MILTON KEYNES PARTNERSHIP
Milton Keynes Employment Land Study May 2007
GVA Grimley LLP
3 Brindleyplace Birmingham B1 2JB
0870 900 8990 www.gvagrimley.co.uk Milton Keynes Partnership Contents
CONTENTS
1. INTRODUCTION AND APPROACH ...... 1 2. POLICY AND SOCIO-ECONOMIC CONTEXT...... 5 3. PROPERTY MARKET REVIEW...... 31 4. ASSESSMENT OF CURRENT AND POTENTIAL SUPPLY...... 53 5. FUTURE DEMAND – SHORT TERM/LONG TERM ...... 75 6. CONTRASTING FUTURE DEMAND/SUPPLY...... 99 7. COMPARATOR CITY ANALYSIS...... 113 8. DELIVERY STRATEGY...... 124
APPENDICES
Appendix A- Existing Employment areas and Employment site proformas Appendix B- Methodology for ranking of employment sites Appendix C- Development Typologies Appendix D- CMK Plots
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1. INTRODUCTION AND APPROACH
Brief
1.1 This chapter outlines our appreciation of the Brief and the key issues that have been taken into account as part of this work. Our involvement in preparing the Long Term Sustainable Growth Plan for Milton Keynes MK2031) has given us a wide understanding of the many issues driving growth in the area.
1.2 Key to this growth is the role of the property market in delivering future growth and the type of businesses that the area seeks to attract and its implications for the property market in terms of property product. The most fundamental issue for MK2031 is the geographical location of future employment land to meet planned growth in houses 68,600) and jobs as set out in the Milton Keynes Sub-Regional Strategy. The main issues that are considered as part of this report are as follows:
• Location of Growth;
• Employment Growth;
• Knowledge Economy Jobs;
• Property Market Implications; and
• Timetable for Growth.
Location of growth
1.3 This is a key consideration of the MK2031 work, which assessed 6 growth options offering varying levels of urban capacity achievable low, medium and high) and a quantum of development to be delivered in the peripheral areas outside the Milton Keynes Local Authority boundary.
1.4 Expansion areas have been identified to accommodate growth that can’t be provided for in the urban area. Planning policy directs us to consider new development by applying the sequential test, looking at brownfield land before greenfield land. The Sub-Regional Strategy identifies that not all of the proposed growth can be accommodated within the Milton Keynes urban area and this is a key issue for this report and the MK2031 report.
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1.5 The MK2031 study has had a number of key inputs into this work, most notably the land suitability and deliverability work, which has considered the development capacity / mix on a sample of employment sites to deliver regeneration through potential intensification. Another key input has been the work undertaken on the deliverability of both brownfield and greenfield land to identify the most suitable and deliverable sites for development within the urban and rural areas. This work has fed into our assessment of current and potential supply, which is presented at Chapter 4.
Employment Growth
1.6 The Milton Keynes and South Midlands MKSM) sub-regional strategy assumes a total employment growth of 68,600 to 2031, equivalent to around 2,287 jobs per annum. In fact, this may be a rather conservative estimate of employment growth, however this figure is retained for two reasons, these being:
• The need to ensure that levels of self containment within Milton Keynes, in particular net commuting flows, are maintained. The MKSM strategy has incorporated a dwellings / job ratio of 1:1 for monitoring purposes in order to achieve this balance. The indicative employment figure of 44,900 by 2021 matches the number of dwellings planned for the same period.
• The MKSM Strategy outlines a more balanced economic pattern of growth within the MKSM sub-region in order to achieve regeneration benefits in neighbouring towns. Therefore growth targets within Milton Keynes assume below trend growth, whilst other areas in the sub-region, such as Northampton and Corby will assume above trend growth.
1.7 The Brief outlines ongoing debate concerning the validity of the 1:1 ratio that is suggested in the MKSM Sub-Regional Strategy. As part of this report we explore the implications of restraining growth in Milton Keynes in order to allow growth of neighbouring towns.
1.8 Demand based employment forecasts, linked to employment based local economic strategies and plans, have provided us with an understanding of how the Milton Keynes economy could grow under different scenarios to 2031 and the implications this would have for the demand for employment space.
Method
1.9 Our approach has been based on the diagram presented below.
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Figure 1.1 – Approach to Study
INCEPTION
Background Assessment Assessment Centres Property Competitor Information & of Sites of Premises Assessment Market Areas Review Economic Review Analysis STAGE 1 STAGE
Current Supply Quality & Quantity
Future Requirements STAGE 2 STAGE
Impact of Target Growth Population Sectors Growth
Employment Land / Space Requirements
Gap STAGE 3 Analysis
Portfolio Requirements
Delivery Requirements STAGE 4
Policy Market / Disposal Financial Practices
Monitoring & STAGE 5 Evaluation Framework
Reporting
Source: GVA Grimley, 2007
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1.10 This approach provides:
• An understanding of the context/drivers of the local economy and property market Stage 1);
• Development of economic scenarios to assess demand Stage 2);
• Comparison against available supply and future requirements Stage 3);
• Delivery requirements Stage 4); and
• Monitoring and evaluation Stage 5).
1.11 As such, it complies with Employment Land Review guidance produced by the ODPM/DCLG in December 2004 but extends this to consider town centre floorspace and broader delivery issues.
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2. POLICY AND SOCIO-ECONOMIC CONTEXT
2.1 This section reviews some of the key policy and research documents that are relevant to the Milton Keynes area, its economic structure and employment land supply, as well as providing an analysis of socio-economic baseline data.
Review of Policy
South East Plan
2.2 The Draft South East Plan was submitted to Government in March 2006. The examination in public took place between November 2006 and March 2007. The panel report is expected in July 2007. There are a number of draft policies which are relevant to this work.
• Policy RE1 refers to the need to support regionally important sectors and clusters. This should take into account of national economic interests and recommendations of SEEDA and local business partnerships. A number of mechanisms to achieve this are suggested in the draft policy including ensuring an adequate supply of land and premises; enhancing and promoting local assets to support sectors/clusters, and promoting non land use initiatives that will benefit and foster growth.
• Policy RE2 refers to employment land provision and the need for local authorities to assess the needs of their local economy and take into account sub regional strategies for the location quantity and nature of employment land and premises.
2.3 The key diagram identifies Milton Keynes as part of the Milton Keynes and Aylesbury Vale sub regional strategy area and as a regional hub Policy CC86). The key challenge identified for the Milton Keynes and Aylesbury Vale sub regional area is to ensure that economic growth and employment increase in line with population.
2.4 Draft Policy MKAV1 identifies a proposed spatial framework for the Milton Keynes Growth Area, its key components are:
• 48,850 new dwellings to be provided 2006 – 2026, through urban intensification and the development of new sustainable urban extensions.
• Levels of proposed development to be monitored against an increase in employment of 48,850 jobs by 2002 – 2026.
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• Key locations for employment related development would be Central Milton Keynes, Bletchley, Wolverton, Newport Pagnell and some locations within urban extensions at focal points and on the public transport system.
2.5 The draft policy refers to there being adequate employment land supply to meet forecast demand to 2016.
Sub Regional Strategy – MKSM
2.6 The Milton Keynes and South Midlands MKSM) Sub-Regional Strategy, published in 2004, is a co-ordinated review of policy for the MKSM sub region, which covers three regions, these being the East Midlands, East of England and the South East.
2.7 The MKSM Sub-Regional Strategy has undergone a long period of stakeholder and public consultation in order to appreciate the scale and scope of growth within the sub-region and to identify the need for a cross regional strategy.
2.8 The evolution of the MKSM Sub-Regional Strategy came about through the MKSM Study, which was published in 2002. The study evaluated four options for distributing growth throughout the sub region.
2.9 Following on from the Study, Growth Area Assessments GAA) were developed for each of the growth points identified, to provide a recommended broad pattern, timing and phasing of development; to determine how much growth is capable of being accommodated in the urban areas and to provide guidance on how these areas could be developed in the most sustainable way.
2.10 Milton Keynes, as one of the identified growth points within the MKSM Sub-Region has the objective of maturing as a major regional centre, particularly through the substantial development of the central area known as Central Milton Keynes CMK). This growth will be supported by an enhanced public transport system.
2.11 In terms of new housing provision, the MKSM Sub-Regional Strategy identified a total growth of 44,900 homes within Milton Keynes to 2021. Growth in the level of employment is expected to follow a ratio of 1:1, with 44,900 additional jobs expected within Milton Keynes to 2021. In the longer term, from 2021-2031, the MKSM Sub-Regional Strategy proposes an additional 23,700 new homes within Milton Keynes, making a total of 68,600 new homes to 2031. In terms of predicted job growth between 2021 and 2031, the strategy makes no reference as to the aspirational amount of growth for the area, although it is reasonable to expect that the amount of growth would be in the ratio of at least 1:1.
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2.12 With regard to the creation of sustainable communities, the strategy makes the point that areas within the MKSM sub region will undergo many changes, in most cases, more than any other places in the country. The strategy identifies the following requirements, amongst others, as being key to building sustainable communities:
• A flourishing local economy to provide jobs and wealth;
• Sufficient size, scale and density of development and of the right layout to support basic amenities in neighbourhoods and minimise the use of resources land);
• Good public transport and other transport infrastructure, both within communities and linking to urban, rural and regional centres; and
• Effective engagement and participation by local people, groups and businesses, especially in the planning, design and long-term stewardship of their community, and an active voluntary and community sector.
2.13 The MKSM sub-region lies within two strategic economic corridors, London to Birmingham and the “Oxford to Cambridge” Arc O2C), meaning it is well placed to build its economic prosperity. The strategy identifies a number of growth sectors, which it states are key to the economic prosperity of the sub-region. These sectors are identified as being:
• High Performance Automotive;
• Creative Industries;
• Other Knowledge-Based Industries;
• Food and Drink;
• Freight and Logistics;
• Health and Social Care;
• Tourism; and
• Airport Services.
