Peel L&P Development Limited January 2021
Haydock Point Appeal
Property Market Assessment Proof of Evidence Rory Brooke
Appeal by Peel L&P Development Limited
Haydock Point
PINS REFERENCE: APP/H4315/W/20/3256871
savills.co.uk
Haydock Point Appeal Rory Brooke Property Market Assessment Proof of Evidence
Contents Introduction 4 Personal Details ...... 4 Scope of Evidence ...... 4 Structure ...... 4 Note on Land Use Classes ...... 5 Haydock Point and the Other Appeal Sites 6 Introduction ...... 6 Haydock Point, Saint Helens (Peel L&P Ltd) ...... 7 Parkside, Newton-le-Willows, Saint Helens (Langtree and St Helens BC) ...... 9 Symmetry Park, Wigan (Tritax Symmetry) ...... 13 Land West of Wingates Industrial Estate, Bolton (Harworth Group) ...... 15 Omega South Western Extension, Land north of Finches Plantation ...... 18 Comparison ...... 20 Policy Framework and Evidence Base 23 Introduction ...... 23 Liverpool City Region ...... 24 St Helens Market Assessment ...... 28 Greater Manchester Region Market Assessment ...... 31 Conclusion and Summary ...... 33 Submitted Market Analysis in Support of the Scheme 34 Introduction ...... 34 Total Logistics Report 2016 ...... 34 CBRE Report April 2020 ...... 35 Economic Statement May 2020 ...... 36 My Approach to Assessing Market Need 37 Introduction ...... 37 Definition of the PMA ...... 37 Sub-Markets and Time Frames ...... 37 Historic Demand ...... 38 Demand Constrained or Supply Constrained: Market Signals ...... 40 Adjustment for Future Anticipated Trends/Drivers ...... 40 Converting Floorspace into Land: Plot Ratio ...... 41 Land Supply Assessment ...... 41 Adjustment for Market Equilibrium Vacancy Rates...... 42 Gap Analysis ...... 43 Relevant Property Market Area for Haydock Point 44 Introduction ...... 44 The Product/Target Market ...... 44 Context: Motorway Network and Population Distribution ...... 44 Travel Time Analysis ...... 46 Logistics User Analysis ...... 46 Market Intelligence and Views ...... 48 Selected PMAs and Relationship to Liverpool FEMA and GMSF ...... 49
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Historic Demand in the PMA 52 Introduction ...... 52 Historic Take-Up of New Space ...... 52 Historic Take-Up of Net Additional Greenfield Space ...... 53 Historic Demand for Greenfield Land ...... 55 Conclusions...... 55 Estimated Future Demand in the PMA 56 Introduction ...... 56 Market Signals ...... 56 Current Market Requirements...... 57 Drivers of Future Demand in the PMA ...... 58 LA Estimates of Adjustments to Future Demand in the PMA ...... 59 My Estimate of Adjustments to Future Demand in the PMA ...... 60 Demand for Greenfield and Longer-Term Brownfield Land ...... 61 Comparison with LA Studies ...... 62 Supply of Industrial Land and Premises 63 Introduction ...... 63 Elements of Supply ...... 63 Total Supply ...... 64 Review of Individual Sites ...... 66 Estimate of Larger Unit Capacity ...... 76 Comparison of Appeal Sites ...... 76 Supply of Sites Capable of Accommodating 1 million sq.ft Building ...... 77 Conclusion ...... 78 Balance of Supply and Demand in the PMA 79 Introduction ...... 79 Adjustment for Market Equilibrium Vacancy Rate ...... 79 Demand and Supply Comparison ...... 79 Demand and Supply and the Appeal Sites ...... 80 Sensitivity Test: Lower Demand ...... 82 Economic and Social Benefits 84 Introduction ...... 84 Social and Economic Need ...... 84 Key Benefits of the Development ...... 85 Optimising Benefits for Local People ...... 88 Wider Social Value ...... 88 Summary and Conclusions 90 Scope of Evidence ...... 90 Haydock Point and the Co-Joined Appeal Schemes ...... 90 Approach to Assessment of Market Need ...... 90 Demand ...... 91 Supply ...... 91 Supply and Demand Balance ...... 91 Economic Benefits ...... 92 Glossary 94
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Appendix A: Documents 95 Appendix B: Liverpool Port Impact on Demand 96 Appendix C: Site Information and Assessments 101 Appendix D: Excluded Sites 102
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Introduction
Personal Details
My name is Rory Brooke. I have a bachelors in Mathematics and Economics from the University of York and a Masters in Town Planning from Cardiff University and am a member of the Royal Town Planning Institute (RTPI) and the Institute of Economic Development (IED). I have 30 years experience working in the fields of economics and planning. I have been at Savills close to five years, am a director and head of the Savills Economics team. I headed up the URS (now AECOM) Economics and Development team for 14 years before joining Savills.
I have worked on a wide range of employment land reviews for local authorities and market demand studies for the public and private sector. These include work for Manchester City Council assessing the markets for development around Manchester Airport and Manchester Piccadilly stations and work for Highways England looking at the employment and housing property markets around the M60. I have also led on major property market studies relating to projects including Hemel East (Hertfordshire), Junction 3 of the M54 (Staffordshire), Fawley (Hampshire), and Thames Valley Science Park (Berkshire).
Scope of Evidence
This proof of evidence covers my analysis of overall demand for and supply of space for logistics and industry in appropriate property market areas in the North West of England, with attention on the market for larger units and in particular for units above 100,000 sq.ft (9,300 m2) and 500,000 sq.ft (46,500 m2). I consider the context of the North West region and the property market area broadly following the M6 corridor between Manchester and Liverpool. I consider the potential role the Haydock Point site would play in addressing demand/need and how it compares to alternative sources of supply.
Structure
I have structured my proof as follows:
· Section 2 summarises details of the Haydock Point proposals and the other three appeal schemes · Section 3 presents the policy and local authority employment land evidence base context · Section 4 gives details of market evidence submitted in support of the Haydock Point proposals · Section 5 outlines the approach I have taken to assessing demand, supply and gap between demand and supply
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· Section 6 reviews information relevant to defining a relevant property market area (PMA) and concludes with a view on which PMAs to consider · Section 7 considers data on the historic demand for logistics and industrial space in the PMAs · Section 8 covers my estimate of future demand · Section 9 sets out information collected on the future supply of industrial and logistics land and how different sites compare · Section 10 contrasts estimated future demand with supply by segment of market and timeframe · Section 11 refers to the economic and social benefits of the Haydock Point scheme · Section 12 covers summary and conclusions.
Note on Land Use Classes
In this proof I usually refer to the manufacturing use class as B2, the warehouse/logistics use class as B8 and office as B1. The use classes were changed on 1 st September 2020. Use classes A1/2/3 & B1 are to be treated as Class E. Use classes B2 and B8 remain in use. However as all the source documents use the old categories I have in places continued to refer to offices as B1 rather than E.
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Haydock Point and the Other Appeal Sites
Introduction
This section sets out the five appeals sites and their relevant characteristics. All the sites have the capacity to accommodate large units of varying sizes and Haydock Point in particular can accommodate a unit of around 1,000,000 sq.ft. The location of the appeal sites are shown in Figure 2.1 below. This shows that Haydock Point, Parkside West and Symmetry Park are on the M6 corridor, Omega SW is on the M62 corridor and Wingates is on the M61 corridor. Haydock Point is also on the A580 east-west corridor.
Figure 2.1 Location of the Appeal Sites
Source: Savills, 2021
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Haydock Point, Saint Helens (Peel L&P Ltd)
Site Context
The Site is located near Haydock within the local authority of St Helens. Haydock is located in the north east of the local authority close to its boundary with Wigan. The Site is situated to the north east of Junction 23 of the M6 where it intersects the A580 which runs east-west between Liverpool and Manchester. The A49 also runs past the western side of the site.
