

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9.8 In terms of office occupiers in the town, the economy is still very dependent on the public sector with large numbers of people employed by the NHS and Council. However, the econometric forecasts show that there will need to be a greater growth in private sectors such as professional services, digital, technology, and creative sectors. New office space should be focussed on meeting the needs of these sectors.

9.9 The Boho quarter continues to be very successful in providing good quality space for the digital and creative sectors and provides modern office space providing modern office facilities to support medium, small, and micro businesses. The development includes a range of office spaces starting at 100 sq ft; informal and flexible workspaces; and project spaces for use by companies requiring short term capacity.

9.10 Currently, Stockton-on-Tees is the most popular location for office occupier looking for space in the Tees Valley, and provides a range of good quality out-of-town office park locations which provide good quality modern accommodation with good car parking provision in easily drivable locations. While these low density office park development are not considered appropriate for the Town Centre or Middlehaven there are factors which should be considered in order to attract office occupiers to these locations: car parking provision was cited as a major factor for businesses looking for premises in the area; access to the strategic road network is important and Middlesbrough is well served by the A66; additionally, Middlesbrough train station has the potential to provide good public transport links, however links nationally are currently somewhat limited.

Industrial Space

9.11 In terms of industrial and warehouse/distribution provision, the majority of the supply (24.6 ha) is at Riverside Park. The Former Ironmasters Site provides 12 ha of suitable land, with the remainder comprising smaller (less than 3 ha) infill sites within the area. Beyond Riverside Park, there is 4.9 ha at sites within the existing industrial area in East Middlesbrough, and some smaller sites within Cannon Park Industrial Estate. Additionally, there is 7.9 ha of employment land allocated at Hemlington Grange.

9.12 In terms of quality, the majority of stakeholders interviewed generally feel that there is sufficient land for industrial uses but that it not of great quality. There is very unlikely to be any speculative development and there is unlikely to be any new building without public subsidy. In addition, sites at the existing industrial areas often require remediation and have the associated costs making them a less attractive proposition for redevelopment.

9.13 There is a shortage of small to medium size units in the Borough and a number of stakeholders identified that there is a demand for smaller, traditional workshop units and workspace of between

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500 and 5,000 sq ft. Cannon Park was cited a number of times as providing the type, size, and quality of space being sought.

9.14 The advanced manufacturing sector is seen as a growth sector being able to draw from the existing manufacturing skills base within the area as well as drawing upon the strengths of Teesside University and Middlesbrough College. Although demand for new industrial space in this sector is relatively fragile, it is reliant on the growth of existing local firms and start-up enterprises. There is demand for small workshop spaces to support the development of small businesses in this sector – similar to the Boho scheme for advanced manufacturing.

9.15 Part of Middlesbrough’s advanced manufacturing offer relates to the growth of the offshore energy sector and the opportunities to benefit from the port area. There is increasing demand for locations with river frontage and the Port is seen as major demand driver. The Council should support development which benefits from and adds to this, and conversely should resist uses which do not.

9.16 For B8 uses, while the A19 provides a good demand driver for warehouse/distribution uses, it is considered that sites closer to the A1 are more attractive to meet the sub-regional / regional B8 demand, and therefore demand in Middlesbrough is for smaller scale premises meeting the needs from local manufacturers and final mile distribution uses. There is a limited demand for large scale B8 premises, with demand more focussed on smaller B8 sites of around 2-3 ha with good access to the A19 and/or the A66.

9.17 In addition to the smaller infill sites in Middlesbrough’s existing employment areas, there is a demand for a larger site within the Borough. Sites of this larger size provide a number of benefits – being able to support larger units and provide a greater flexibility to meet occupier requirements. Additionally, larger sites provide the sufficient critical mass to create a commercially attractive and deliverable new employment area – whether this forms within or an extension to an existing employment site or at a new location creating a new business park within the Borough. It is important to provide a sufficient choice – in terms of location, type and size of plot / premises – and currently the Borough’s supply fails to provide this being too reliant on infill sites in Riverside Park. The allocation at Hemlington Grange will provide for this need and we recommend the Council continue support for a considerable quantum of employment land at this location.