2.14 Of the above list those growth sectors that are appropriate to Milton Keynes include creative industries, knowledge based industries, freight and logistics and health and social care.
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2.15 The delivery of the MKSM Sub-Regional Strategy is to be through a number of mechanisms including the MKSM Inter-regional Board, Regional Housing Boards, Local Development Documents and Masterplans / Strategic Development Briefs.
Oxford to Cambridge Arc (O2C)
2.16 The O2C Arc was launched in 2003 to promote the extraordinary and unique set of educational, research, business, commercial and governmental resources that exist in the area around and between Oxford and Cambridge – with Milton Keynes close to its centre. The Arc began as an idea to link Oxford and Cambridge Universities, both world famous centres of research and innovation, but relatively small in international terms, to create an “arc” of entrepreneurial activity that could rival Silicon Valley. The stated objective of the O2C Arc is to develop a knowledge-based economy (KBE) of sufficient mass and momentum to challenge the best in the world.
2.17 The Arc is supported and funded by the three Regional Development Agencies, SEEDA, EMDA and EEDA that overlap it, as well as all the Economic Partnerships within it Oxfordshire, Buckinghamshire, Milton Keynes, Bedfordshire and Luton, Northamptonshire and Cambridge) and several other Arc-based Network Organisations. The O2C Arc Ltd became a legal entity in April 2004. In the first half of 2006 the O2C Arc strategy was reviewed and the initiative relaunched.
2.18 The recent review noted that the areas within the Arc lag behind comparable European areas. In GDP per head terms workplace-based) Arc sub-regions currently rank between 44th Milton Keynes) and 376th Bedfordshire) of the 1,214 EU-25 NUTS 3 regions These are regions defined by the European Union based on population. NUTS 3 regions have a population of between 150,000 and 800,000).
2.19 Oxford and Cambridge’s rankings of 86th and 138th in Europe do not reflect their strong knowledge infrastructure and innovation assets and the study considered a number of primary drivers of productivity growth, including skills, enterprise and innovation. The data shows that productivity levels are highest in Milton Keynes, Oxfordshire, and Cambridgeshire and generally lower elsewhere in the centre of the Arc. Moreover productivity growth rates have been higher of late in Oxfordshire and Cambridgeshire than elsewhere. Figure 2.1 shows relative workplace productivity growth in relation to workplace employment growth.
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Figure 2.1: Productivity & Employment Growth in the ARC, 1998-2003
Employment & Productivity Growth in the ARC, 98-03 Employment
Productivity*
Luton
Northamptonshire
Milton Keynes
GB
Eastern
Bedfordshire
ARC
South East
Buckinghamshire
East Midlands
Cambridgeshire
Oxfordshire
-0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Average Annual Growth 1998-2003 %)
Source: Oxford2Cambridge Arc, 2006
2.20 The analysis showed that the Arc’s performance is sub-optimal and that there is a significant room for improvement in all parts of the Arc. The above analysis highlights that:
• The Arc’s performance is sub-optimal;
• Global competitiveness pressures are growing;
• There are specific constraints in various parts of the Arc; and
• Various parts of the Arc have complementary assets.
2.21 Based on the review of the economic assessment of the Arc and its asset base, a revised O2C Arc strategic framework has been set out for “Smart Growth Solutions” for:
• Building the smart growth coalition;
• Accelerating productivity and growth; and
• Creating smart places.
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2.22 The key recommendations for the framework included:
• All Arc smart growth solutions require strong institutional and political leadership;
• The Arc needs to demonstrate ‘tangible value’ of the Arc initiative to a private sector and HEIs;
• Develop the Arc’s integrated solution to sign-post the technological and research community towards appropriate support for commercialisation of ideas;
• Based on a robust evidence base, the Arc must influence the human capital policies, programmes and initiatives of the public training and education agencies by consulting, supporting and advocating; and
• Smart places should be promoted through the growth and development of knowledge- based sustainable growth hubs – including sustainable housing and employment communities.
Milton Keynes Local Plan 2001-2011
2.23 The Local Plan was adopted in December 2005 and will be replaced by the emerging LDF. In terms of employment land and allocations there are specific policies which look to manage the growth of employment in Milton Keynes.
2.24 Policy E1- Protection of Existing Employment Land looks to refuse planning permission for a change of use or redevelopment of any land identified for employment use on the Proposals Map to any other purposes, unless there was no conflict with existing or potential neighbouring uses and one of the following ‘tests’:
• The proposal would result in a significant reduction in the detrimental environmental impact of an existing use; or
• The proposed use is one that cannot be satisfactorily accommodated other than in an employment areas; or
• The proposed use will not significantly reduce the provision of local employment opportunities.
2.25 Notwithstanding this, a recent application on an allocated employment site for residential development has been accepted by the Local Authority and planning permission granted.
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2.26 Remaining undeveloped employment land stock in the former Designated Area and new allocations in the City Expansion Areas equate to 301.0ha from a total designated amount of 981.4ha this does not however include any information on CMK). The designated Expansion Areas total 117.2ha of vacant land with B1, B2 and B8 uses being specified. Table 2.1 shows the full list of employment sites not currently developed in Milton Keynes:
Table 2.1 Employment Land Allocations in Milton Keynes City (2006)1
Grid Square / Area Gross Area Vacant Land Use Class (hectares) (hectares)
Broughton /Atterbury 18.2 16.5 B1/B2/B8/C2
Caldecotte 14.7 4.2 B1/B8/C2
Bletchley - Denbigh2 32.4 9.3 B1/B2/B8
Kents Hill North 5.2 5.2
Kiln Farm 51.2 1.1 B1/B2/B8
Knowlhill 33.1 10.0 B1/B2/B8
Linford Wood 39.1 7.0 B1
Mount Farm 48.0 1.9 B1/B2/B8
Old Wolverton 40.1 1.9 B2/B8
Redmoor 13.4 3.3 B2/B8
Rooksley 21.4 1.3 B1/B2/B8
Shenley Wood 37.4 25.3 B1/B2/B8/C2/ D1
Tattenhoe / Snelshall East 16.0 8.5 B1/B2/B8
Tattenhoe Park / Snellshall West 20.6 1.1 B1/B2/B8/C1
Tongwell 52.1 1.4 B2/B8
Walton 26.3 15.9 B1/B2/B8
Waverndon Gate 13.9 9.2 B1C2/D1
West Ashland 7.0 7.0 B1/B2/B8
1 Note – These figures do not form the basis of our subsequent analysis in Chapter 6 – these are based on more recent datasets that have been received from both Milton Keynes Partnership and Milton Keynes Council. Alterations to these datasets have been agreed with the Client. 2 This figure includes areas at Newton Leys 7ha), Old Bletchley, West Bletchley, and Denbigh Hall
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Grid Square / Area Gross Area Vacant Land Use Class (hectares) (hectares)
Winterhill 0.92 0.92 B1/B2/B8
Wolverton 37.0 2.4 B1/B2/B8
Wolverton Mill 35.4 8.7 B1/B2/B8
Wymbush 25.4 1.9 B1/B2/B8
Eastern Expansion Area Site MK1) 97.0 97.0 B2/B8
Western Expansion Area Site MK2) 16.8 16.8 B1
Northern Expansion Area Site MK3) 3.4 3.4 B1/B2/B8
CMK 276.27 40.7 B1
TOTAL (hectares) 981.37 301.0 Source: Milton Keynes Council, 2006
2.27 New employment development will normally be given planning permission in the areas which have been allocated for employment purposes. In considering proposals a number of factors will be taken into account including the details in the above table, the physical and locational attributes of sites, the need of a variety of sites to meet the differing requirements of a wide range of employment uses and any employment proposals on sites other than those listed will be assessed against Policy E2.
2.28 The majority of employment allocations have been made in the city, with a small site being allocated for B1 use in Olney. There are no new allocations proposed in the Key Settlements of Newport Pagnell, or Woburn Sands. However, in Newport Pagnell and Woburn the closure of existing manufacturing plants could give rise to replacement sites which would add to the stock of employment land.
2.29 Employment development Policy E4) promotes employment uses within Town, District and Local Centres provided that there is no detrimental effect on the surrounding areas due to the development.
2.30 In terms of employment land uses in the rural areas of Milton Keynes, permission will be granted for any activities which diversify those farming activities and those that may be ancillary to agricultural activities.
2.31 As well as providing employment land allocations, the Local Plan considers the implications of those people who work from home. Although this is currently a very small
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proportion of the working population, working from home is a trend, which could increase in the future with significant advances in technology. If planning permission is required for business use within a dwelling then it will be granted as long as the property continues to be primarily a dwelling, it is only for the employment of the occupier, it does not adversely effect the amenities of adjacent residents and the character of the area and that adequate parking is available.
2.32 Another objective for consideration but not of any great significance in terms of employment land is the protection of small business units through refusing permission for any change of use and expansion or redevelopment of small units into larger units.
2.33 A final key objective and the focus of two policies for employment in the Local Plan is large footprint employment. This is due to wholesale distribution and logistics accounting for a significant percentage of jobs in Milton Keynes, and it suggested that this sector will grow in the future.
2.34 Policy E12 stipulates that about 80 ha of land east of Kingston and north of the A421 is allocated for large footprint employment development.
Central-CMK Framework SPG
2.35 This Supplementary Planning Guidance was adopted in March 2003 to provide guidance for the development of the Central CMK area. In terms of policies at the national level which have an impact on Central CMK these include PPS1: Delivering Sustainable Development 2005); PPS6: Planning for Town Centres and PPG13: Transport. All these documents set out key principles, which try to ensure development contributes to sustainable environments. In particular to focus development that attracts a large number of people, especially retail, leisure and office development, in existing centres to promote their vitality and viability and more sustainable patterns of development.
2.36 Regional Planning Guidance for the South East RPG9) promotes that urban areas should be the main foci of development through making them more attractive, accessible, and better able to attract investment. Access to employment, services, leisure and cultural facilities should be less dependant on travelling long distances and should be accessible through normal travel needs such as walking, cycling and public transport.