The Site comprises of 42.3ha of mainly agricultural land. The site is generally flat but rises towards the north-western corner. A drainage ditch and water main run east-west and approximately bisect the Site.
Planning Status
The Site currently falls wholly within the designated Merseyside Green Belt.
St Helens Borough Council published the Pre-Submission Draft Local Plan (PSLP) (CD 3.18) in January 2019. The PSLP proposes to safeguard the majority of the Haydock Point site for employment development beyond the Plan period 1.
Proposal
The Haydock Point site is owned by and being promoted for development by Peel Land and Property (L&P) Developments Limited.
The Proposed Development comprises up to 167,225 m2 of B8/B2 floor space including mezzanine levels (up to 20% B2 floorspace), ancillary office and associated facilities, car parking, landscaping, site profiling and transport, drainage and utilities infrastructure. One of the submitted layout plans is shown in Figure 2.2 below
Table 2.1 below sets out the proposed units sizes which are made up of three large units, with Unit 1 being the largest in size (940k sq.ft/83.9k m2). The area schedule is illustrative and the scheme may ultimately provide fewer units or more units. However the site has capacity to accommodate a unit of about 92,902 sq.m (1m sq.ft) and no unit will be less than 22,298 sqm.
1 St Helens Borough Local Plan 2020-2035 Submission Draft, p50, January 20
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Table 2.1 Haydock Point Site Schedule Element Metric Imperial Unit 1, GIA 87,172 m2 938,321 sq.ft Unit 2, GIA 40,026 m2 430,840 sq.ft Unit 3, GIA 40,026 m2 430,840 sq.ft Total GIA 167,224 m2 1,800,000 sq.ft Site area 42.3 ha 104.6 Acres
Source: Michael Sparks Associates, Illustrative Masterplan Option 1 (Ref: 3926-FE-042U Figure 2.2 Haydock Point Site Masterplan (Revision U)
Source: Michael Sparks Associates, Illustrative Masterplan Option 1 (Ref: 3926-FE-042U)
Accessibility and Strategic Connections
Haydock Point is exceptionally well positioned in terms of accessibility. It is located on the M6 Junction 23/A580 Interchange, two of the principal roads in the strategic road network in the North West. This gives immediate and direct access (north and south) to the regional motorway network including the M62, M58 and M61 and to the major urban centres and logistics facilities in the North West and beyond, including
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Manchester Airport, Liverpool John Lennon Airport, and the Port of Liverpool including the recently completed L2 new deep water container terminal as well as the burgeoning development at Port Salford.
The proposal will also deliver a key part of the emerging scheme for the long term improvement of Junction 23 of the M6 through facilitating the diversion of the A49 through the site. This will contribute to the more effective operation of this key junction and enable the network to accommodate long term growth projections resulting from the implementation of the Local Plan.
The site has direct site frontage to the A49 and A580 for site access. The A49 enables bus services connecting the site to the local residential neighbourhoods of Ashton-in-Makerfield, Golborne, Haydock, Newton-le-Willows and onward to St Helens town centre. Footpaths and cycleways would also connect the site to the surrounding residential neighbourhoods. This includes a strategic cyclepath along the southern side of the A580.
Application Status/ Progress
The planning application for Haydock Point was submitted to St Helens Council in March 2017 (CD 15). The Application was submitted in outline in order to enable the Applicant to tailor the precise scheme to the market for large scale logistics at the time that the scheme is consented, with access provided in detail. An appeal against non-determination was submitted on 24 th July 2020 (CD 23.2).
Parkside, Newton-le-Willows, Saint Helens (Langtree and St Helens BC)
Site Context
Parkside phase 1 is located to the south east of Newton-le-Willows. It is an irregular shape and has an area of approximately 47.9 hectares. It lies within the Green Belt. Access would be taken from the existing access on to the A49 Winwick Road via a new three-armed signal-controlled junction.
Planning Status
The site currently falls wholly within the designated Merseyside Green Belt.
St Helens Borough Council published the Pre-Submission Draft Local Plan (PSLP) (CD 3.18) in January 2019. This proposes to remove the application site from the Green Belt and allocate it as employment land appropriate for B2/B8 uses 2.
2St Helens Borough Local Plan 2020-2035 Submission Draft, p68 (January 2019)
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Proposal
An application has been submitted by Parkside Regeneration LLP, a joint venture partnership between Langtree Property Partners Limited and St Helens Borough Council.
The proposals are for outline planning permission with all matters reserved other than access for ‘ The construction of up to 92,900m² of employment floorspace (use class B8 with ancillary B1(a)) and associated servicing and infrastructure including car parking; vehicle and pedestrian circulation space; alteration of existing access road including works to existing A49 Junction; noise mitigation; earthworks to create development platforms and bunds; landscaping including buffers; works to existing spoil heap; creation of drainage features; substations and ecological works. ’ (Gatley Legal 2020, Statement of Case page 2).
The proposed site masterplan is shown in Figure 2.3 below.
The proposal shows three broad development cells, capable of accommodating 560k sq.ft (52k m2), 232k sq.ft (21.5k m2) and 206k sq.ft (19k m2) of floor area with maximum building heights of 23m on Plots C and D and 22m on Plots A and B. A summary of proposed units is shown in Table 2.2 below.
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Figure 2.3 Parkside, Newton-le-Willows, Saint Helens Masterplan (Application Site Red Boundary)
Source: Fletcher Rae 2017, Phase 1 Illustrative Masterplan (ref: 16043_PL301)
Table 2.2 Parkside, Newton-le-Willows, Saint Helens Site Schedule Element Metric, m2 Imperial, sq.f t Unit A/B, GIA 52,029 560,040 Unit C, GIA 21,544 231,900 Unit D, GIA 19,123 205,840 Total, GIA 92,000 997,780 Site area 47.9 ha 114 acres Source: Fletcher Rae 2017, Phase 1 Illustrative Masterplan (ref: 16043_PL301)
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Accessibility and Strategic Connections
The main access for Parkside comprises of the southern areas of the former colliery together with open land within the colliery ownership is from a point on the A49 Winwick Road. The A49 Winwick Road lies to the west of the site and runs between the town of Newton Le Willows immediately to the west and north of the application site. It is a busy road that runs between Junction 23 of the M6 to the north and Junction 9 of the M62 to the south. Residential development fronts the A49 and backs onto the site. Residential development also lies opposite the site access.
The applicants states that the scale of the development here is dictated in part by the highway capacity of the A49. The applicant states that the development does not require the implementation of the Parkside Link Road, also under consideration, for the development of Phase 1 to be acceptable in highway terms.
Application Status/ Progress
The application was validated on 16 th January 2018. Officers presented a report to the Planning Committee meeting held on the 17 th December 2019 recommending that planning permission be granted. The council received notification on 21 st May 2020 that the Secretary of State (SoS) had decided that the application be referred for a decision.
Future Phases
The applicant identifies the proposal as the first phase of a comprehensive development of up to 4 million sq.ft. The wider scheme shown in Figure 2.3 (purple line boundary) is Phase 2 of the proposals. Phase 2 is for B8 and B2 development with a 70/30 split. However, due to future capacity restraints after the completion of Phase 1 on the A49 corridor, the proposals for Phase 2 will rely upon the construction of the Parkside Link Road which will link the A49 to junction 22 of the M6 and that will provide an alternative route for Parkside heavy goods vehicle (HGV) traffic from both Phases 1 and 2 away from the A49 corridor eastwards over the M6 motorway and back southwards to junction 22.
A further phase of development, called Parkside East, of 64.5ha, has been highlighted in the draft local plan for development to the west of the M6. (See my proof Appendix C ).