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9 SUMMARY AND CONCLUSIONS

9.1 This Economic Development Needs Assessment has been prepared to form part of the evidence base to inform production of Middlesbrough’s Local Plan. It provides an assessment of Middlesbrough’s commercial property market which has also been informed through extensive stakeholder consultation, forecasts the Borough’s future economic growth and considers the implications this has on the Borough’s future employment land requirements. Finally, it has assessed the existing stock of employment sites within the Borough and has assessed the Borough’s employment land supply and considered the need to identify new sites for employment uses.

9.2 The first stage of the process is to consider the Functional Economic Market Area (FEMA). This analysis considers commuting patterns; migration flows; the extent of the Tees Valley LEP area; administrative geographies; retail and service market for consumers; catchment areas of facilities providing cultural and social well-being; and the transport network.

9.3 The data indicate strong linkages between Middlesbrough, Stockton-on-Tees and Redcar and Cleveland, providing clear evidence that these should be considered within the same FEMA. In addition, the data suggests that the other Tees Valley authorities should be included and a Tees Valley-wide FEMA may be more appropriate: In terms of local authority and LEP boundaries, the Tees Valley Unlimited LEP and the Tees Valley Combined Authority cover all five of the Tees Valley authorities. The data also shows Middlesbrough is the main retail and leisure destination within Tees Valley and exerts a significant influence across the whole of Tees Valley with all the authorities showing reliance (to a greater or lesser degree) on Middlesbrough for retail and service provision. We conclude therefore that a Tees Valley-wide area is the appropriate FEMA. This assessment for Middlesbrough has therefore considered the Borough’s commercial property market dynamics and future demand drivers within the context of this FEMA.

9.4 Middlesbrough has a relatively high jobs density compared to elsewhere in the Tees Valley or the North East region indicating its role as an employment centre of sub-regional and regional importance. The Borough’s economic activity rate – currently 73% – is below the Tees Valley, North East and national averages. The figures reflect that Middlesbrough was hit hard by the economic crash in 2008 and subsequent recession, however since 2011 Middlesbrough has seen strong improvements to its economic activity rate trending well above the growth rates at regional or national level. This being said, there is clearly still potential for this to improve in the future.

9.5 Amongst stakeholders the general consensus is that the Middlesbrough economy is fragile but that there is considerable potential to grow. A number of stakeholders feel that there is a lack of a strategic overview and that employment land over the plan period requires closer collaboration

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between Middlesbrough and the adjoining local authorities. Middlesbrough would appear best placed to lead this given its role as the retail, commercial and industrial heart of the Tees Valley.

9.6 The demand forecasting considers two labour demand scenarios based on the jobs growth forecasts from Oxford Economics as well as the growth target of the Tees Valley LEP. It also considers a labour supply scenario based on the demographic-led workforce growth identified in the Middlesbrough SHMA. These scenarios forecast a jobs growth in Middlesbrough of 500; 6,325; and 6,771 jobs respectively. Considering these scenarios together with past completions trend data and information arising from stakeholder engagement, a future demand for around 34 ha of employment land has been identified for Middlesbrough over the period 2016-34.

Forecast Net Land Requirements, Middlesbrough 2016-34 Hectares B1a/b: Office 10.7 B1c/B2: Industrial 10.4 B8: Warehouse/ Distribution 13.2 Total B-Class Uses 34.3

9.7 Key employment sectors in Middlesbrough are Health, Wholesale and Retail Trade, Education, and Professional and scientific services. The public sector is a key employer with public sector jobs constituting 44% of all employment in the Borough – compared to a figure of 25% nationally. There is a consensus amongst stakeholders that the manufacturing sector is still relatively strong and there remains a skilled workforce.

9.8 A number of stakeholders feel that there is an opportunity to grow the advanced manufacturing and clean manufacturing sector. Beyond the Town Centre the feeling is that there needs to be a bigger push to build on the digital and creative sector office space needs in the BOHO quarter.

9.9 The report then considered Middlesbrough’s supply of land suitable to support future development for employment uses. The site assessment process considered a range of existing and potential employment sites across the Borough. This resulted in a total of 21 sites across the Borough where employment uses would be suitable and commercially attractive to support future development for employment uses. Collectively these sites comprise 44.5 ha.