2.37 The vision of the Central CMK Framework is to create a high quality environment for employment and the local community. Catering for local business will contribute to the success of the local economy and spread economic employment benefits.
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2.38 To keep in line with providing a good quality environment for both businesses and the community, it is important to introduce mixed-use development on sites in the centre of CMK. With this in mind they have set the following parameters to apply to all development, that within the Central Areas, larger developments for business B1) and retail A1, A2, A3 and A4) purposes will be sought in the form of integrated mixed use development.
2.39 Specifically for commercial purposes, and employment land implications, the provision of office space as a component of mixed-use development will be encouraged in the Central Area. Serviced accommodation and managed business suites are appropriate on the upper levels of mixed-use schemes.
2.40 As a result of introducing new development in the CMK area, surface level car parking will be used for further development and replacement parking will be provided in the form of multi-storey, on-street and courtyard, built to Safer Parking Standards.
2.41 In terms of access and movement, Central CMK should reflect its function as a primary pedestrian and public transport route. Saxon Gate, which is part of the core pedestrian route will need to be improved to ensure better public transport and that cyclists and pedestrians are able to use this safely and easily. Existing road space will be considered for allocation to buses and the general quantum of surface car parking will be reduced to be replaced by multi-storey car parks. They will only be retained at surface levels if it can be demonstrated there is a need.
2.42 As a final point of observation there are two sites within the framework, which have been identified for development of new multi storey car parks, however these are now under review and are likely to change. Sites 8a and 8b Saxon Gate South and Saxon Gate North were both identified to deliver one of the principle multi-storey car parks as a gateway structure into CMK in order to meet anticipated requirements in terms of capacity, which is estimated at being in excess of 2000 cars.
New Town to International City (DTZ)
2.43 This report, prepared by DTZ Pieda Consulting in conjunction with the Milton Keynes Economy and Learning Partnership MKELP) outlines the vision for Milton Keynes to move through its transition from a New Town to an International City.
2.44 In May 2002, the reported population of Milton Keynes was around 210,000 people with around 122,000 people employed in the town. This equated to a ratio of around 2:1, which is far removed from the aspirational ratio of 1:1. The anticipated population growth to 2031
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is projected to be around 68,600 and this growth can only be sustainable if an equal amount of new jobs are created in parallel within Milton Keynes.
2.45 The DTZ report identifies a vision for Milton Keynes stating that “in 2034 Milton Keynes will be a major free standing city, with a diverse, high value business base offering well paid employment opportunities to all those living within the city”. The Vision comprises a number of elements, which will underpin, support and enable the transition of Milton Keynes from town to city.
2.46 The report states that Milton Keynes will have a diverse employment base, with many employers in a broad range of employment sectors, but with a focus on those industries in the knowledge based and higher value added service manufacturing sectors. By 2034, Milton Keynes as a city will provide sufficient jobs for all those who live in the city and for many people in the city’s surrounding rural areas and wider hinterland.
2.47 The DTZ report does not however relate the scale and spatial distribution of the supply of employment land to the projected growth that is anticipated within Milton Keynes, something that is addressed through this report.
2.48 One of the key drivers behind the growth of employment within Milton Keynes is the product that Milton Keynes can offer compared with the rest of the MKSM sub-region and further away. These products include advantages for employers such as lower rental values and greater accessibility, and it is hoped that attracting additional headquarter and professional office based employment will deliver a number of benefits to Milton Keynes, including an expansion in the number of jobs in the town.
2.49 Increases in the number of research and development based industries are seen as critical to securing the development base within Milton Keynes as this will enable the future city to be able to compete for potential employees in the growing employment sectors.
2.50 The DTZ report recognises that at present the level of skills within the Milton Keynes workforce can be, at best, described as average, as shown in the Socio-Economic Baseline section of this chapter. If this is not addressed this could be a major barrier to the economic development of the city. However, change on the scale of that proposed for Milton Keynes takes time and cannot be achieved overnight. In the short term, the skills of the workforce will need to be enhanced in order to attract companies in the growing employment sectors and this can only be done through attracting better skilled people to live within the city.
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2.51 In the medium to longer term the skills of the existing population can be taught through the provision of better tertiary education facilities in the city and ensuring that the quality of life offer within Milton Keynes is of such a level that many of those students who choose to come to Milton Keynes, also choose to stay after they finish their studies. The continued presence of Milton Keynes University and Cranfield University, which currently provide tertiary education within the District, are paramount to achieving this aim.
2.52 The Information and Communication Technology ICT) infrastructure within Milton Keynes continues to be a major driver of employment growth within the city. The distribution and type of broadband internet cables across Milton Keynes varies widely, with some parts of the town having access to high speed broadband internet connections, whilst other areas do not.
Previous Employment Land Reports
2.53 In 2001, Halcrow Group Ltd undertook an employment land study of the Milton Keynes Travel to Work Area TTWA) which informed the Milton Keynes Local Plan review process. The Halcrow study had two objectives:
• To determine whether there was enough land of the right characteristics to meet forecast demand for B1, B2 and B8 employment uses to 2011; and
• To advise on any employment land allocations that were considered to be potentially unviable in terms of market demand.
2.54 In terms of approach the Halcrow study undertook both supply-side and demand-side assessments, which included appraisals of both existing and potential employment land, job forecasts and a market review, as well as an extensive employment land forecasting process and the application of typologies to determine the types of premises that could be created in the Milton Keynes Travel to Work Area TTWA).
2.55 The study confirmed that Milton Keynes has a wide “sphere of influence”, which attracts commuters from the surrounding areas where there are relatively smaller settlements and a less significant employment base.
2.56 The Halcrow study undertook two separate demand-side assessments, one using a “land based” methodology and the other using local economic sectors and job densities to determine land requirements. The land based method calculated that demand for employment land within Milton Keynes TTWA would be in the region of 278 hectares to 2011, whilst the economic sector / job density method calculated demand to be in the
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region of 289 hectares. The Local Plan allocated between 352 – 362 hectares to 2011, meaning that there was effectively a further four years of employment land within Milton Keynes TTWA taking them up to 2015. This Study has identified a total supply of employment land in the order of 330ha, slightly less than was allocated, however this may be due to sites being developed or removed from the portfolio. Further details of the portfolio of sites included in this Study can be found at Chapter 4. This Study has also calculated that there is a deficit of employment land to 2011, with some 9.6 ha required for office / technology developments and around 52 ha required for industrial / distribution developments, which contradicts the Halcrow work. This difference may be due to differences in the demand forecasting model used, or indeed a change in the availability of employment land over the next 5 years. More details of this shortfall in supply can be found in Chapter 6.
2.57 With regard to employment densities, the report recognises that present day Milton Keynes has relatively low job densities due to the way in which the area has evolved, which has lead to low building heights, generous car parking standards and significant areas of strategic landscaping. In the future employment densities within CMK could be much higher than those used in the forecast model and this could reduce the overall demand for employment land by up to 100ha. This is an issue also addressed in this report.
2.58 In order to achieve higher employment densities within Milton Keynes, the report suggests a number of proactive measures:
• The parking standards for vehicles within the Local Plan should be treated as a maximum level of provision;
• Investigate the potential for areas of underground car parking in order to enable greater opportunities for increasing footprints of development; and
• Promoting more efficient use of internal floorspace.
2.59 In terms of marketability the report identifies that over the next 30 years a significant amount of all future B1 office development will be concentrated within the city centre, together with significant improvements in public transport infrastructure. In addition, the development of a number of large footprint developments are suggested in order to cope with demand, particularly in the B2 / B8 sectors for large footprint buildings, particularly in the eastern area of Milton Keynes adjacent to the M1 motorway junction. Notwithstanding this growth, the study also recognises that the motorway junctions that serve Milton Keynes are already at capacity and improvements would need to be made in order that these would be able to cope with the forecasted additional traffic movements.
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2.60 In conclusion the report identities that in principle, the Milton Keynes TTWA has an adequate supply of employment land to 2011, and potentially beyond if there is a surplus. However, the report states that there will need to be regular monitoring to ensure that employment land allocations that are weak in terms of marketability still have the potential to come forward for development. Furthermore, the spatial distribution of this employment land is crucial, as many B2 / B8 businesses prefer to be located adjacent to the M1 motorway junctions. This is creating pressure not only on the supply of land within the eastern sector of Milton Keynes but also on the capacity of the motorway junctions themselves.
Socio-Economic Baseline Review
2.61 This section provides an analysis of relevant baseline socio-economic datasets, which helps to gain an understanding of the social and economic situation within Milton Keynes. The data that is analysed in this section includes the age of the population, proportion of the population that are economically active, household composition and travel to work data.
Population Structure
2.62 The age structure of the population in Milton Keynes is shown below. Similar data for the South East region and England is provided for comparison.
Figure 2.3 – Age Structure of Milton Keynes
100%
90%
80%
70% 65+ 60% 50-64 50% 22-49 16-21 40% Under 16 30%
20%
10%
0% Milton Keynes South East England
Source: Census, 200 and GVA Grimley analysis
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2.63 As can be seen above, Milton Keynes has a higher than average number of residents aged under 16 and also aged between 22 – 49. Around 23% of the population are aged under 16, compared with 20% regionally and nationally, whilst 44% are aged between 22 – 49, compared with 39% regionally and nationally. This suggests a population structure with higher than average proportions of young and middle aged families compared with the region and nationally. There are also less than average percentages of older people, those aged over 65 years of age. In Milton Keynes around 10% of the population are aged over 65, compared with the regional and national average of 16%.
2.64 Over the timescale of this study it is likely there will be higher than average numbers of elderly people 65+) and those aged 50-64, resulting in an ageing population.
Economic Structure
2.65 The economic structure of Milton Keynes is shown below, along with that of the South East and England for comparison.