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Symmetry Park, Wigan (Tritax Symmetry)
Site Context
The site is a predominantly triangular plot of land of 54.4 hectares located at Junction 25 of the M6 motorway between Wigan to the north and Ashton-in-Makerfield to the south. Drummers Lane and Brocstedes Road bound the site to the south, with a triangular plot of land containing Low Brooks Farm located further south. The M6 motorway directly bounds the site along the west/south west boundary. The eastern part of the site is situated adjacent to the proposed access off the A49 Warrington Road.
Planning Status
The site currently falls within the Green Belt.
The site is not allocated for development in the Wigan Local Plan Core Strategy (adopted 2013) (CD 22.25).
Wigan Council initially progressed site allocations through the Allocations and Development Management Plan (CD 22.26) in 2015 but this was paused in favour of progressing the Greater Manchester Spatial Framework (GMSF) (CD 2.4). The application site is proposed within the draft GMSF as an employment allocation under emerging Policy GM Allocation 42.
The Proposal
An application was submitted by DB Symmetry (Applicant), now known as Tritax Symmetry.
The proposal consists of demolition of existing buildings and re-profiling of the site for development comprising:
‘Full planning permission for the erection of 27,871 square metres of employment floor space (Use Class B8 with ancillary integral Use Class B1a floor space), comprising two units and the provision of associated infrastructure including sub-station, car parking, landscaping, access from the A49 roundabout and internal estate road; and
Outline planning permission for the erection of up to 106,095 square metres of employment floor space (Use Class B8 with ancillary integral Use Class B1a floor space), including car parking, internal estate road and landscaping. All matters except for access are reserved, with access proposed from the A49 roundabout .’ (Wigan Council, 2020, Statement of Case page 1, Ref: APP/V4250/V/20/3253242)
The scheme masterplan is shown in Figure 2.4 below.
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Figure 2.4 Symmetry Park Masterplan
Source: AEW 2019
The proposal schedule is shown in Table 2.3 below, which shows a total of 1,402,000 sq.ft of predominantly B8 floorspace proposed.
Table 2.3 Symmetry Park Site Schedule Element Metric, m2 Imperial, sq.ft DBS1 17,651 190,000 DBS2 10,219 110,000 DBS3 27,871 300,000 DBS4 16,537 178,000 DBS5 15,143 163,000 DBS6 13,099 141,000 DBS7 9,290 100,000 DBS8 24,155 260,000 Total 133,965 1,442,000 Site area 54 ha 135 acres Source: AEW 2019
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Accessibility and Strategic Connections
The main vehicular and pedestrian access to the site is proposed via a new fourth arm of the existing A49/M6 slip road roundabout junction (Bryn Interchange) at Warrington Road. However this will only allow access for north bound M6 traffic. South bound M6 traffic will need to travel further south to Junction 24 and travel back up the M6 to Junction 25 or take the Liverpool Road off Junction 24 across to the A49 and then travel north to access the site.
Application Status/ Progress
The application was validated on 22 nd August 2018. Planning Committee members subsequently resolved to approve the application in accordance with officer recommendation on 14 th January 2020. The site was called-in by the SoS following Ministry of Housing Communities & Local Government (MHCLG) letter of 21 st May 2020.
Land West of Wingates Industrial Estate, Bolton (Harworth Group)
Site Context
The site extends to approximately 82 acres (33 ha) and comprises fields primarily used for animal grazing. Adjacent uses include industrial units at Wingates, farmsteads to the southwest and residential houses on Chorley Road.
Planning Context
The site currently falls within the Green Belt.
Bolton’s local plan is made up of the Core Strategy (adopted on 2 nd March 2014) (CD 22.27) and the Allocations Plan (adopted 3 rd December 2014) (CD 22.28). They do not allocate the site for development.
The site falls within the Great Manchester Spatial Framework (GMSF) (CD 2.4). The Wingates site falls within a wider proposed strategic development allocation under Policy ‘GM -Strat8- Wigan-Bolton Growth Corridor’. The application site is proposed to be allo cated in its entirety and subsumed within the wider Growth Corridor which includes the provision of around 798,000 m2 of new employment floorspace.
Proposal
Wingate’s Industrial Estate is a hybrid application which consists of:
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‘Part A: Outline applicatio n for strategic employment development for industrial (Class B1c/B2), storage and distribution (Class B8) and/or research and development (Class B1b) uses each with ancillary office space (Class B1a), parking and associated facilities; (Class D1), ancillary food and drink (Class A3/A4/A5) and associated roads and landscape works.
Part B: Full planning application for demolition of building/structures, upgrade to highway infrastructure, creation of new access to Wimberry Hill Road, formation of development platforms, boundary landscaping and ecological enhancement area.’ (Johnson Mowat, 2020 Statement of Common Ground, Page 3)
The site is specifically planned to accommodate a large floorplate unit as well as a number of smaller units. This is shown in Figure 2.5 below.
The proposal schedule is shown in Table 2.4 below.
Table 2.4 Land West of Wingates Site Schedule Element Metric, m2 Imperial, sq.ft Unit 1 3,550 38,215 Unit 2 3,133 33,719 Unit 3 3,941 42,241 Unit 4 A 1,800 19,378 Unit 4 B 1,800 19,378 Unit 4 C 1,410 15,177 Unit 5 11,815 127,180 Unit 6 3,259 35,079 Unit 7 62,572 673,523 Total 93,280 1,004,070 Site area 33 ha 82 acres Source: RSP 2018
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Figure 2.5 Land West of Wingates Masterplan
Source: RSP 2018 , Illustrative Masterplan, ref: SK065
Accessibility and Strategic Connections
The site is directly accessible to the strategic road network via the A6 to junctions 5 and 6 on the M61. The site lies to the south of the M61 and is located approximately 3.9 km from Junction 5 (M61) to the south east, passing residential dwellings in Westhoughton and is 1.4 km to Junction 6 (M61). The proposed development includes a number of proposed works on Winberry Hill Road to facilitate access to the proposed development and at the key junction of this road and the A6 (Chorley Road) in order to reduce congestion.
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Application Status/Progress
The planning application was submitted to Bolton Council in October 2018 as a hybrid proposal seeking part full permission and part outline consent. The application was then considered at a meeting of the council’s planning committee on 16 th January 2020. The council wrote to the Planning Casework Unit on 11 th March 2020 in line with the approved resolution to refer the proposals to the SoS.
Omega South Western Extension, Land north of Finches Plantation
Site Context
The site is located to the west of the existing Omega Business Park within the local authority of St Helens. The site is stated to the west of Junction 8 of the M62, which runs east-west between Liverpool and Manchester.
The extension has an irregular shape and has an area of approximately 50 hectares. Its current use is mainly agricultural land.
Planning Status
The site currently falls within the designated Merseyside Green Belt.
St Helens Borough Council Local Plan 2020-2035 Submission Draft in January 2019 (CD 3.18) proposes to remove the site from the Green Belt and allocated for employment development.
Proposal
The Omega South Western Extension site is promoted for development by Omega St Helens / T.K. Morris Limited. A hybrid planning application has been submitted for the proposed development. The planning application covers an area of 75 hectares.
Detailed planning permission is sought for the erection of a B8 logistics warehouse (referred to as Omega West Unit 1) comprising of 77,084 square metre (829,725 square feet) warehouse with 4,486 square metres (48,287 square feet) of ancillary office development. Overall this totals 81,570 square metres (878,018 square feet) and covers a site area of 35 hectares. Prospective occupiers for Unit 1 are T.J. Morris Limited, who trade as Home Bargains.
The indicative masterplan is shown below in Figure 2.6 . The blue Unit 1 illustrates the detailed planning permission sought. The proposal schedule is show in Table 2.5 .