9.10 In terms of office provision, Middlesbrough’s office market is focussed in two key locations – the Town Centre and Middlehaven. These areas provide the strongest retail and leisure offer within the Tees Valley and contain key amenities and demand drivers including Teesside University, James Cook University Hospital, Middlesbrough College, and a key concentration of retail and leisure facilities. These facets provide clear unique opportunities to attract office uses – and in particular to build on the success of the Boho development.

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9.11 However, these areas do face challenges, and the stakeholders’ consultation revealed that there are more attractive locations elsewhere in Tees Valley for occupiers seeking modern office space. Stockton-on-Tees was cited as being likely to be more attractive to new occupiers principally due to higher quality modern office premises which offer free parking provision.

9.12 The following considerations are recommended to support office development in Middlesbrough:

• The office market is focussed in the Town Centre and Middlehaven areas and should build on the strengths of these areas – particularly building on the areas’ retail, leisure, and transport links; • The office strategy should be closely aligned with the retail, leisure, and regeneration strategies for the areas; • Office development will mostly be delivered as part of mixed use schemes in these areas. There is limited potential for standalone office development to come forward; • Support the redevelopment of the large redundant office buildings in the Town Centre to alternative (non-employment) uses; • New office space should focus on meeting the needs of the professional services, digital, technology, and creative sectors. This should build on the success of the Boho development. • Car parking provision is a key issue cited by occupiers choosing premises elsewhere in the Tees Valley, and should be a key consideration for new developments; • Improve connectivity between the Town Centre and Middlehaven areas; • Improved rail connectivity.

9.13 The supply assessment identified 5.8 ha of land as suitable for office uses. This includes smaller infill sites within the Town Centre as well as two sites on Shepherdson Way. In addition there is 43.4 ha of land identified as suitable for mixed use development, which will contribute to meeting the identified office need. As such, these sites in the Town Centre and Middlehaven sites are considered adequate to support the Borough’s office land needs. In addition the 7.9 ha allocation at Hemlington Grange provides an opportunity for the development of an alternative employment location in the Borough.

9.14 In terms of industrial and warehouse/distribution provision, the supply assessment identified 38.7 ha of suites suitable for B1c, B2, and/or B8 development. The majority of the supply (24.6 ha) is at Riverside Park. The Former Ironmasters Site provides 12 ha of suitable land within this employment area. The other suitable sites comprise small (less than 3 ha) infill sites within Riverside Park, and smaller sites (below 1 ha) in Cannon Park and East Middlesbrough.

9.15 Though there is sufficient land for industrial uses, it is not of great quality. Premiums are low and there is very unlikely to be any speculative development and there is unlikely to be any new building without public subsidy. However, the following considerations are recommended to support industrial development in Middlesbrough:

• There is demand for small to medium size units – traditional workshop units and workspace of between 500 and 5,000 sq ft;

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• The advanced manufacturing sector is seen as a growth sector being able to draw from the existing manufacturing skills base and from the University and College; • There is demand for small workshop spaces to support the development of small businesses in this sector – similar to the Boho scheme for advanced manufacturing; • There is increasing demand for locations with river frontage. The Council should support development relating to the Port and resist uses in the vicinity which do not; • There is a limited demand for large scale B8 premises, with demand more focussed on smaller B8 sites of around 2-3 ha with good access to the A19 and/or the A66; • Support for a considerable quantum of employment land at Hemlington Grange.

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APPENDIX A: ECONOMIC BASELINE CHARTS AND TABLES

Skills and Occupations

Profile of Occupations of Working-Age Residents, Middlesbrough 2016

9: Elementary Occupations

8: Process, Plant and Machine Operatives

7: Sales and Customer Service Occupations

6: Caring, Leisure and Other Service…

5: Skilled Trades Occupations

4: Administrative and Secretarial…

3: Associate Prof & Tech Occupations

2: Professional Occupations

1: Managers, Directors and Senior Officials

0% 5% 10% 15% 20% 25%

North East England and Wales Tees Valley Middlesbrough

Source: ONS Annual Population Survey 2016 Skills Profile of Residents, 2015

90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% % with % with % with % with % with other % with no NVQ4+ - agedNVQ3+ - agedNVQ2+ - agedNVQ1+ - aged qualifications qualifications 16-64 16-64 16-64 16-64 (NVQ) - aged (NVQ) - aged 16-64 16-64