Figure 2.4 – Economic Structure (Residents) within Milton Keynes
100%
90%
Elementary Occupations 80%
Process; Plant and Machine Operatives 70% Sales and Customer Service Occupations 60% Personal Service Occupations 50% Skilled Trades Occupations 40% Administrative and Secretarial Occupations 30% Associate Professional and Technical 20% Occupations Professional Occupations 10% Managers and Senior Officials 0%
Milton Keynes South East England
Source: Census, 200 and GVA Grimley analysis
*Note: Examples of elementary occupations include Farm Workers, Labourers, Kitchen Assistants and Bar Staff
2.66 It can be seen above that the range of job types taken by residents within Milton Keynes are broadly similar to those seen at the regional and national level. There are however some differences of note. Around 9% of Milton Keynes’ population are employed in skilled trades, slightly less than the regional and national average of 11% and 12% respectively.
May 07 19 Milton Keynes Partnership GVA Grimley LLP
Conversely there are slightly more people living in Milton Keynes employed in elementary occupations with around 13%, compared with the regional average of 10%.
2.67 In terms of the workplace population of Milton Keynes, the basic economic structure is shown below.
Figure 2.5 – Economic Structure (Workplace Population) within Milton Keynes
100%
90% On state benefit, unemployed, lowest grade workers 80%
70% Semi-skilled and unskilled manual workers 60% Skilled manual workers 50%
40% Supervisory, clerical, junior managerial / administrative / 30% professional Higher and intermediate managerial / 20% administrative / professional 10%
0% Milton Keynes South East England
Source: Census, 200 and GVA Grimley analysis
2.68 As can be seen above, the majority of people who work in Milton Keynes work in higher managerial, professional, supervisory and administrative roles, with these occupations accounting for around 64%, slightly higher than the regional average of 61% and the national average of 59%. As a result there are fewer skilled, semi-skilled and unskilled manual workers in the district - a total of 35%, compared with 38% regionally and 40% nationally. It is clear therefore, that Milton Keynes is already able to attract a high proportion of highly skilled jobs to the area, however it is questionable as to whether the people fulfilling these roles live within the district or commute in. This point is highlighted in more detail at section 2.77.
Earnings
2.69 The figure below shows the resident and workplace earnings for Milton Keynes, compared against the regional and national averages and for two comparitor cities, Northampton and Luton.
May 07 20 Milton Keynes Partnership GVA Grimley LLP
Figure 2.6 – Earnings within Milton Keynes and the Surrounding Area
480 470 460 450 440
430 Residence Earnings 420 Workplace Earnings 410
Gross weekly pay (£) 400 390 380 370 Milton Luton Northampton South East Great Britain Keynes
Source: Nomis (Annual Survey of Hours and Earnings (ASHE)), 2005 & GVA Grimley analysis
2.70 The figure above shows that the residents of Milton Keynes earn, on average, around £15 per week less than those workers who commute into Milton Keynes. Similarly, residents of Luton earn around £13 less per week than those working in Luton. This pattern is opposite to that seen across the rest of the South East region and highlights an interesting point that people who commute in places such as Milton Keynes and Luton are usually working in the more highly skilled, better paid jobs compared with the people who live in those places. In places such as Northampton, whose residents earn around £12 more than those working there; it is likely that these residents are commuting to places such as Milton Keynes in order to earn higher incomes.
Economic Activity
2.71 The economic activity rate of Milton Keynes, the South East and England are shown below.
May 07 21 Milton Keynes Partnership GVA Grimley LLP
Figure 2.7 – Economic Activity Rate within Milton Keynes
80%
70%
60%
50% Milton Keynes 40% South East England 30%
20%
10%
0% Economically Active Unemployed Economically Inactive
Source: Census, 200 and GVA Grimley analysis
2.72 As can be seen above Milton Keynes has a higher than average population who are economically active, with around 72% of the population aged 16-74. This compares with an average of 68% in the South East and 64% overall. Unemployment in Milton Keynes is slightly higher than the regional average of 2%, but on a par with the national average of 3%. The data indicates that there is already a healthy workforce resident within the District, the next section looks at how skilled these workers are.
Skills
2.73 In terms of measuring the skills of the economically active population, one indicator is to analyse the qualifications of residents. The qualifications of the population of Milton Keynes are shown below, along with the South East and England for comparison.
May 07 22 Milton Keynes Partnership GVA Grimley LLP
Figure 2.8 – Qualifications of Resident Population
35%
30%
25%
20% Milton Keynes South East 15% England 10%
5%
0%
s s s s n ns tion tion ion io known icat n lif alifica alifica alificatio alificat u u ua vel u qu qu q e l 1 l 2 q l 3 q L No e / 5 ve ve l 4 Le Lev Le eve L
Source: Census, 200 and GVA Grimley analysis
2.74 As can be seen above Milton Keynes has a relatively smaller proportion of highly skilled residents, compared with the rest of the South East in particular and to a lesser extent, the rest of England. The percentage of residents with Level 3 qualifications, that is those residents whose highest qualification attained is 2+ 'A' levels; 4+ 'AS' levels; Higher School Certificate; NVQ level 3; or Advanced GNVQ within Milton Keynes is 8%, slightly lower than the regional average of 9%. The percentage of residents with Level 4 / 5 qualifications, those whose highest qualification attained is a first degree, postgraduate qualification, teachers and professional medical staff in Milton Keynes is around 19%, less than the regional average of 22% and slightly lower than the national average of 20%.
2.75 Conversely the majority of Milton Keynes’ population have Level 2 qualifications or below. Level 2 qualifications are equivalent to 5 GCSE passes at Grade C or above. Altogther around 43% of the population have Level 1 or 2 qualifications, compared with 38% regionally and 36% nationally.
2.76 Overall, Milton Keynes’ population have at best, an average skills base, which means that they are not entirely suited to the types of businesses Milton Keynes are looking to attract, these being more knowledge based. The next section looks at how far the people who work in Milton Keynes travel to work, in order to gain an understanding of commuting patterns within the District.
May 07 23 Milton Keynes Partnership GVA Grimley LLP
Travel to Work
2.77 The travel to work data for Milton Keynes is shown below, along with the data for the South East and England and a number of local comparitor towns. These help to highlight some of the patterns of commuting that are unique within Milton Keynes.
2.78 Figure 2.9 – Distance Travelled to Work – Resident Population
100% 90% No fixed place of work 80% 60km and over 70% 40km to less than 60km 60% 30km to less than 40km 20km to less than 30km 50% 10km to less than 20km 40% 5km to less than 10km 30% 2km to less than 5km 20% Less than 2km Works mainly at or from home 10% 0%
d n n d es r n dfo uto pto e L m Keyn B tha Engla on South East ilt M Nor
Source: Census, 200 and GVA Grimley analysis
2.79 It can be seen above that around 50% of the population of Milton Keynes travel less than 5km to their place of work. This shows that a high proportion of the population work within the district and although this mirrors trends seen regionally and nationally, it is slightly lower than the proportion of residents in nearby towns such as Bedford, Northampton and Luton. Around one fifth 22%) of the working population travel between 5 – 10km to their place of work indicating that they may commute within Milton Keynes or to nearby places such as Bletchley and Newport Pagnell.
2.80 The figure below highlights the travel to work data for Milton Keynes’ workforce, along with data for the South East, England and comparitor towns.
May 07 24 Milton Keynes Partnership GVA Grimley LLP
Figure 2.10 – Distance Travelled to Work – Workforce Population
100% 90% 60km and over 80% 40km to less than 60km 70% 30km to less than 40km 60% 20km to less than 30km 50% 10km to less than 20km 40% 5km to less than 10km 2km to less than 5km 30% Less than 2km 20% Works mainly at or from home 10% 0%
s t e nd la edford Luton B th Eas Eng ou ton Keyn orthampton S N Mil
Source: Census, 200 and GVA Grimley analysis
2.81 The figure above shows that the workforce population of Milton Keynes, on average, travel further to work than people working elsewhere in the region and to a lesser extent, elsewhere in England. Of those people working in Milton Keynes, just 49% travel less than 5km to their place of work, compared with 56% regionally and 54% nationally. Almost 1 in 5 people 19%) working in Milton Keynes travel more than 20km to their place of work, this is compared with 15% in the South East and 13% in England.
2.82 It can be seen from the analysis above that Milton Keynes has a commuter based workforce, who mainly travel from outside the city to their place of work. The relatively high percentage of commuters travelling between 20km – 30km to their place of work within Milton Keynes suggests that many workers are coming from nearby conurbations such as Northampton approximately 30km drive), Bedford approximately 27km drive) and Leighton Buzzard approximately 21km drive).
2.83 The figure below shows the split of modes of transport used by people working in Milton Keynes and compares these with the comparitor cities and the regional and national averages.
May 07 25 Milton Keynes Partnership GVA Grimley LLP
Figure 2.11 – Mode of Transport Used to Work – Workforce Population
100% 90% 80%
70% Work from Home 60% Walking / Cycling 50%
40% Public Transport 30% Other Motorised Private 20% Transport 10% Car or Van 0% Luton Milton Keynes Bedford England South East South Northampton
Source: Census, 200 and GVA Grimley analysis
2.84 The figure above highlights Milton Keynes’ workforce population reliance on the motor car, with 63% of all workers using their car / van to get to work. This is in comparison with an average of 56% in Luton, 59% in the South East and 55% nationally. Just 8% of commuters use public transport, compared with a national average of 12%.
2.85 This travel to work data highlights one of the main problems that Milton Keynes may face if there is to be a significant increase in the resident and workforce population of the district, with a higher than average proportion of people using their cars to get to work.
Household Formation
2.86 The composition of households can give an indication as to the nature of the population, whether it be a young, growing population, or an older declining one. The household composition data for Milton Keynes can be seen below. Data for the South East and England is given for comparison.