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Figure 2.6 Omega South Western Extension Indicative Masterplan (Revision)
Source: Chetwoods (2020), ref: AMENDED OPP DWG. 01 4150-CA-00-00-DR-A-05100_INDICATIVE MASTERPLAN-SK15
Table 2.5 Omega South West Extension Schedule Element Metric, m2 Imperial, sq. ft Unit 1 81,570 878,012 Source: Progress Planning Ltd (December 2019), Planning Statement OPP DOC.6
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Accessibility and Strategic Connections
The main access for the site would be a new roundabout construction at the end of the Catalina Approach which connects onto Omega Boulevard. This would connect onto Skyline Drive, which connects directly onto Junction 8 of the M62 motorway. All goods and service vehicles would enter via the new roundabout.
Application Status/ Progress
The council received notification on the 18 th December 2020 that the Secretary of State (SoS) had decided that the planning application be referred for a decision.
Future Phases
Phase 2 is outlined in the outline planning permission, which sought for a combination of B2 Manufacturing and B8 Logistics development. It is envisaged that the remaining 40 hectares will accommodate up to 123,930 square metres (1,333,971 sq.ft) of employment development. This would be spread across the Unit 1 expansion land, and three separate warehouse buildings to the south. Access has been brought forward as a reserved matter, but all other matters such as landscaping, layout, appearance and scale have been reserved for future approval. The second phase would rely upon the construction of the new roundabout connecting to the already existing Omega Park. This phase is shown by Units 2, 3, and 4 is the southern part of the indicative masterplan in Figure 2.6.
Comparison
Table 2.6 below shows the overall proposed floorspace of the five appeal sites. The total floorspace is just under 5.25 million sq.ft, over approx. 178 ha. The average plot ratio is 27%. Haydock Point has the highest plot ratio at 39%.
Table 2.6 Appeal Proposals Buildings Sites Plot ratio sq.ft m2 Acres ha Haydock 1,800,000 167,224 104.6 42.3 39% Parkside 997,780 92,696 113.5 47.9 19% Symmetry Park J25 M6 1,442,000 133,965 134.5 54.4 25% Wingates 1,004,070 93,280 81.9 33.1 28% Omega South West 878,012 81,570 88.73 35.9 23% Extension Total 6,121,862 568,735 523.2 213.7 27% Source: Various, Savills Analysis 2021
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Figure 2.7 below shows the total floorspace proposed at each of the appeal sites, along with a breakdown of the individual units at each of the sites. Haydock Point proposes the largest singular unit, which is 940k sq.ft (80k m2), followed by Omega South West Extension at 880k sq.ft (81.5k m2). My understanding is that due to ground conditions and implications for foundations it would be difficult for the Symmetry Park site to be configured with units of the scale of those proposed at Haydock Point, Omega SW and Wingates.
Figure 2.7 Appeal Proposals and Units
180,000
160,000
140,000
120,000 9th largest 8th largest
100,000 7th largest 6th largest 5th largest Sq.m GIA 80,000 4th largest 3rd largest 60,000 2nd largest Largest unit 40,000
20,000
0 Haydock Parkside Wingates Symmetry Park Omega South West Extension
Source: Various, Savills Analysis 2021
Table 2.7 below shows what proportion of each scheme is proposed to accommodate units under 100k sq.ft, over 100k sq.ft and over 500k sq.ft. I will consider the implications of this breakdown later in my proof.
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Table 2.7 Distribution of Units Sizes on the Appeal Schemes Buildings under 100k -500k sq. ft. 500ksq.ft+ Total 100k sq.ft Haydock 861,680 938,321 1,800,001 Parkside 437,740 560,040 997,780 Symmetry Park J25 M6 1,442,000 1,442,000 Wingates 203,367 127,180 673,523 1,004,070 Omega South West 878,012 Extension 878,012 Total 203,367 2,868,600 3,049,896 6,121,863 % distribution 3% 47% 50% 100% Source: Various, Savills Analysis 2021
All five of the appeal sites are within 2.5 km of motorway junctions. However Haydock has easily the closest and most direct access. Parkside access to the M6 is via the A49 which is not dual carriageway for the relevant section and passes through residential areas. Symmetry Park has good access for north bound M6 traffic but southbound M6 traffic have a more circuitous route to access the site. Wingates is around 1.4 km from the M61 via the A6. Omega South West Extension is around 2 km from the M62 via the existing Omega Park.
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Policy Framework and Evidence Base
Introduction
This section presents the relevant planning policy evidence base framework for Haydock Point and summarises the key evidence base documents that are used to justify the policies. These cover work prepared by Liverpool City Region, St Helens Borough Council and the Greater Manchester Combined Authority (GMCA). Appendix A gives a list of the relevant documents and evidence.
The relevant local authorities and city regions are shown in Figure 3.1 below.
Figure 3.1 Appeal Sites and Local Authority Boundaries
Source: Savills 2020
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For each of the local authority areas I consider:
· How they have defined and justified their property market area (PMA) · Their assessment of demand · Their analysis of supply · Their gap analysis and consequent policies
A key matter relating to the Haydock Point appeal is the definition of its PMA. As St Helens sits between Liverpool and Manchester some/all of the analysis relating to Liverpool City Region and Greater Manchester is relevant to the appeal. In subsequent sections of my proof I draw my conclusions on the PMA, demand, supply and relationship to the work presented in this section. In order to allow comparison of analysis on a consistent and comparative basis I have expressed demand assessments in terms of m2/sq.ft and ha per annum (as well as over plan periods, the length of which varies).
Liverpool City Region
I take the principal relevant documents to be:
· Defining the Housing Market Area & Functional Economic Market Area Liverpool City Region, Final Report, July 2016 (CD 22.23) · Liverpool City Region Strategic Housing & Employment Land Market Assessment (SHELMA), Consultation Draft Report, GL Hearn, January 2017 · Liverpool City Region Assessment of Supply of Large-Scale B8 Sites, GL Hearn, June 2018 (CD 5.83) · Liverpool City Region Area of Search Assessment, GL Hearn, August 2019 (CD 5.82).
Definition of Property Market Area (PMA)
The Liverpool City Region (LCR) PMA is defined as a single Functional Economic Market Area (FEMA) 3, which includes Halton, Knowsley, Liverpool, Sefton, St. Helens, West Lancashire and Wirral. It states that ‘…since patterns of economic activity vary from place to place, there is no standard approach to defining a functional economic market area ’4. However analysis of LCR’s existing development pattern and motorway/strategic A-Road network suggests that key strategic A-Road and motorway corridors along the
3 ‘The geography of commercial property markets should be thought of in terms of the requirements of the market in terms of the location of premises, and the spatial factors used in analysing demand and supply – often referred to as the functional economic market area.’ Paragraph 12, Planning Practice Guidance, ID:2a-012-20140306
4 LCR SHELMA 2016 Appendix A, p19.
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M58, M57, and M62 will likely be vital to meeting the increased distribution needs 5. The LCR LAs are taken as equating to the FEMA. These are shown in Figure 3.2 below.
Figure 3.2 LCR identified Functional Economic Market Area
Source: LCR SHELMA, page 9, redrawn by Savills
Demand Assessment
The LCR SHEMLA (2017) looks at the demand for employment land. The report breaks down need into office (B1), industry (B2) and small scale distribution (B8), and separately need for new-build large scale warehousing (B8) in the region. The office and industrial land need includes small-scale B8 warehouse/distribution development < 9,000 sq.m. (100k sq.ft). The output from this exercise is an estimate of the total gross warehouse new build which can be expected up to 2043.
