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Warehousing and Logistics in Leicester and Leicestershire: Managing growth and change Leicester and Leicestershire Authorities Final Report April 2021 Prepared by GL Hearn 65 Gresham Street London EC2V 7NQ T +44 (0)20 7851 4900 glhearn.com With MDS Transmodal Ltd Iceni Projects Ltd Public Warehousing and Logistics in Leicester and Leicestershire: Managing growth and change, April 2021 Leicester and Leicestershire Authorities, Final Report Contents Section Page 0 EXECUTIVE SUMMARY 10 Key messages from the report 10 1 INTRODUCTION AND CONTEXT 20 Context 21 Study Area 21 Stakeholders 23 2 DRIVERS FOR CHANGE IN THE LOGISTICS MARKET 24 Better Delivery: The Challenge for Freight 24 National Planning Policy Framework and Planning Practice Guidance 31 National Planning Statement for National Networks 34 The Growth of E-commerce 35 Rail Freight Trends and Forecasts 41 Rail Network Enhancements 45 Highway Network Enhancements 50 Brexit 52 3 WAREHOUSING STOCK POSITION (2019) 60 4 PROPERTY MARKET REVIEW 67 Warehouse / Industrial Market Review 67 Warehousing Floorspace 70 Agent Consultation: Key Drivers and Trends 82 5 EXISTING SRFI RAIL FREIGHT VOLUMES 85 6 WAREHOUSE LAND SUPPLY AND SUPPLY TRAJECTORY, LEICESTERSHIRE AND ‘GOLDEN TRIANGLE’ 87 7 ESTIMATES FOR FUTURE STRATEGIC WAREHOUSING NEED – LABOUR DEMAND AND COMPLETIONS TRENDS 90 Labour Demand Model 90 Baseline Forecasts 94 Completions Trend Model 98 8 ESTIMATES FOR FUTURE STRATEGIC WAREHOUSING NEED – REPLACEMENT AND TRAFFIC GROWTH 102 9 TESTING DEMAND FORECASTS AND SUPPLY 113 Road Only Sites – Demand and Supply 122 10 FUTURE WAREHOUSE FLOORSPACE GROWTH SCENARIOS SUMMARY 127 GL Hearn Page 2 of 209 P:\Projects\Harborough District Council - Future of Wareshousing in Leicestershire - 20-322\4. Reports and Appraisals\Warehousing Report Leics FINAL 27 04 21 V2.docx Warehousing and Logistics in Leicester and Leicestershire: Managing growth and change, April 2021 Leicester and Leicestershire Authorities, Final Report Completions Trend Model 127 Labour Demand Model 128 Replacement and Traffic Growth Model 128 Margin for Flexibility 129 Model Summary and Preferred Scenarios for testing 130 Forecast Demand Preferred Scenario and Future Site Supply 132 Key risks and assumptions 134 11 FUTURE DEVELOPMENT – AREAS OF OPPORTUNITY 137 12 MONITORING 144 13 FLOORSPACE SCENARIO IMPLICATIONS ON EMPLOYMENT 147 Job Creation 147 Types of job growth 152 Effects on the FEMA and adjacent FEMAs 155 Local Authority Commuting Analysis 158 Housing Implications 159 14 LABOUR AND SKILLS 163 Commuting patterns 163 Labour force composition 167 15 HGV PARKING 171 Parking for Non-operational Reasons – Spatial Implications 173 Consequences of Parking at Inappropriate Locations 175 HGV Parking – Facilities Required 177 Need and Facility Development in Leicestershire 179 16 PLANNING POLICY AND DISTRIBUTION DEVELOPMENT 181 Providing facilities: Last mile / Point of delivery 181 Freight Optimisation 183 17 CONCLUSIONS & RECOMMENDATIONS 191 E COMMERCE LOGISTICS MODELS 198 LARGE SCALE WAREHOUSE FLOOR SPACE BY BILLING AREA – EAST MIDLANDS (VOA 2019) 200 STUDY AREA SUPPLY APRIL 2020 204 WIDER AREA SUPPLY APRIL 2020 205 MAP OF