May 07 26 Milton Keynes Partnership GVA Grimley LLP
Figure 2.12 – Household Composition in Milton Keynes
35%
30%
25%
One person households 20% Two Adults with no Children Two Adults with Children
15% Lone Parent Households Other Households
10%
5%
0% Milton Keynes South East England
Source: Census, 200 and GVA Grimley analysis
2.87 The analysis above shows that within Milton Keynes there are slightly higher than average proportions of households comprising two adults with a number of dependent children, with 31% of all households in Milton Keynes, compared with 28% in the South East and 27% nationally. This supports the population data presented earlier that showed Milton Keynes as having a higher than average number of people aged between 22 – 49. The fact that there are two person households with a number of children would tend to support this.
Job Density
2.88 Jobs density is defined as the number of filled jobs in an area divided by the working-age population resident in that area and a job density of greater than 1 represents an area that is experiencing inward commuting. The average job density figures for Milton Keynes and the surrounding area are shown below.
May 07 27 Milton Keynes Partnership GVA Grimley LLP
Figure 2.13 – Job Density in Milton Keynes and surrounding areas
1.2
1
0.8
0.6
0.4
0.2 Number of Filled Jobs / Working Age Population 0 Milton Keynes Bedford Luton Northampton South East Great Britain
Source: NOMIS, 2006
2.89 The jobs density in Milton Keynes is around 1.04, way above the national average of 0.83. This indicates there are around 5% more people working in Milton Keynes than actually live there working age people only). Compared with other towns in the local area, only Northampton shares this trend, with a jobs density of 1.11. The other towns in the local area all have a jobs density of less than 1 they are all around 0.8) showing that they have a smaller workforce than the number of jobs in the same area.
2.90 While areas with relatively high jobs densities clearly offer potential job opportunities for residents of the area, it may be the case that there is a mismatch between the type of jobs in an area and the skills of the people living there, as discussed in section 2.65 above. Furthermore, Milton Keynes’ situation as a net importer of people means that it will experience the same sorts of issues relating to sustainability as other larger cities such as Birmingham, Manchester and Leeds.
Dwelling to Worker Ratio
2.91 The ratio of dwellings to workers within Milton Keynes and comparison areas South East and England) is shown below.
May 07 28 Milton Keynes Partnership GVA Grimley LLP
Table 2.2 – Dwelling to Worker Ratios
Milton Keynes South East England Total Employment 108,075 3,888,756 22,441,497 No of Dwellings 86,479 3,391,833 21,206,804 Ratio of Workers : Dwellings 1.2:1 1.1:1 1.1:1 Source: Census, 200 and GVA Grimley analysis
2.92 As can be seen in the analysis above, the average worker to dwelling ratio in Milton Keynes is 1.2:1, well above the regional and national average of 1.1:1. This suggests that Milton Keynes has a high ratio of dwellings with one or more economically active residents. This could reflect house types larger homes), a relatively young but of working age population) and smaller numbers of retired persons. This large pool of labour highlights the extent of jobs available locally given the data in Figure 2.13 which suggests that jobs outnumber the economically active creating a need for in commuting to satisfy this level of economic activity.
2.93 A major issue looking towards 2031 is the nature of additional housing. If it follows existing characteristics it will provide a large pool of economically active residents within the labour market.
Milton Keynes Development Overview
2.94 As part of this baseline it is of value to set out what the key differences are between Milton Keynes and other major urban areas and indeed other new towns. Milton Keynes in planning and development terms is a unique example of urban development for the following reasons:
• Milton Keynes is a planned town based around a centre but with dispersed growth around it. Whilst this is typical of new towns it is not an urban form commonly found in the UK;
• The City has experienced tremendous growth with population expanding from 64,0003 at the establishment of the New Town to 178,300 in 1991 and an approximate figure today of 218,0004. Employment has also expanded rapidly rising from 95,000 in 1994 to 115,700 in 20065. It is unlikely that any significant urban area in the UK has experienced this level of growth in the period;
3 Milton Keynes Official City Atlas, 2006 4 Nomis, 2007 5 Nomis, 2007
May 07 29 Milton Keynes Partnership GVA Grimley LLP
• Growth is expected to continue over the next 25 years with an additional 68,600 new homes and an equivalent level of new jobs;
• The City’s growth has been guided by the public sector and importantly public ownership of land evolving from the New Town Corporation, Commission for New Towns and now English Partnerships. Today, through the Milton Keynes Partnership MKP) Milton Keynes Council and English Partnerships have created a vehicle to steer growth. The previous dominance of the public sector in terms of land holdings is likely to change as expansion increasingly takes place on land in private ownerships with the planning system being the major key mechanism for guiding development. Nevertheless in locations such as Central Milton Keynes, the public sector will remain the major landowner. These changing circumstances are reflected in the remit of Milton Keynes Partnerships which now focuses much more upon the promotion of development opportunities; and
• The land market in Milton Keynes reflects the high degree of public ownerships with controlled releases of land. The impact of the employment land and space market has been to limit the extent of speculative development. This reflects a nervousness regarding speculative development on a significant scale and the impact numerous “To Let” signs would have on market confidence. Whilst in some ways such issues play a role in other land markets these are controlled by market mechanisms rather than by control over the disposal of land or the type of development upon it. However it should be recognised that large estate owners, both in the public and private sector, often share similar approaches. Such an example would be the Calthorpe Estate in Birmingham which carefully controls the type and extent of development on land within its control.
2.95 Clearly Milton Keynes reflects an unusual set of circumstances with high levels of past and anticipated growth and a transition from public sector control of land development to one where the public sector through MKP promotes growth and targets key sectors, whilst the spatial pattern of development is controlled through the planning system.
May 07 30 Milton Keynes Partnership GVA Grimley LLP
3. PROPERTY MARKET REVIEW
3.1 Milton Keynes was designated a New Town in 1967 and has probably been the most successful. It is equi-distant from London and the Midlands and is served by Junction 13 and 14 of the M1. It also has a very good train service with journey times to London Euston of approximately 36 minutes and Birmingham New Street of 58 minutes.
3.2 This Chapter looks at the demand and supply for office and business park accommodation in Milton Keynes, and seeks to project how the demand for employment land might change in the future.
Offices
3.3 The office market in Milton Keynes falls into three categories. The “town centre” type buildings are situated in the central area, known as Central Milton Keynes CMK). Most of the remaining office buildings outside the central area tend to be classed together in Business Parks such as Linford Wood or Caldecotte Lakes, or stand alone complexes for owner occupiers such as EDS and Abbey.
3.4 Milton Keynes can be easily described as an average office centre, similar in size to Croydon, with approximately 130,000 employees recorded at the end of 2003. The economy is extremely diverse and is not reliant upon any specific sector for its employment.
3.5 Milton Keynes has an estimated office stock of approximately 7 million sq ft. There was very little office development prior to its designation as a New Town in 1967, and so there are few old buildings which have become outdated and suitable for demolition or change of use. On average, approximately 140,000 sq ft of new space has been completed each year in Milton Keynes for the last 20 years. However, this has been influenced by cycles in the market and until recently there had been no new development in CMK since 2002. As such, all development carried out since 2002 has been in out of town locations. Invest Milton Keynes currently estimate the stock of vacant office space to be 86,000 sqm 923,000 sq ft).
3.6 The extent of development activity for offices is illustrated in Figure 3.1 overleaf.
May 07 31 Milton Keynes Partnership GVA Grimley LLP
Figure 3.1 – New Buildings – Office Floorspace in Milton Keynes
New Buildings - Office Floorspace in Milton Keynes
70,000
60,000
50,000 ) 2 40,000 Office 30,000 Office - CMK 20,000 Floorspace (m Floorspace 10,000
0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 -10,000 Year
Source: Invest MK, 2006
Central Milton Keynes (CMK)
3.7 It is readily apparent that recent office growth has taken place outside CMK. This reflects the review of CMK strategy 2001 – 2003 which did allow for small investments to take up space. The CMK area is arranged on a grid pattern with the railway station on the western edge connected by Silbury, Midsummer and Avebury Boulevards to the main shopping area in the east. The early office buildings of the 1970’s and early 1980’s are somewhat anonymous but tend to be large multi-storey glass clad buildings providing large floor plates and good natural daylight. The developments of the late 1980’s and 1990’s have arguably been less bland and more individual in appearance.
3.8 Within CMK large current availability is estimated to be in excess of 700,000 sq ft, or about 10% of the stock in Milton Keynes6. This consists almost entirely of older 1970’s buildings with large albeit shallow floorplates which do not necessarily suit modern occupiers. Typical examples include Elder House and Station House in Station Square where there is approximately 100,000 sq ft currently available.
3.9 There is one speculative scheme under construction at the present time which is the development by Frontier Estates of the first phase of CBX3 on Midsummer Boulevard. This will provide two Hotels 3 and 4 star), 45,000 sq ft of speculative offices, and for the first time on this scale in the heart of CMK, 392 apartments, 84 serviced apartments and
6 PROMIS 2006
May 07 32 Milton Keynes Partnership GVA Grimley LLP
approximately 85,000 sq ft of specialist retail, cafes, bars and restaurants. The office scheme is due for completion later this year. Quoted rental levels for office space are £19 per sq ft, if achieved these would represent a new bench mark for rentals in the city centre.
3.10 The early proposals for CMK included extensive free car parking in front of the office buildings, with private parking to the rear. In recent years policy has changed, and most of the ‘free parking’ is now pay and display. The vision is for MK to become less car dependent with high density mixed use development in the centre, and multi-storey car parks on the fringe. As such new town centre office schemes will have lower car parking ratios, and this may well lead to increased demand for the out of town business parks.
Out of Town
3.11 Outside of CMK there are two types of office development. These consist of either business parks designed for a number of users or stand alone complexes for owner occupiers such as the Wavendon Tower facility which is under construction for EDS at Brinklow.
3.12 The largest out of town area is to the north of CMK at Linford Wood. The majority of the space at this development is office and hi-tech with occupiers such as Data Research Services, Hayes Logistics and NEC.
3.13 To the north east lies Willen Lakes which is home to Siemens, and beyond that Atterbury Lakes which has good access to junction 14 of the M1. The main location to the south is Caldecotte Lakes Business Park, which commenced in 1990 and has attracted Rockwell and Daimler Chrysler amongst others. Further to the south west, at Shenley Wood, there is a 200,000 sq ft office complex for Abbey and a speculative development called Shenley Pavilions which is multi-let.