5 Defining the Housing Market Area & Functional Economic Market Area Liverpool City Region, Final Report, July
2016, p75
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The assessment for office, industry and small scale distribution is based on forecasts of employment growth, with a comparison with past completion trends. Two growth scenarios are considered – a Baseline Scenario and a Growth Scenario. These are presented for example in Table 75, page 187 of the LCR FEMA. In Table 3.1 below I summarise these scenarios and implied p.a. demand.
Table 3.1 LCR FEMA B1, B2 and Small Scale B8 Demand Scenarios, 2012-37 (ha) Baseline Scenario Growth Scenario Completions Trend B1 office 160 233 236 B2 industry 140 155 437 Small scale B8 118 Total (ha) 300 387 791 Total ha p.a. 12.0 15.5 31.6 Source: LCR SHEMLA 2017, Table 61, p159
This shows an estimated demand of between 12 and 15 ha p.a. but with a much higher number of 32 ha p.a. for the completions trend. The LCR FEMA separately considered the demand for large scale distribution space. It makes a distinction between demand for ‘replacement build’ and for ‘growth build’:
· Replacement build is the requirement to continually replace existing warehouse capacity which is 'life expired’ · Growth build is the need for additional floor space to handle long-term growth in traffic volumes (p161).
These equate to a distinction I will make in my approach between demand on existing sites and demand on new development sites.
The LCR FEMA also draws up two growth scenarios. One is a ‘Do Minimum’ scenario and the second is based on work by Freight Transport for the North (FTN) and called the ‘FTN Strategy’. The ‘Do Minimum’ scenario reflects recent underlying economic growth alongside minimal investment in transport infrastructure. The FTN Strategy reflects the consultant’s strategy which also reflects the results of an extensive consultation exercise with the freight and logistics industry in the north of England and the public sector (page 188). The project demand for the period 2014 to 2037.
Table 3.2 shows the land requirement for large scale B8 uses to 2037 (to align with the timeframes used elsewhere in the SHELMA) for both scenarios.
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Table 3.2 LCR SHELMA Forecast Large Scale B8 Requirement, 2014 to 2037 Do Minimum 2037 FTN Strategy 2037 Replacement build floorspace, m2 952,000 952,000 Growth build floorspace, m2 281,000 638,000 Total floorspace, m2 1,233,000 1,590,000 Total floorspace p.a., m2 53,609 69,130 Total ‘growth build’ floorspace p.a., m2 12,217 27,739 Replacement build land, ha 238 238 Growth build land, ha 70 160 Total land, ha 308 397 Total land p.a., ha 13.4 17.3 Total ‘growth build’ land p.a., ha 3.1 6.9 Source: LCR SHEMLA 2017, Table 69, page 167, Savills Analysis
Over the period to 2037 a need for 308 ha of land for strategic B8 development is identified in the Baseline/Do Minimum Scenario and 397 ha in the TfN Strategy Scenario. When land for ‘growth build’ is separated out this equates to 70 ha and 160 ha respectively. This is 3 and 7 ha p.a. respectively.
It’s not fully explained which of the B1, B2 and small scale B8 scenarios to use. I also assume that the scenarios are for new land. The implication of adding the B1/B2/small B8 scenarios with the large scale B8 scenario is that total demand for new land is in the region of 15 to 22 ha p.a. and possibly up to 39 ha p.a.
Supply Assessment
GL Hearn have undertaken a Strategic Sites Assessment (CD 5.8) of the potential land supply for large scale (5+ ha) B8 development. The findings of the report are shown in Table 3.3 below. It finds that of the sites assessed positively, in physical and market terms, after adjusting for potential B2 demand, there is approximately 344 ha of land suitable for strategic B8 which vary in timing of delivery. Of this, the sites that are currently allocated or have planning permission, there is a total supply of 184 ha.
Table 3.3 LCR Stage 2 Supply Summary Sum of strategic B8 Sum of strategic B2 or B8 Sites Total (ha) (ha) (ha) All Sites 138.8 205.3* 344.1
Sites with Allocations and Permissions 84.4 99.8 184.2 Source: LCR Areas of Search Assessment (2019), page 10
* a use class split of 80% has been applied to B8 and 20% to B2 development.
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Gaps Analysis and Policy
Overall the residual over supply is 5.3 ha for the do minimum scenario and a residual requirement of 90.0 ha for the do something scenario. I show this in Table 3.4 below.
Table 3.4 Strategic B8 Supply/Demand Balance (ha) Do Minimum TfN Strategy Land demand: scenario + buffer 339.0 437.0 Committed supply 184.2 Supply from emerging/potential sites 159.9 Total supply 344.1 Residual requirement +5.3 -90.0 Source: LCR Areas of Search Assessment (2019), page 11 St Helens Market Assessment
I take the principal relevant documents to be:
· Review of Employment Land in St. Helens to 2027, 2011 (CD 22.20) · St Helens Employment Land Needs Study (ELNS), 2015 (CD 5.79) · St Helens Allocations Local Plan Evidence Base Paper, September 2015 (CD 5.78) · St Helens Employment Land Needs Study, Addendum Report, January 2019 (CD 5.81) · St Helens Employment Land Need and Supply Background Paper, October 2020. (CD 22.19)
Definition of PMA
St Helens is located within the Liverpool City Region but its economy is also influenced by Greater Manchester to the east. The Employment Land Needs Study (2015) (CD 5.79) recognises that St Helens’ economy does not act as a singular unit, but has vital relationships with surrounding areas and concludes tha t ‘… the functional economic market area for St Helens should be defined as Liverpool City Region plus Warrington and Wigan boroughs’. (ELNS 2015, page 82).
Employment Land Needs/Demand
The ELNS updated (CD 5.81) states that since the initial 2015 report additional demand for employment land generated by major projects in the region and the additional spur of the logistics sector above past trends was also forecast. The significant majority (about 80 percent) of the additional land demand generated through the major projects was forecast to be for B8 warehousing uses. Table 3.5 below sets out the estimated employment land needs up to 2037, which equates to 12.6-16.0 ha per annum. This figure is broken down by employment type in Table 3.6, stating 110-155 ha is required for B8, equating to 4.4 to 6.2 ha p.a.
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Table 3.5 Employment Land Needs 2012-2037 (ha) Employment Land Needs Baseline (land take-up scenario) 135-174 ha Additional land demand major projects* 55-65 ha Total Employment Land Needs 190-239 ha Need p.a. 7.6 to 9.6 ha Source: ELNS 2019, p12 (CD 5.81) * Adjusted to account for likely double counting
Table 3.6 Breakdown of Employment Land Need by Type (ha) Employment Type Hectares B1(a) Office 10-15 B1(b) Research and development 1-4 B1(c) Light Industry 15-20 B2 General industrial 55-70 B8 Storage and Distribution 110-155 Total employment needs 190-239 B8 Need p.a. 4.4 to 6.2 Source: ELNS 2019, p13 (CD 5.81)
The ELNS also identifies the objectively assessed need requirement of employment land of a minimum of 227.4ha for the period 2012-2035. The ELNSBP from October 2020 (CD 22.19) provides the most recent update of the council’s employment land position. It shows that between 2012 and 2020 about 58ha was delivered and there was a remaining 4ha of existing developable employment land. This results in a residual employment land requirement of about 165ha.
Supply Assessment
The 2011 Review of Employment Land in St. Helens to 2027 (CD 22.20) sets out the total supply of land in St Helens. This is broken down by use class, as set out in Table 3.7 below.
Table 3.7 St Helens Supply Assessment, ha Small/Medium Scale Large Scale B2/B8 (to B1(a) offices B2/B8 (to accommodate accommodate units in Total (ha) units up to 9,290 sq. excess of 9,290 m/100,000 sq.ft) sq.m /100,000 sq.ft Immediately deliverable in the 11.2 24.6 10.5 46.2 short term (0 to 5 years) Constrained and potentially deliverable in the 0.0 34.9 5.0 39.9 medium/long term (6 to 15 years) Total 11.1 59.5 15.5 88.1 Source: St Helens Review of Employment Land 2011, page 20 and Economic Evidence Base Paper, 2015, page 25.