STRATEGIC WAREHOUSING LOCATIONS BY AGE 207 DEVELOPMENT SIZE AND FLOOR SPACE: SELECTED DEVELOPMENTS 208 GL Hearn Page 3 of 209 P:\Projects\Harborough District Council - Future of Wareshousing in Leicestershire - 20-322\4. Reports and Appraisals\Warehousing Report Leics FINAL 27 04 21 V2.docx Warehousing and Logistics in Leicester and Leicestershire: Managing growth and change, April 2021 Leicester and Leicestershire Authorities, Final Report List of Figures FIGURE 1: FIGURE: WIDER ‘GOLDEN TRIANGLE’ STUDY AREA 22 FIGURE 2: E-COMMERCE RETAIL SALES 2007-2019 36 FIGURE 3: DOMESTIC FREIGHT MOVED IN GB 42 FIGURE 4: CHANGE IN INDUSTRIAL FLOORSPACE, 2002-19 71 FIGURE 5: STRATEGIC INDUSTRIAL TRANSACTIONS IN FEMA SINCE 2014 73 FIGURE 6: INDUSTRIAL DEALS IN FEMA BY YEAR AND LOCAL AUTHORITY, 2014-19 74 FIGURE 7: INDUSTRIAL FLOORSPACE BY YEAR AND LOCAL AUTHORITY, 2014-19 75 FIGURE 8: INDUSTRIAL FLOORSPACE BY YEAR AND SIZE, 2014-19 76 FIGURE 9: INDUSTRIAL AVAILABILITY IN FEMA 78 FIGURE 10: DIRECT AVAILABILITY ACROSS LEICESTER AND LEICESTERSHIRE BY LOCAL AUTHORITY 80 FIGURE 11: DIRECT AVAILABILITY ACROSS LEICESTER AND LEICESTERSHIRE BY SIZE AND GRADE 81 FIGURE 12: HIERARCHAL STRUCTURE OF OXFORD ECONOMICS’ SUITE OF MODELS 91 FIGURE 13: MAIN RELATIONSHIPS 92 FIGURE 14: STRATEGIC WAREHOUSING COMPLETIONS (SQM) 99 FIGURE 15: KEY AREAS OF OPPORTUNITY 139 FIGURE 16: HMA SURROUNDING LEICESTERSHIRE 156 DIAGRAM 1: E-COMMERCE – LOGISTICS MODEL 1 198 DIAGRAM 2: E-COMMERCE – LOGISTICS MODEL 2 198 List of Tables TABLE 1: TABLE: SUMMARY OF RAIL FREIGHT DEMAND FORECASTS TO FY2033/4 AND FY2043/4 45 TABLE 2: RAIL ENHANCEMENT SCHEME PROGRESS 47 TABLE 3: RAIL NETWORK ENHANCEMENT PIPELINE, EAST MIDLANDS 49 TABLE 4: LEICESTERSHIRE HIGHWAY SCHEMES 51 GL Hearn Page 4 of 209 P:\Projects\Harborough District Council - Future of Wareshousing in Leicestershire - 20-322\4. Reports and Appraisals\Warehousing Report Leics FINAL 27 04 21 V2.docx Warehousing and Logistics in Leicester and Leicestershire: Managing growth and change, April 2021 Leicester and Leicestershire Authorities, Final Report TABLE 5: TABLE: RORO UNITS HANDLED AT DOVER AND GREAT BRITAIN PORTS 2016 AND 2018 54 TABLE 6: INDUSTRIAL FLOORSPACE TRENDS, 2002-19 70 TABLE 7: ANNUALISED AND PROJECTED TAKEUP BY AUTHORITY 77 TABLE 8: GOLDEN TRIANGLE RENTAL VALUE CHANGE, BIG SHEDS 77 TABLE 9: DIRECT YEARS SUPPLY, LEICESTER AND LEICESTERSHIRE COUNTY LOCAL AUTHORITIES 82 TABLE 10: INDIRECT PIPELINE YEARS SUPPLY, LEICESTER AND LEICESTERSHIRE COUNTY AUTHORITIES ERROR! BOOKMARK NOT DEFINED. TABLE 11: UNDER CONSTRUCTION YEARS SUPPLY, LEICESTER AND LEICESTERSHIRE COUNTY LOCAL AUTHORITIES ERROR! BOOKMARK NOT DEFINED. TABLE 12: TABLE: CURRENT LARGE-SCALE WAREHOUSE CAPACITY ENGLAND AND WALES, BY REGION (2019) 61 TABLE 13: TABLE: CURRENT LARGE SCALE WAREHOUSE CAPACITY AT SRFIS AND OTHER RAIL-CONNECTED SITES (2019) 63 TABLE 14: TABLE: CURRENT LARGE SCALE WAREHOUSE CAPACITY LEICESTERSHIRE BY BILLING AUTHORITY (2019) 65 TABLE 15: RAIL FREIGHT TONNES LIFTED 2019 85 TABLE 16: TYPICAL INTERMODAL SERVICES – ORIGINS AND DESTINATION 86 TABLE 17: LEICESTERSHIRE WAREHOUSE LAND SUPPLY 87 SOURCE: COSTAR / EGI / AUTHORITIES 87 TABLE 18: WIDER GOLDEN TRIANGLE WAREHOUSE LAND SUPPLY 89 TABLE 19: ESTIMATED REPLACEMENT BUILD TO 2041 105 TABLE 20: REPLACEMENT BUILD ASSUMPTIONS ERROR! BOOKMARK NOT DEFINED. TABLE 21: EXISTING & FORECAST FREIGHT FLOWS FOR DISTRIBUTION CENTRE COMMODITIES – LEICESTERSHIRE 107 TABLE 22: EXISTING & FORECAST FREIGHT FLOWS FOR DISTRIBUTION CENTRE COMMODITIES – EAST MIDLANDS 107 TABLE 23: SENSITIVITY TEST TRAFFIC FORECAST (2041 TRAFFIC FORECAST + 15%) - LEICESTERSHIRE 108 TABLE 24: SENSITIVITY TEST TRAFFIC FORECAST (2041 TRAFFIC FORECAST + 15%) – EAST MIDLANDS 109 TABLE 25: FORECAST TRAFFIC GROWTH AND ADDITIONAL FLOOR SPACE REQUIRED109 GL Hearn Page 5 of 209 P:\Projects\Harborough District Council - Future of Wareshousing in Leicestershire - 20-322\4. Reports and Appraisals\Warehousing Report Leics FINAL 27 04 21 V2.docx Warehousing and Logistics in Leicester and Leicestershire: Managing growth and change, April 2021 Leicester and Leicestershire Authorities, Final Report TABLE 26: TABLE: SENSITIVITY TEST TRAFFIC FORECAST AND ADDITIONAL FLOOR SPACE REQUIRED 110 TABLE 27: FORECAST NEW-BUILD RATES TO 2041 110 TABLE 28: FULL-TIME EQUIVALENT JOBS BY USE CLASS (‘000S) 94 TABLE 29: B8 EMPLOYMENT FLOORSPACE NEED (SQM) 95 TABLE 30: FORECAST B8 EMPLOYMENT LAND NEED (HA) 95 TABLE 31: FULL-TIME EQUIVALENT STRATEGIC B-8 JOBS CHANGE 96 TABLE 32: STRATEGIC B8 EMPLOYMENT FLOORSPACE NEED (SQM) 97 TABLE 33: FORECAST B8 EMPLOYMENT LAND NEED (HA) 97 TABLE 34: AVERAGE ANNUAL GROWTH RATES, WAREHOUSING SECTORS 98 TABLE 35: FORECAST COMPLETIONS TO 2041 100 TABLE 36: INDUSTRIAL FLOORSPACE TRENDS, 2002-19 (SQM ‘000S) 101 TABLE 37: TOTAL FORECAST NEW-BUILD AND AT RAIL-SERVED SITES (SRFIS) TO 2041115 TABLE 38: RAIL-SERVED SITE SUPPLY IN LEICESTERSHIRE AND EAST MIDLANDS – WITH CONSENTS 117 TABLE 39: LAND REQUIRED AT RAIL-SERVED SITES AND POTENTIAL SITE SUPPLY TO 2041 118 TABLE 40: POTENTIAL SITE SUPPLY 2041 – LEICESTERSHIRE AND EAST MIDLANDS 121 TABLE 41: TOTAL FORECAST NEW-BUILD AND ROAD ONLY NEW-BUILD TO 2041 (HIGH REPLACEMENT) – LEICESTERSHIRE 122 TABLE 42: TABLE: SITE SUPPLY ROAD ONLY SITES – VACANT UNITS AND PLOTS WITH B8 CONSENTS 124 TABLE 43: TOTAL NEW-BUILD AT ROAD ONLY SITES AND POTENTIAL SITE SUPPLY TO 2041 125 TABLE 44: FORECAST COMPLETIONS TO 2036 AND 2041ERROR! BOOKMARK NOT DEFINED. TABLE 45: INDUSTRIAL FLOORSPACE TRENDS, 2002-19 (SQM ‘000S) 128 TABLE 46: FORECAST NEW-BUILD RATES TO 2041 AND ASSOCIATED LAND REQUIREMENTS 129 TABLE 47: FORECAST NEW-BUILD RATES TO 2041 AND ASSOCIATED LAND REQUIREMENTS INCLUDING VACANCY MARGIN (000S SQM) - LEICESTERSHIRE 130 TABLE 48: RAIL - FORECAST DEMAND AND SITE SUPPLY - LICESTERSHIRE 133 GL Hearn Page 6 of 209 P:\Projects\Harborough District Council - Future of Wareshousing in Leicestershire - 20-322\4. Reports and Appraisals\Warehousing Report Leics FINAL 27 04 21 V2.docx Warehousing and Logistics in Leicester and Leicestershire: Managing growth and change, April 2021 Leicester and Leicestershire Authorities, Final Report TABLE 49: LAND REQUIRED AT ROAD ONLY SITES AND POTENTIAL SITE SUPPLY TO 2041 134 TABLE 50: SUMMARY OF MODELLED SCENARIOS ERROR! BOOKMARK NOT DEFINED. TABLE 51: SCENARIO EMPLOYMENT GENERATION 150 TABLE 52: FUTURE WAREHOUSING JOB TYPE (ASSUMES 119 SQM PER FTE) 152
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