3.14 More than two thirds of the current office availability in Milton Keynes is located out of town. Much of the consented space for out of town has been granted to occupiers seeking extensions to existing facilities. Examples include Abbey with a 200,000 sq ft consent at Shenley Wood, Data Research Services, VW Audi and Taylor Nacanco.
3.15 Consented speculative schemes include Dencora’s 63,000 sq ft Brooklands scheme at Linford Wood and Wilson Bowden’s 59,500 sq ft scheme at Eastlake Park. These locations are shown at Figure 3.2 below.
May 07 33 Key
Recent Developments
LinfordLinford WoodWood WillenWillen LakesLakes EastlakeEastlake ParkPark
ShenleyShenley WoodWood
CaldecotteCaldecotte LakesLakes BusinessBusiness ParkPark
Reproduced from Ordnance Survey mapping with the permission of Her Majesty's Stationery Office. Crown Copyright. Unauthorised reproduction infringes Crown Copyright and may lead to prosecution or civil proceedings. Licence No. LA10019593
MILTON KEYNES PARTNERSHIP - MILTON KEYNES EMPLOYMENT SITES Figure 3.2 - Location of Recent Office Developments Milton Keynes Partnership GVA Grimley LLP
3.16 There is approximately 2.3 million7 sq ft of consented space within the development pipeline, which based on development activity over the last 5 years, provides about 28 years of supply. However, most of this consented space is located out of town.
Office/Business Park Market Future Trends and Key Issues
Locational Trends
3.17 Firms may be encouraged to look for space outside the South East by the shortages of labour now evident in many locations where many towns have unemployment rates of under 2%, and in some places, less than 1% of the workforce is unemployed).
3.18 Occupiers will continue to demand large buildings. Given the lack of sites in city centres, this will continue to create demand for sizeable lettings in edge and out-of-town locations. In London, this should help maintain demand in markets such as Paddington.
3.19 Government planning policy aims to reduce the need for travel, and in particular, the level of car use. Planning regulations now limit the number of car parking spaces allowed at new developments. This has increased the attractiveness of redeveloping existing space rather than using greenfield sites, and therefore favours locations such as town centres and major transport interchanges, rather than business parks.
Other Trends
3.20 The continued challenge of the global business environment will maintain pressure on firms to review their office space requirements.
3.21 The quality of the working environment is likely to increase in importance, and access to retail and leisure services will be a higher priority for employers.
3.22 It has become increasingly important to provide environmentally-friendly office space, particularly since the introduction of the climate change levy on firms in April 2001, which is charged on electricity usage in office space. Environmental concerns have been seen as relatively unimportant by occupiers to date, but this may change as the running costs of environmentally inefficient buildings increase.
3.23 The prospects for continued strong growth in the serviced offices sector are likely to depend on its ability to appeal to a broader range of companies, and attract larger and more established occupiers to this type of space. There are already signs that this is happening, with the average length of tenancy in serviced offices rising. However, the
7 PROMIS 2006
May 07 35 Milton Keynes Partnership GVA Grimley LLP
sector still accounts for only a small proportion of the total UK office market, and the flexibility it gives occupiers will result in continued long-term growth in this sub-sector.
3.24 Other more fundamental changes such as increased working from home and “hot-desking” are not likely to have a significant impact over the next two to three years.
3.25 There is a clear need to reposition the office market to focus upon Central Milton Keynes building on the CBX3 scheme and subsequent development. Whilst an out of town market has become established, there will need to be a greater emphasis upon in town development and control over out of town space to ensure that this does not adversely impact on development at CMK.
3.26 Another key issue is the potential to create new and more interesting buildings and a key challenge particularly in CMK, where uniformity of design could be viewed as a weakness in a national and indeed globally competitive market.
3.27 This perspective on the market reflects, in part, past trends. The efforts of Invest Milton Keynes and the Milton Keynes Partnership to develop University provision and to target inward investment activity around it coupled with wider City marketing form an integral part of transforming the City and changing past trends.
Industrial
3.28 Milton Keynes has a range of industrial premises distributed around the edge of CMK. Estimates predict that at the end of 2005, there was between 2.52m m2 and 2.83m m2 of industrial floorspace within Milton Keynes8. Within the industrial sector, total take-up for 2005 was close to 1m sq ft 92,900 m2), which was the lowest level since 2001. Despite this relatively low figure for the entire year, over two thirds of this came in the second half of the year, possibly indicating a rise in the take up of industrial space for 2006.
3.29 Market rental values, according to a number of sources, including Bidwells Drake and Brown & Lee were at around £6.50 per sq ft for prime rental space in the last quarter of 2005. Good secondary space rental values were around £5.50 per sq ft. It is noticeable that rental values within Milton Keynes have risen very slowly over the last 15 years, from around £5 per sq ft in 1991 to their present day levels.
3.30 In terms of demand and availability, there continues to be a shortage of Grade A space within Milton Keynes, and the prospect of further rises in prime rental values had brought
8 Commercial and Industrial Floorspace and Rateable Value Statistics 2005 Revaluation), 2005 and Bidwells Drake DataBook, 2005
May 07 36 Milton Keynes Partnership GVA Grimley LLP
forward 480,000 sq ft 44,500m2) of speculative development at Quatro Park, RO24, Torc MK and Celestia. Rental values at these sites shown in Figure 3.3 below) are in the region between £7 per sq ft RO24) and £8 per sq ft Torc MK)9.
3.31 Total demand for the year 2005 was around 8.8m sq ft, with around 325 requirements for industrial space. Total availability was around 2.8m sq ft, although just 8% of this space was Grade A new), with most space 44%) being 2nd hand good quality. In terms of new development, there is around 400,000 sq.m of potential floorspace in the pipeline, with one large new development at Nova Park of 315,000 sqm, with 65,000 sqm currently the subject of a reserved matters application for a new distribution facility for the John Lewis Partnership.
3.32 The extent of industrial/distribution development activity in Milton Keynes is shown in Figure 3.4 below.
Figure 3.4 - Industrial / Distribution Development in Milton Keynes
160,000
140,000
2 120,000
100,000
80,000
60,000
New Buildings m 40,000
20,000
0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Year
Source: Invest MK, 2006
3.33 On average 73,500 sqm 790,000 sq ft) of new development has taken place in Milton Keynes per annum over the past 10 years with peaks in 1999 and 2003. The last 3 years 2004 – 2006 have however seen some of the lowest rates of development since the late 1990’s. This represents new speculative/bespoke development mainly for the
9 www.investmiltonkeynes.com [accessed 11/08/06]
May 07 37 Key
Recent Industrial Developments QuatroQuatro ParkPark
RO24RO24
TorcTorc MKMK
CelestiaCelestia
Reproduced from Ordnance Survey mapping with the permission of Her Majesty's Stationery Office. Crown Copyright. Unauthorised reproduction infringes Crown Copyright and may lead to prosecution or civil proceedings. Licence No. LA10019593
MILTON KEYNES PARTNERSHIP - MILTON KEYNES EMPLOYMENT SITES Figure 3.3 - Location of Recent Industrial Developments Milton Keynes Partnership GVA Grimley LLP
3.34 distribution sector and some development by owner occupiers. This is a very healthy level of demand reflecting a relatively plentiful supply of employment land.
Manufacturing Market Future Trends and Key Issues
3.35 National trends are showing a decline in manufacturing production in the UK as globalisation and the enlargement of the EU sees large mass production manufacturing activity shifting to overseas locations in South East Asia/China or Eastern Europe. Competitive pressures are likely to squeeze the cost base of UK manufacturing putting pressure on the efficient use of manufacturing space. It is likely that UK manufacturing will continue to shed manufacturing space particularly poorer quality inefficient buildings. The process of rationalisation is likely to lead to some demand for new manufacturing plants as companies particularly nationals/multi-nationals with a number of UK locations) to rationalise production on to a smaller number of sites or even new locations. Locations will either gain or lose out through this process with wage costs, land availability/price and the availability of fiscal incentives being key drivers except where the existing skills base is considered to be an over-riding requirement this is more likely for higher value added sectors).
3.36 Whilst the above reflects headline trends there is likely to remain a requirement for manufacturing premises in large urban economies providing supplies to UK based manufacturingparts for overseas production.
Key Trends
• Limited prospects for large scale basic manufacturing investment;
• An overall decline in manufacturing floorspace;
• The process of rationalisation will lead to winners and losers higher cost locations in the South East. These are likely to lose out unless there are specific skill requirements which outweigh general cost requirements; and
• A retained but smaller manufacturing base with pressures on occupational costs.
3.37 In Milton Keynes the closure of plants for Aston Martin and Plysu in Newport Pagnell and Woburn Sands point to these trends.
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Logistics/Distribution Market Future Trends and Key Issues
3.38 The logistics and distribution market represents a significant land use issue. In Milton Keynes there has been considerable growth in this sector in recent years and it is unlikely that this will change in the short term. Distribution/logistics uses are traditionally viewed as land hungry and providing relatively low quality employment. Whilst this is not necessarily always the case, large logistics developments can be expected to employ 40 full time equivalent employees per hectare ha) and 5 HGV drivers per ha. Earnings are also often comparable to manufacturing and above lower grade clerical and administration jobs in the service sector.