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However the St. Helens Allocations Local Plan Evidence Base Paper September 2015 (CD 5.78) states that ‘...none of the sites previously considered potentially suitable in the 2011 Employment Land and Premises Study for large scale distribution and manufacturing uses meet the established criteria of 5 ha or more. Consequently, there is zero provision of suitable land for large scale distribution uses within the Borou gh’s identified employment land supply’ 6.
The ELNSBP (CD 22.19) covers discusses the sites that have been proposed in the Submission Draft Local Plan and notes that most of them are in the Green Belt. Therefore the council’s baseline position of committed supply to meets its employment land needs to 2037 is about 70ha which is comprised of about 58ha developed between 2012 and 2020; existing undeveloped employment land of about 4ha; and non- Green Belt sites proposed in the Submission Draft Local Plan of about 8ha. The latter two categories do not have capacity to deliver large scale sites.
There is currently an unbalance between demand and supply for large scale distribution and manufacturing sites in the borough. The shortage of available land to build large distribution facilities has meant that in recent years, when demand for such premises has been high, occupiers have had to locate elsewhere.
Gaps Analysis and Policy
The St Helens studies build up a picture of the overall gap in the supply and demand across the local authority. Overall, there is no supply of suitable sites, therefore their evidence finds there is a need for 110- 155 ha of land for B8 use. This is summarised in Table 3.8 below.
Table 3.8 St Helens Gap Analysis Land Needed Available suppl y (2011) Difference Total 110-155 ha B8 land 0 110-155 ha Source: ELNS 2019 (CD 5.81), page 12.
When looking at the Addendum Report to the ELNS dated January 2019 (CD 5.81), which is the main evidence based supporting the emerging St Helens local plan for demand, it states that the revised total employment land needs for the borough is now a range of 190-239 ha. This revision was made taking into account the latest evidence from the Liverpool City Region SHELMA, and other market demand information which highlights the growth potential of demand for large-scale logistics. This includes a breakdown by use including the need for 110-155 ha of B8 storage and distribution land and 55-70 ha of B2 general industrial land, equating to 7-10 ha per annum of B8 storage and distribution land and 4-5 ha per annum of B2 general
6 St Helens Allocation Local Plan Evidence Base Paper, p26, September 2015
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industrial land. In comparison to the CBRE report, which looks at Grade A demand in the North West, this figure is generated based on all employment use classes, size and grade within the borough.
The supply data which underpins the emerging Local Plan (CD 5.78) was updated in 2015 7. The Review of Employment Land in St. Helens to 2027 (2011) (CD 22.20) states that much of the supply identified in the borough lends itself to servicing small/medium scale need for B2/B8 uses although there are three sites which are in locations close to the strategic highway network and of sufficient scale to be of interest to the large scale B8 sector. The 2015 report (CD 5.78) updates the supply position by stating ‘…none of the sites previously considered to be potentially suitable in 2011 meet the criteria developed in more detail in this report (5 ha or bigger). The result is that there is zero provision of suitable land for distribution uses within the Borough’s identified employment land supply’ (St. Helens Allocations Local Plan Evidence Base Paper September 2015, page 25).
Greater Manchester Region Market Assessment
I take the principal relevant documents to be:
· GM Employment Land Demand Analysis Note, 2018 (appended to the Topic Paper) (CD 22.15) · Greater Manchester Spatial Framework Revised Draft, January 2019 (GMSF) (CD 22.41) · GMSF Topic Paper: Employment, January 2019 (CD 5.155.6).
Definition of PMA
The Greater Manchester (GM) administrative area covers ten local authority districts: Bolton; Bury; Manchester; Rochdale; Oldham; Salford; Stockport; Tameside; Trafford; and Wigan. This is in recognition that the area is a functional travel-to-work geography and represents the most appropriate fit in terms of planning for future economic needs (GM Employment Land Demand Analysis Note, 2018 page 8) (CD 22.15).
Demand Assessment
The most common method used to assess future needs for industry and warehousing is to use past take- up, work out an annual average, adjust for new factors, then extrapolate this forward over the relevant plan period. This is the method used in the GMSF through three steps. These are presented in Table 3.9 below.
7 St. Helens Allocations Local Plan Evidence Base Paper September 2015 (Ref 10.17)
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Table 3.9 GMSF Summary of Three Step Demand Method for Greater Manchester (m2) Plan period 2018 -2037 Annual Floorspace demand St ep floorspace demand ( m2) ( m2) Step 1: Past net completions rate 3,270,000 172,000 Step 2: Reweighting (+3.3%) 3,380,000 177,700 Step 3: Demand uplift (+25%) 4,220,000 222,100 Source: GM Employment Land Demand Statement (2018) (CD 22.15), p21
Past completion rates are net which is defined as ‘…new gross floorspace completions, minus demolitions,
plus any gains or losses through change of use and conversions.’ 8
Steps 1 to 3 give a gross total industry and warehouse demand requirement for all unit sizes of 4,220,000 m2 (rounded), equivalent to 222,100 m2 per annum across the 19 year plan period of 2018 to 2037. The total figure is used in the draft GMSF Policy GM-P 49. I convert these figures in to land requirements using a plot ratio of 40% in Table 3.10 below.
Table 3.10 GMSF Summary of Three Step Demand Method for Greater Manchester (ha) Plan period 2018 -2037 Annual Floorspace demand Step floorspace demand ( ha) ( ha) Step 1: Past net completions rate 131 43.0 Step 2: Reweighting (+3.3%) 135 44.4 Step 3: Demand uplift (+25%) 169 55.5 Source: GM Employment Land Demand Statement (2018) (CD 22.15), p21, Savills analysis
Their analysis is that the historic demand rate is 43 ha p.a. and the future requirement is 55.5 ha p.a.
Supply Assessment
Each local authority has undertaken an assessment of land available for economic development which identified sites that are considered to be suitable and deliverable for economic development. The GMSF work though has concluded that this is not sufficient and has identified additional land and capacity. I summarise the total capacity proposed taking both these steps in to account in Table 3.11 below.
8 Employment Topic Paper, GMCA, paras 3.55-3.56, pp18-19
9 GMSF, 2019, Policy GM-P 4, p105.
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Table 3.11 GMSF Summary of Industry and Warehousing Land Supply by LA LA identified LA identified LA identified Additional GMSF Total brownfield greenfield mixed proposed allocations m2 1,743,703 775,652 108,137 2,730,548 5,358,040 Ha @ 40% plot ratio 436 194 27 683 1,340 Source: Appendix 2 Greater Manchester Employment Land Supply Statement 2018 (CD 22.16), page 90
This shows a proposed total allocation of 1,340 ha. Total proposed supply is 5.4 million m2. This compares with the demand assessment of 4.2 million m2. The approach used has been to propose to allocate an over-supply to allow more flexibility and choice.
Conclusion and Summary
The different local authorities and city regions have carried our work reviewing demand for and supply of floorspace and land for logistics and manufacturing activities. Their assessments of average annual demand and total supply are shown in Table 3.12 below. This also shows how many years’ worth of demand their identified supply represents if demand is as estimated and supply comes forward.