Middlesbrough Tees Valley North East England and Wales

Source: ONS Annual Population Survey, January-December 2015

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Earnings

Workplace-based Median Weekly Earning of Full-Time Workers

£600.00 £529.40 £527.70 £505.80 £499.50 £488.70 £502.30 £498.50 £500.00 £438.60 £447.10 £443.10

£400.00

£300.00

£200.00

£100.00

£0.00 Middlesbrough Tees Valley North East England and United Kingdom Wales

2010 2015

Source: ONS Annual Survey of Hours and Earnings

Comparison of Residents and Workplace-based Earnings, Full-Time Workers, 2015

£540.00 £529.90 £529.40 £527.70 £527.70 £530.00 £520.00 £510.00 £505.80 £499.50 £500.00 £491.50 £488.70 £490.00 £484.80 £480.00 £467.60 £470.00 £460.00 £450.00 £440.00 £430.00 Middlesbrough Tees Valley North East England and United Kingdom Wales

Resident Workplace

Source: ONS Annual Survey of Hours and Earnings- Resident and Workplace Analysis, 2015

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Employment

Employment Rate, 2005/2006 – 2015/2016

80.00%

75.00%

70.00%

65.00%

60.00%

55.00%

50.00%

Middlesbrough Tees Valley North East England United Kingdom

Source: ONS Annual Population Survey Self-Employment

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

Middlesbrough Tees Valley North East United Kingdom

Source: ONS Annual Population Survey

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Business Base

Office Floorspace, Tees Valley Authorities, 2000-2012

350

300

250

Darlington 200 Hartlepool 150 Middlesbrough Redcar and Cleveland Thousand sq m Thousand 100 Stockton-on-Tees

50

0

Source: VOA Industrial Floorspace, Tees Valley Authorities, 2000-2012

1,400

1,200

1,000

Darlington 800 Hartlepool

600 Middlesbrough Redcar and Cleveland Thousand sq m Thousand 400 Stockton-on-Tees

200

0

Source: VOA

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Number and Concentration of Businesses by Sector, 2016 Middlesbrough Tees North United Location Quotient: Valley East Kingdom Middlesbrough vs. # % % % % UK Agriculture, forestry 10 0.32% 2.8% 5.9% 5.8% 0.06 & fishing Mining, quarrying & 20 0.64% 0.6% 0.6% 0.5% 1.25 utilities Manufacturing 190 6.1% 6.3% 6.3% 5.2% 1.17 Construction 380 12.2% 12.5% 12.2% 11.8% 1.03 Motor trades 105 3.4% 3.6% 3.5% 2.9% 1.17 Wholesale 115 3.7% 2.8% 3.2% 4.1% 0.91 Retail 260 8.3% 8.0% 8.8% 7.5% 1.11 Transport & storage 75 2.4% 3.5% 3.5% 3.6% 0.66 (inc postal) Accommodation & 240 7.7% 6.9% 8.3% 5.8% 1.33 food services Information & 120 3.9% 3.6% 4.5% 8.1% 0.47 communication Financial & 50 1.6% 1.3% 1.4% 2.1% 0.78 insurance Property 85 2.7% 2.4% 2.9% 3.6% 0.76 Professional, 780 25.0% 24.4% 17.5% 18.0% 1.39 scientific & technical Business 250 8.0% 7.5% 7.3% 8.2% 0.98 administration & support services Public administration 5 0.2% 0.2% 0.3% 0.3% 0.59 & defence Education 70 2.2% 1.8% 1.8% 1.6% 1.37 Health 160 5.1% 4.9% 4.7% 4.4% 1.15 Arts, entertainment, 205 6.6% 7.0% 7.3% 6.6% 1.00 recreation & other services Source: ONS UK Business Counts, 2016

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Growth in Active Enterprises, 2010-2016

120

115

110

105 100) 100

95

90 Count of Active Enterprises: Index (2010 = (2010 Index Enterprises: Active of Count 85 2010 2011 2012 2013 2014 2015 2016

Middlesbrough Tees Valley North East United Kindom

Source: ONS Business Demography, 2016

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APPENDIX B: STAKEHOLDER CONSULTEES