3.39 There are a number of key drivers in the distribution sector:
• Import Substitution – Increasingly goods consumed in the UK are being sourced from international markets particularly the Far East, rather than being produced domestically. This creates demand for distribution space to receive goods, add value through packaging, etc and to forward to the distribution network;
• Purchasing Trends in the Retail Sector – The traditional model has been for each organisation in the supply chain despatching goods to organise and pay for the movement of goods to the next stage of the supply chain. However, the emergence and likely continued dominance of large retail chains Tesco, B&Q for example) is altering this structure by taking over the responsibility for managing the inward transport of goods from supplies distribution centres or factories to their own regional and national distribution centres. This has a number of advantages including retailers greater control over inward flow of goods and through buying power, the ability to lower transport costs. The result in land use terms is pressure for larger ‘consolidation’ centres where goods are packaged before onward delivery to regional distribution centres;
• Increasing Transport Costs – Whilst road has presented the most cost efficient means of moving goods in the past EU and UK government directives including the introduction of lorry road user charging are likely to increase the relative costs of transport of goods by road;
• Congestion – The logistics industries preference of road haulage is in part driven by the need for just in time delivery. Increasing congestion in the UK road network the road usage is expected to increase by 25%, 2000 – 2010). This will lead to higher costs as operators factor in additional journey times; and
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• Working Time Directive/Driver Shortages – The impact of legislated shorter working hours and reported levels of driver shortages particularly in the South East and Midlands). Demographic factors such as the high numbers of lorry drivers aged 45 – 65 age range will also impact on this. The consequence is likely to again increase costs as operators raise wage levels to attract drivers.
Likely Impacts
3.40 The impacts of the above are likely to manifest itself in two ways:
i) The way operators manage their transport arrangement; and
ii) The demand for distribution floorspace over the medium to long term.
3.41 Given increasing road costs certainly in the medium to long term operators will need to look for more cost effective solutions to remain competitive. The availability of genuine modal choice to and from distribution centres will be a key component of this and consequently be increasingly demanded in the market. However, in practical terms road haulage will remain the favoured means for transporting most goods but operators will favour locations that offer a choice when goods can be moved cost effectively by rail. The recent development of a rail freight service by Eddie Stobart Limited from the DRIFT Terminal at Daventry is an example of this.
3.42 Market trends will also support this as greater levels of import substitution will lead to wide use of deep sea ports concentrated largely in the South East. Trends in the retail sector will lead to greater use of consolidation centres. In simple terms the trend will be for higher volumes, handled by fewer operators at fewer locations. Such concentration will favour rail freight and hence locations with a modal choice.
3.43 The other main impact will be the demand for distribution space. The clear trend in the recent past has been for larger buildings. The demand for larger distribution space is likely to continue, both in terms of the size of floorspace per unit and the number of large units demanded driven by greater number of consolidation centres, greater import substitution and the expansion of foodstores into importing) non-food lines. A key driver of the logistics and distribution market particularly in the food retail sector will be customer shopping preferences. For instance a move towards local produce as part of initiatives to reduce carbon emissions could lead to a demand for smaller local distribution hubs. Overall there will be greater national demand for warehouse floorspace, as shown by Cambridge Econometric forecasting model in Chapter 5 of this Study.
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Future competitive distribution locations
3.44 The key drivers of future demand for large distribution centres are likely to be:
• Modal choice;
• Rail connectivity;
• Site size;
• Highway links; and
• Labour availability and cost.
3.45 Locations able to offer genuine modal choice are likely to be favoured. Integration of rail and road avoids local road connecting trips from rail terminal to warehouse, offer rail the greatest competitive advantage to road transport.
3.46 In terms of size, rail freight connectivity is only likely to be cost effective at a large scale. Neighbouring uses for operations taking place over 24 hours per day with a focus on night time deliveries will encourage locations away from residential areas. Distribution activities remain labour intensive and rely on manual labour for many of their activities. Consequently, favoured locations will be in or around areas of employment need, with below average wage rates, the right skills and with fairly short travel to work distances.
Implications for Milton Keynes
3.47 Milton Keynes sites are generally in what has been a favoured location for logistics given its connections to the motorway network and its proximity to the South East ports. It has been able to offer land availability on large plots for regional distribution centres in particular. However, in respect of future trends it has a less favoured position:
• It currently lacks a rail freight facility;
• It has a relatively high wage cost location when compared to locations in the north and east accessible from deep sea ports; and
• Skills availability i.e. requirement for manual labour may not be to Milton Keynes advantage.
3.48 Nevertheless, a growing population, access to the motorway network and relatively good land availability indicate that Milton Keynes remains a strong and competitive location for
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distribution activity. GVA Grimley expect Milton Keynes to continue to attract companies from the medium sized regional distribution centre market rather than newer and larger units for consolidation centres which we believe will favour locations with rail freight, lower wage costs and very large sites.
Investor Attitudes
3.49 Research has been undertaken on behalf of Invest Milton Keynes, with the intention to understand the role and perspective of the relocation decision influencers. The intention was to appreciate how business relocation decisions are made and the balance of hard and soft factors that impact on the current profile and image of Milton Keynes amongst key decision-influencers and thus areas for improvement. The companies that took part in the research were all relocation specialists/ advisors to London businesses. Interviews were carried out with 20 senior partners or similar from the selected companies. Its value to this work is as a sample of external perceptions of the city and in particular its city centre.
3.50 Each company that was interviewed had very different responses in how they advise their client for relocation or expansion. The advice given was dependent on the client, but some consultants created a location matrix with key criteria such as:
• Road and rail connectivity;
• Size and profile of labour pool;
• Office and staff costs;
• Office availability;
• Major companies in the city; and
• Quality of life measures.
3.51 Most consultants had their own internal research departments, as well as using external research. Regional Development Agencies RDAs), relevant investment agencies i.e. regional websites and local authorities were also approached for research purposes.
3.52 It was found that the essential drivers for change tend to be financial, operational and human resource requirements. Milton Keynes scored well for operational requirements, quite well on financial not as good as other cities) and poor on human resources.
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3.53 Most major cities are seen as having significant positives i.e. Reading has a telecoms/technology cluster, Oxford and Cambridge have world class universities and Leeds is an ‘up and coming’ city…etc… Milton Keynes registered very low ‘off the radar’) and was one of the last cities to be mentioned or until the respondents were prompted). There was no strong sense of Milton Keynes being a place to relocate, which would not have been the case 10 years ago. Respondents lacked knowledge of Milton Keynes and crucially had hardly any knowledge of the future plans for expansion.
3.54 Certain property commentators have noted that Milton Keynes is seen to have lost its ‘excitement’ as a new city, and due to its location is unlikely to become a regional centre, like Birmingham. Milton Keynes is generally seen as having a grey, dull image and soulless and does not appear to be a very interesting place to live. As a result Milton Keynes is regarded as being a ‘back office’ and Business Park location. The image of Milton Keynes is seen as being negative, despite the commentators not having much knowledge of the city. It is not seen as a vibrant city, with commentators assuming that land for development would be readily available. Importantly Milton Keynes is not seen as having any iconic modern architecture that makes a statement. The built environment was seen as being bland, uniform, dull and functional.
3.55 Milton Keynes is seen to have no centre of excellence in one particular industry and a lack of critical mass. Commentators have also remarked that the city lacks a university, although the Open University campus is located there, the perception is that there is no university.
3.56 Despite the negative image of Milton Keynes, the functional aspects of the city are seen as more positive. With its location close to London approximately 50 miles north of central London) and excellent road and rail links it is therefore seen as a good location for warehousing/ distribution with good access to the M1. Competitive office costs although maybe not as large a cost saving as other cities), and was a modern organised city in which traffic flowed easily and had good cycleways with perceived low levels of crime. It was also believed to have plenty of available land, so if a suitable location was not already available then one could be built. The research highlighted Milton Keynes as a good location for data centres given the greater need for disaster planning for London businesses post 7/7 terrorist attacks).
3.57 The only ‘emotional’ positive aspect associated with Milton Keynes was the ‘can do’ attitude towards businesses. In the early days of Milton Keynes, the eagerness to attract businesses created a simplified and rapid planning approach and was seen as being ‘built
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for business’. Major competitor cities have faced problems in accommodating business but have now begun to overcome them i.e. Manchester and Birmingham.
3.58 The conclusion and recommendation from this research was that Milton Keynes needs to significantly raise its profile with the property consultants questioned and build good relationships. This needs to be done through good PR/ advertising in industry publications i.e. Estates Gazette and Property Week; and the establishment of a prominent local leadership to attract business, direct communications with consultants through Open Days / Corporate hospitality showcasing what Milton Keynes can offer; asking existing large multinational companies i.e. CEO’s) to provide positive testimonials regarding their experience of the city, to provide a positive image. Finally, achieving a targeted approach to attracting investors is important. This can be done on focusing on a particular industry such as IT, and professional services. Overseas investors should be targeted through the appeal of Milton Keynes being a new, clean and efficient city.
3.59 This work has informed the work undertaken by Invest Milton Keynes to reposition the City. Extensive marketing has taken place to promote links with the University and to target key sectors such as creative businesses and ICT. Initiatives such as promotional events, conferences such as MIPIM provide the opportunity to address pre conceptions about the City and provide new opportunities. Furthermore Milton Keynes’ location at the centre of the Oxford to Cambridge Arc makes it also especially attractive to technology and knowledge-based businesses and those involved in research and development. There are opportunities for tailor-made development of incubation centres and grown on space for R & D companies through to manufacturing facilities. This forms a key element of Invest Milton Keynes Business Plan.
Existing Businesses within Milton Keynes
3.60 Data is available on businesses within Milton Keynes from the 2005 Employment Survey. This is a comprehensive survey of over 7,000 businesses in Milton Keynes. Whilst not a survey designed to assess property demand it does provide information on the extent of employment growth and its location, the size of businesses and the extent of local control over business decisions, which are all influential on property. Table 3.1 below highlights the change in employment 2003 – 2005
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Table 3.1 - Employment Change In Milton Keynes 2003 – 2005
Jobs Sector July 2003 October 2005 Change No % No % No % Agriculture 573 0.5% 543 0.4% -30 -5.2% Production 17 200 14.5% 15 383 12.6% -1 817 -10.6% Construction 4 185 3.5% 4 495 3.7% 310 7.4% Services 96 744 81.5% 101 846 83.3% 5 102 5.3% Total 118 702 100.0% 122 267 100.0% 3 565 3.0% Source: Milton Keynes Employment Survey 2005
3.61 As would be expected, employment in production sectors has declined by over 10% over the period with large losses in employment within mechanical engineering, food and drink and motor vehicles, but with growth in other metal goods. Service sector employment grew by 5,100 in a little over 2 years with significant gains in wholesale distribution, business services, education and medical and health services.