Table 3.12 Select Local Authorities Assessment of B2 and B8 Demand and Supply Estimated Estimated Assessed total Supply as demand demand p.a., ha supply, ha years ’ p.a., m2 worth of demand Liverpool City Region, all demand 89,707 22.4 344 15.3 Liverpool City Region, logistics 27,739 6.9 138.8 20.0 demand, FTN scenario St Helens ELN assessment 2019 30,400 to 38,250 7.6 to 9.6 88.1 9.2 to 11.6 GMSF 222,100 55.5 1,340 24.1 Sources: Various
The above assessments cover demand for all B2 and B8 space and in particular, except where stated, for all B8 unit sizes. My focus is on demand for and supply of larger B8 units in the short to medium term. A significant segment of the overall market is for smaller units, and a significant fraction of the assessed supply is only anticipated to come forward in the medium to long term, so care is needed in extrapolating conclusions from the overall findings of these studies. I consider these matters further in Section 5.
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Submitted Market Analysis in Support of the Scheme
Introduction
This section considers the market analysis that has been submitted in support of Haydock Point scheme, including the original planning application and additional appeal documentation.
The 2017 application was submitted alongside various supporting documents. One of the key supporting documents was the 2017 Economic Statement (Turley) (CD 15.6). This report was based on evidence set out in the Total Logistics report (2016) which looks at the demand for Haydock Point, and the CBRE report (2017) which considers the supply and demand of logistic space.
In May 2020 supplementary documents were submitted to St Helens Council in support of the application. This included the updated 2020 Economic Statement by Turley (CD 17.4), which used the same Total Logistics report (2016) as findings were considered to remain valid 10 , along with an updated 2020 CBRE report. The findings from these documents are set out below.
The documents reviewed in this section were prepared before the Covid19 crisis and finalised Brexit deal. As set out in chapter 8 in my view these more recent shocks/events have tended to result in increased demand for logistics space.
Total Logistics Report 2016
The Total Logistics report looks at the whole North West region and states growth of demand for ‘big box’ warehouses has been pronounced in recent years 11 . Total Logistics note that ‘…warehouse acquisitions of over 500,000 sq.ft accounted for just 12% of total acquired square footage in 2009. In 2012 this had growth to 30% of acquired floorspace, indicating a growing demand for larger warehouses’ 12 .
It estimated, based on projected GVA growth for the North West and the relationship to warehouse take- up, that approximately 5 million sq.ft of floorspace is required annually to meet demand 13 . Taking account of the development lead times, construction phasing and the practical utilisations of development sites (i.e. that occupier requirements cannot be met by 100% of the development plots available), it is believed that the total development space in progress (or approved for development) should represent 3 - 5 years of
10 2020 Economic Statement (Turley), page 2 11 A Big Box warehouse is the term given to a building over 500,000 square foot - XXL Warehouses in the UK, CBRE Research and Reports (Gibson, 2018) 12 2017 Economic Statement Appendix (Turley), page 90 13 page 22
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expected demand. Accordingly in the region there should be between 15m to 25m sq.ft of logistics space, either constructed or available for development.
The report states that in 2015 the national take-up of larger (>100,000 sq.ft) warehouse space was reported as 24m sq.ft. The availability of such space is reported to be only 30m sq.ft. The report concludes this demonstrates the extent to which lack of availability of good quality warehouse facilities (in terms of size, specification and location) could inhibit future growth.
CBRE Report April 2020
The CBRE report covers demand and supply for logistics floorspace in the UK and North West region. It finds that the average annual gross take-up in the UK over the past ten years was about 21.5 m sq.ft per annum and in the North West the average annual take up was about 3.1m sq.ft between 2006 and 2019 14 . Requirements for Grade A accommodation in the North West is stated as 3.22m sq.ft (29.9 ha). Demand for logistics premises has been generated from a variety of sources including third party logistics contractors (3PLs), manufacturers, the auto industry, parcel delivery and a wide range of retailers.
The report states that there is a total of 4.19 million sq.ft (389k m2) of Grade A floorspace across 20 units, representing a mere 16 month supply of floorspace, which clearly demonstrates that the supply of development is lagging behind market demand. The report concludes by stating there is currently a limited supply of ‘oven ready’ consented sites within 2.5 km of motorway junctions within the M6 corridor. Major schemes including Omega Warrington, Logistics North Bolton, Kingsway Rochdale and Global Logistics Manchester Airport are said to be unable to accommodate a single building of up to 1m sq.ft floorspace to accommodate a regional or national distribution centre occupier requirement. Immediately available units of 300,000+ sq.ft are in particularly short supply with only one unit of 375,000 sq.ft being available in Bolton. The future supply pipeline of Grade A space offering in excess of 300,000+ sq.ft is also diminished comprising just 654,000 sq.ft in two planned units.
The report also looked at the wider North West sites. However it emphasised that these sites are located away from the M6 corridor. It states that as operator costs increase with distance from the M6 corridor making these sites far less profitable and efficient. In summary while there are potentially alternative sites within the North West they are likely to appeal to logistics operators and occupiers looking to service specific regional market areas.
14 page 9
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Economic Statement May 2020
The 2020 Economic Statement (Turley) (CD 17.4) links the evidence from the Haydock Point reports, along with the LA evidence base, and sets out the economic benefits of the proposed development. The report uses the supply and demand data from the CBRE 2020 report along with including the updated employment land need data provided in the latest ELNS, 2019 (CD 5.81).
The report states that Haydock Point is a major development that provides an opportunity to address the undersupply of Grade A logistics buildings of 400,000 sq.ft + in the North West region. Operators are increasingly requiring larger premises to accommodate Regional Distribution Centre (RDC) facilities as well as National Distribution Centres (NDC) with floorspace requirements in excess of 500,000 sq.ft. Very few sites are currently available to accommodate a single building of circa 1m sq.ft. This is a further advantage of Haydock Point which will be able to accommodate a single unit just under 940,000 sq.ft.
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My Approach to Assessing Market Need
Introduction
This section sets out the methodology I have used to estimate market need. This is based on adjusting past trends and projecting them forward to estimate future demand. The approach is relatively consistent with the approaches used in the Liverpool City Region and GMSF 15 . Sections 6 to 10 apply the method set out below to estimate the scale of market need and case for Haydock Point.
Definition of the PMA
The first step is to define a property market area (PMA). This sets the geography used to then collect information on demand, supply and gap. My focus is on the PMA for large logistics. This market serves a wider geography and so has a wider PMA than for example markets for smaller scale logistics and manufacturing. Although there is a degree of consistency between locational requirements, actual areas of search will in practice vary by company and possibly over time. Consequently defining a PMA is not an exact exercise and some relevant companies may consider geographies with different extents from the ones used in studies. I have addressed this ‘fuzziness’ in market boundaries by considering possible different PMAs. In Section 6 I set out how I have assessed and defined my PMAs.
Sub-Markets and Time Frames
The Haydock Point scheme is targeted at larger logistics operators and can accommodate buildings of up to around 1 million sq.ft (93,000 m2) and also includes two proposed buildings of around 250,000 sq.ft (23,000 m2). Consequently my analysis is focused on the market for larger logistics units. Given that demand for units of over around 500,000 sq.ft (46,500 m2) is more lumpy, and that the usual market convention for larger logistics units is to consider units of over 100,000 sq.ft, I have considered markets for:
• Over 100,000 sq.ft (9,300 m2) GIA, and • Over 500,000 sq.ft (46,500 m2) GIA.
However it is important to bear in mind that a substantial fraction of the overall market is for units of less than 100,000 sq.ft (9,300 m2) 16 .
15 For example the GMSF states: ‘The most common method used is therefore to take past take -up, work out an annual average then extrapolate this forward over the relevant plan period. This is the method used in the GMSF.’ GMSF Employment Topic Paper, January 2019, Page 60, para 3.60. Also see para 3.61. 16 For example in David Newman’s Wingates appeal proof, Figure 9 p35 shows the sub -100k sq.ft take-up being
around 40% of the total market.