List of Interviewees, September 2016 Name Organisation Lisa Holt Middlesbrough Means Business Gary Dawson AV Dawson Nicki Clark BE Group Mark Ashall Ashall Projects Ltd Andrew Benzies North East Commercial Barry Jackson Stockton-on-Tees Borough Council Margie Oliver, Alex Conti & Ian Stewart Redcar & Cleveland Borough Council Antony Steinberg Hartlepool Borough Council Chris Munro Homes & Communities Agency Rachel Anderson North East Chamber of Commerce Darren Vipond Teesside University Martin White Homes & Communities Agency Stuart Monk Jomast Alistair Hudson Middlesbrough Institute of Modern Art John Clifford Middlesbrough Sports Village Neil Etherington Able UK Ltd Julie Wallin Carver Commercial Gary Owens South Tees Hospitals Foundation Trust Michael McConnell PD Ports Linda Edworthy, Director of Policy & Investment Tees Valley Combined Authority Zoe Lewis, Principal Middlesbrough College

List of Attendees at Stakeholder Workshop, March 2017 Name Organisation Roger Tait Redcar and Cleveland Council Alistair Hudson Mima/Teesside University Stephen Brown Dodds Brown Richard Wilson Dodds Brown David Bage Stockton Council Isabel Nicholls Darlington Council Keith Wilson Tess Valley Combined Authority Matthew Johnson New River REIT plc Hannah Langler Hambleton District Council

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APPENDIX C: STAKEHOLDER QUESTIONNAIRE

Middlesbrough Council - Economic Development Needs Assessment

Key Stakeholders’ Questions

I head up the Planning and Development team for Scotland and the North East of England at GL Hearn, which is part of Capita Real Estate.

We have recently been commissioned by Middlesbrough Council to carry out an Economic Development Needs Assessment (EDNA) that will underpin the Middlesbrough Local Plan economic vision and strategy covering the period up to 2033. The EDNA falls into two parts. It firstly looks at Middlesbrough’s Future Economy, which includes a review of the key economic sectors and opportunities going forward. Secondly there is an Employment Land Review, which will review the existing property market as well as appraising existing and future employment sites.

As a key stakeholder in Middlesbrough now and into the future I would greatly appreciate if you would agree to answer twelve questions which will help inform the EDNA. These questions are set out below. I intend conducting these discussions either over the phone or face to face but thought it would be helpful for you to see the questions in advance. This shouldn't take longer than 30 minutes. I would greatly appreciate if you could let me know what time would suit you best on any of the following dates 13th, 14th, 15th or 16th September.

Your views are vital in helping to shape the future direction of Middlesbrough and I look forward to speaking to you or meeting you soon.

1. How would you describe the current state of the Middlesbrough economy and how effective is the economic strategy which underpins this?

2. What are the strengths and weaknesses of the Middlesbrough economy and the economic strategy?

3. Please provide your views on the current economic sectors:

• Retail • Industrial • Office • Tourism and Leisure • Hotels • Knowledge based industry

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4. How do you see these economic sectors changing over the period to 2033? What are likely to be the growth sectors over this period?

5. How much land should the local plan provide for industrial and office uses over the plan period?

6. What is your view on the current supply of office space in Middlesbrough? Is their enough office space? Is this of sufficient quality? What are the constraints to development?

7. What is your view on the current supply of general industrial space in Middlesbrough? Is their enough industrial space? Is this of sufficient quality? What are the constraints to development?

8. What is your view on the current supply of storage and distribution space in Middlesbrough? Is their enough storage and distribution space? Is this of sufficient quality? What are the constraints to development?

9. Existing undeveloped employment land in Middlesbrough is principally located in five locations:

• Town Centre; • Greater Hemlington; • Greater Middlehaven; • Riverside Park; and • East Middlesbrough

What do you think should be the main employment uses in each of these areas over the plan period?

10. What are the main barriers to development in each of these areas? Infrastructure constraints? Quality of land? Market demand? Accessibility? Other?

11. What interventions should be considered to encourage economic development and to help bring sites forward?

12. Are there any other issues that you would like to raise about the Middlesbrough economy now and going into the future?

Thank you in advance for your co-operation.

Steve McGavin Planning and Development Director

[email protected]

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