Implications for Property Demand
• Reduced overall requirements for manufacturing space, but growth in some sectors with demand either for new space or to re-use the space vacated by others:
• Growth in service sectors, some such as wholesale distribution will require B8 warehouse) possibly ancillary office space, Others such as business services/real estate occupying B1a office space); and
• Significant growth in sectors such as education +1,400 jobs) and medical and health services 1,860 jobs) with limited demand for traditional employment space, other than some demand for office B1a) functions. It is significant that these two sectors were the largest growth sectors in employment terms in 2003 – 2005.
Nature of Jobs Growth
3.62 Of the net job growth of 3,565 jobs 2003 – 2005 the largest source of employment growth was existing businesses taking on more staff 15,428 new jobs) and new businesses 11,843 jobs). At the same time existing businesses lost 9,180 jobs and 1,325 businesses closed resulting in the loss of 14,525 jobs. Chapter 8 provides recommendations on how to retain existing businesses through property provision.
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Implications for Property Demand
• The above reflects the continual churn of employment in an economy. The impact on property demand is likely to be complex, with new and expanding businesses often taking space occupied by declining or closed businesses. Employment growth could also be absorbed in the more efficient use of existing premises. Decline in employment may not immediately result in a fall in demand for property as businesses retain existing space because of lease commitments or a desire to retain space expecting future upturns. However, over time property demand can be expected to fall as employment declines in a particular sector;
• The extent to which vacated property would be occupied by expanding businesses will depend on its suitability for the expanding business concerned. This will at least partly be reflected in the sector those businesses are in i.e. space vacated by manufacturing businesses will often not be suitable for service industries with different locational and building needs; and
• Further analysis of the nature of job growth by type of establishment would assist in developing some understanding of this.
Size of Establishments
Table 3.2 Change in Employment 2003 - 2005 by Establishment
Employment Employed Employed Change Band July 2003 October 2005 No % No % No % 0-1 1 549 1% 1 753 1% 204 13% 2-5 7 668 7% 7 899 7% 231 3% 6-10 8 459 7% 8 191 7% -268 -3% 11-20 10 153 9% 10 715 9% 562 6% 21-50 19 645 17% 20 646 17% 1 001 5% 51-100 13 394 11% 13 401 11% 7 0% 101-200 16 042 14% 15 097 12% -945 -6% 201-499 16 965 14% 18 623 15% 1 658 10% 500+ 23 495 20% 24 610 20% 1 115 5% Total 117 370 100% 120 935 100% 3 565 3% Overall Total# 118 702 122 267 # - After counting back in estimate for out stationed construction jobs Source: Milton Keynes Employment Survey 2005
3.63 Sole traders employing no more than one person grew by 13% 204 people) 2003 – 2005. Companies employing less than five people, employ 8% of the working population but
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represent 60% of establishments. Large establishments, 200+ employees increased employment by 2,750 jobs.
Implications for Property
• Although the survey does not contain information on the sectoral nature of establishments, the fact that large businesses have grown may reflect growth by large public sector organisations with limited direct property implications). Examples of this would be the Local Authority, the NHS and English Partnerships.
Location of Employment
3.64 The spatial nature of job creation provides a more direct link to property although it may often reflect the location of development activity rather than demand itself. The table above reveals extensive job growth across the city. Table 3.3 identifies employment change by location 2003 – 2005.
Table 3.3 Change in Employment Location
Postcode Location July 2003 October 2005 Change No % No % No % MK1 North Bletchley 8 738 7% 9 329 8% 591 7% MK2 Central/South Bletchley 4 805 4% 4 880 4% 75 2% MK3 West Bletchley 3 295 3% 3 242 3% -53 -2% MK4 Westcroft/Tattenhoe 2 669 2% 2 690 2% 21 1% MK5 Shenley Wood/ 4 320 4% 4 055 3% -265 -6% Shenley Church End/ Knowlhill MK6 Bleak Hall/ 9 182 8% 10 824 9% 1 642 18% Winterhill/ Redmoor /Eaglestone MK7 Caldecotte/Tillbrook 7 543 6% 8 275 7% 732 10% MK8 Crownhill/Wymbush 3 839 3% 3 988 3% 149 4% MK9 Central Milton Keynes 25 202 21% 23 642 19% -1 560 -6% MK10 Kingston/Brinklow 5 837 5% 6 768 6% 931 16% MK11 Stony Stratford/ 4 992 4% 5 017 4% 25 1% Kiln Farm MK12 Old Wolverton/ Wolverton 5 977 5% 6 326 5% 349 6% Mill/ Wolverton/ Stacy Bushes MK13 Bradville/Bradwell 3 484 3% 3 927 3% 443 13% Abbey/Rooksley MK14 Blakelands/ 7 036 6% 7 460 6% 424 6% Linford Wood MK15 Willen Lake/Northfield 6 353 5% 6 975 6% 622 10% Fox Milne/Tongwell MK16 Newport Pagnell 6 253 5% 6 009 5% -244 -4% MK17 Woburn Sands/ Newton 3 691 3% 3 159 3% -532 -14% Longville MK19 Haversham/ 1 762 1% 2 044 2% 282 16%
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Postcode Location July 2003 October 2005 Change Hanslope MK46 Olney 2 353 2% 2 286 2% -67 -3% Unclassified 39 * 39 * -- 0% Out stationed construction jobs 1 332 1% 1 332 1% -- 0% Total 118 702 100% 122 267 100% 3 565 3% # - Examples only – not exhaustive * - Less than 1% Source: Milton Keynes Employment Survey 2005
3.65 However, the following locations have experienced employment decline:
• MK5 including Shenley Wood, Shenley Church End, Knowhill);
• MK9 Central Milton Keynes;
• MK3 West Bletchley;
• MK16 Newport Pagnell; and
• MK17 Woburn Sands/Newton Longville.
3.66 The situation in Central Milton Keynes reflects restructuring amongst a small number of occupiers in the retail sector but also a reduction in the total number of establishments – 38 between 2003 – 2005. The decline at Woburn Sands probably reflects the closure of the Plysu plant. Employment growth has been particularly high in absolute terms in the following locations:
• MK1 – North Bletchley + 590 jobs
• MK6 – Bleak Hall/Winterhill + 1,640 jobs
• MK7 – Caldecotte/Tillbrook + 730 jobs
• MK10 – Kingston/Brinklow + 930 jobs
• MK15 – Willenlake/Northfield Fox Milne + 620 jobs
3.67 Some of this job growth reflects new development activity for instance developments at Snellshall West, which is in progress for a large manufacturing/ logistics building. Also developments at Kingston near junction 14 of the M1. Other more recent developments are the IKEA store and the Asda Wal-Mart in Denbigh.
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Implications for Property
• As discussed above, changes in the spatial distribution of employment may well reflect development activity rather than demand. However with CMK the decline in employment if it were to reflect a longer term trend may reflect a number of facts.
i) A lack of investment in new development there has been little new space built in CMK over the above period);
ii) More limited interest in CMK from occupiers due to a range of factors; and
iii) Sectoral factors with an over representation in CMK of sectors in decline such as retail distribution 750 job losses 2003 – 2005), postal/telecoms services -770 jobs).
• Whilst only a short term trend coupled with property demand dynamics discussed in the property section, the loss of employment in CMK may indicate that much needs to be done to develop CMK as a key driver of the Milton Keynes economy and property market.
Ownership of Businesses
3.68 The ownership of businesses can often reflect the extent to which property decisions are made locally or reflect regional, national or international decisions.
Table 3.4 Owner of Businesses
Origin Establishments Jobs Number % Number % Started-up in the Milton Keynes area 3 664 71.5 46 287 50.1 Relocated from elsewhere in the UK 440 8.6 12 026 13.2 Relocated from outside the UK 13 2.5 285 3.1 Opening a new branch in Milton Keynes 1 009 19.7 32 662 35.8 Total 5 126 100.0 91 260 100.0 Source: Milton Keynes Employment Survey 2005
Table 3.5 Location of Headquarters
Location: Establishments % Milton Keynes include sole trader) 3 958 78.3 Within the UK 1 034 20.4 Outside the UK 66 1.3 Total 5 058 100.0 Source: Milton Keynes Employment Survey 2005
3.69 Most businesses started up in Milton Keynes reflecting many small employers although over half of jobs), relatively few relocated from elsewhere in the UK 440 establishments
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12,000 jobs). Companies opening a new branch in Milton Keynes represented 32,600 jobs this reflects additional inward investment not reflected elsewhere in a range of sectors including retail).
3.70 In terms of ownership most Milton Keynes establishments are locally controlled 78%, 20.4% have headquarters located elsewhere in the UK and only 1.3% outside the UK. However, this data is not presented in terms of employment which we suspect would show a greater influence for UK and outside UK owned companies upon total employment.
Conclusions
3.71 The issues to emerge from this analysis are:
• Development activity for offices has been focused outside CMK and there is plentiful remaining supply outside the city centre;
• Rental levels although improving are below levels where speculative development of city centre offices above 3 storeys) would be viable as a single use. Those schemes that have been brought forward such as CBX3 provide a mix of offices and higher value uses such as residential and retail;
• There has been little development activity in CMK, which partly explains falling employment;
• Industrial /distribution rents are relatively healthy and development activity has taken place at reasonable levels with a focus of distribution;
• Investor advisors do not regard CMK favourably referring to it as functional rather vibrant. This may deter some occupiers and place MK more in competition in terms of occupation costs with the likes of Luton, rather than Birmingham, Manchester and Leeds e.g. Regional Centres;
• Employment growth in recent years has been strong in non-employment space sectors health and education); and
• Whilst there are many small companies employment and therefore property demand is still driven by medium to large companies. However in this context 10 or more employees could be considered a medium-sized company.
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