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My focus is also on the demand for and supply of land for development in the short (up to 5 years) and medium (6-10 years) term. While I consider information on the overall estimated supply of land over the longer term, matching up with plan periods, I focus in on a review of the likelihood of sites coming forward in the short term and being available to meet estimated demand over these periods.
Historic Demand
A conventional starting point for estimating future demand is to review evidence on past annual average demand, consider whether any factors are likely to change in future and make adjustments to reflect this, and then forecast it forward in to the future. This is the overall approach I have taken.
The question then arises over what demand to measure. In the context of land use planning and this appeal the ultimate statistic of interest is demand for new greenfield and longer-term brownfield land for employment use. A range of different approaches are used to derive this end estimate in studies. Examples of variables used include information on employment, market transactions for floorspace, market transactions for new floorspace, and correlations with demand such as gross value added (GVA) growth. My general preference is to use variables that are closely related to the ultimate variable of greenfield and longer-term brownfield land 17 . (This for example means that I place less emphasis on past and future employment forecasts as they often have a poor correlation with demand for land because there are a number of intermediate variables that can distort a direct relationship. In particular logistics space varies significantly in its employment density per m2). Consequently I focus on historic information on take-up of relevant floorspace.
Care is needed in reviewing market data and reports. Agents and property companies often report total lease/occupancy deals covering new and second hand (e.g. re-let) space. This includes an element of churn of existing properties and, subject to some caveats, is not the main statistic of relevance in estimating demand for new greenfield and brownfield land for employment use. A more relevant statistic is data covering lease/occupancy of new space. This again though is not totally aligned with demand for new greenfield and brownfield land as some new space will be redevelopment of sites in existing allocated and/or developed land. Account also should be taken of employment land lost to other uses and policy compliant uses on industrial land not falling in the B2 and B8 categories such as utilities and in some instances retail warehousing. My approach has been to consider a hierarchy of information through to analysis of past demand for new development on greenfield and long term brownfield land. This is illustrated in Figure 5.1 below.
17 For brevity at times I refer to this as demand for greenfield land, but this includes longer-term brownfield land as well.
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Figure 5.1 Relevance of Statistics to Demand for Greenfield and Brownfield Industrial Land
Redevelopment of greenfield land
long time) of industrial land to on greenfield land other land uses
sq.ft unless part of a
market to equilibrium
averages
Source: Savills, 2021
Past demand varies by year and depends on a number of factors. It is appropriate to estimate annual average demand. This then takes account of variations from year to year and evens this out to give an average picture over time. The time frame used to estimate past demand can influence the average figure and care is needed to try and select a representative time frame. Generally it is better to look at longer time frames and try to cover a full business cycle or more of relative growth and decline. In practice this is not always obvious and judgement is needed. I have used data over the period 2009 to 2020 year to date. This covers the tail end of the 2008 recession and the drop in demand in 2014 in particular and the two peaks of 2010 and 2016.
I have analysed CoStar data on past transactions. While this is a reasonably reliable data source it is not 100% accurate. As an additional check I have compared this dataset with the knowledge of agents working on the four appeals and in particular with the knowledge of Paul Cook at CBRE, who is one of the leading industrial agents in the region and has an extensive knowledge of the market and development sites.
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Demand Constrained or Supply Constrained: Market Signals
Historic data can be interpreted in two different ways. It can be taken as evidence of either a demand constrained or a supply constrained market. A demand constrained market is one in which there is enough supply and the constrain on take-up is the scale of demand. A supply constrained market is one in which there is not enough supply to meet demand and there is a degree of suppressed or hidden demand. If the context is the latter situation then data on historic take-up will under-estimate actual demand as some of the demand is not expressed.
I have used market signals as a way of estimating whether the market has been historically demand or supply constrained. Relevant signals include changes in vacancy rates, rental values and yields. Growth in rental values above background inflation suggests the market is tightening. Decline in vacancy rates and yields also suggest that the market is tightening and may be supply constrained. (Converse trends could suggest the market is loosening and shifting to a demand constrained situation).
A number of studies have sought to estimate what to use as the equilibrium vacancy rate in a well- functioning market. I use a rate of 8% vacancy compared to total stock of buildings. Evidence for such a rate is given in the Mayor of London’s ‘Land for Industry and Transport Supplementary Planning Guidance’ (2012). The documents submitted with the other co-joined appeals also use a similar concept though they present this in terms of e.g. ‘a five year flexible buffer’. The evidence for the GMSF also recommends including a ‘buffer of supply’ 18 . (An alternative way of considering this requirement is the need for the market to have a buffer of readily available supply to meet immediate and short-term demand. This is the way in which the co-joined appeal witnesses have expressed this requirement). I consider this further at 5.8 below.
Adjustment for Future Anticipated Trends/Drivers
There may be a number of reasons why it is appropriate to assume that future demand will differ from past demand. For example in the context of the Liverpool City Region studies have strongly suggested that the expansion of Liverpool Port will result in higher demand for logistics space. Also the growth in on-line shopping is resulting in growing demand for logistics space. Relevant factors also include whether the past market has been demand or supply constrained, as set out above.
The relevant question in considering future demand is not whether these factors are present but whether there has been a change in the influence of these factors over the situation in the past. (So if there has been no change the past data already takes account of the influence of these factors and there is no need to make an additional adjustment).
18 ‘Employment Land Demand Analysis Note’, GMCA, December 2018, Para 6.12 and 6.13, p22. (Ref 10.9)
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The various local plan evidence base studies have reviewed factors likely to influence future demand and I have taken these in to account, together with my own review of information, to come up with my estimate of future annual average demand.
Converting Floorspace into Land: Plot Ratio
The above steps give an estimate of annual average demand for logistics and industrial floorspace. In the context of local plan allocations this then needs to be converted in to demand for land. I have converted estimated demand for floorspace in to estimated demand for land by applying a plot ratio. I have generally used a plot ratio of 35%. This is slightly lower than the 40% plot ratio used by for example the Liverpool City Region studies but in my view better reflects the typically lower plot ratios seen on larger strategic sites, which for example often have additional provision for landscaping.
The average plot ratio for the four schemes currently before the Secretary of State is 26% – see 2.6 above. This suggests my estimate may actually under-estimate demand for land.
Table 5.1 below shows the size thresholds considered and the consequent minimum site sizes using a 40% plot ratio for smaller buildings/requirements and a 35% plot ratio for larger buildings/requirements.
Table 5.1 Minimum Site Size for Larger Scale Developments
Buildings floorspace Land requirement Assumed plot ratio sq.ft m2 Acres ha 100,000 9,290 5.7 2.3 40% 300,000 27,871 17.2 7.0 40% 500,000 46,451 28.7 11.6 35% 1,000,000 92,902 57.4 23.2 35% Source: Savills, 2021
The table shows that for development of 500,000 sq.ft a site of around 12 ha is required and for a million sq.ft a site of around 23 ha is required.
Land Supply Assessment
I have reviewed information and knowledge on the potential supply of future land for employment uses in my PMAs. This draws upon information provided in the various local authority studies, CoStar data and agents’ knowledge pooled from the four appeals, and in particular the knowledge of Paul Cook of CBRE.
I have focused on supply estimated to be available in the short to medium term and suitable for development of various sizes. In assessing whether sites are available in the short (1-5 years) to medium term (6-10
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years) I have taken account of: planning policy status; information in local plan documents; and agents knowledge. On planning policy status, with the exception of the appeal sites, any sites that do not at least have a draft allocation in the relevant local plan are only assumed to come forward in the medium or long term.
I have focused on sites able to accommodate at least 100k sq.ft. This equates to a threshold of around 2.3 ha. This allows comparison with demand for buildings of 100k sq.ft and over. However larger sites do not accommodate just buildings of over 100k sq.ft and a significant element of overall demand is for buildings of under 100k sq.f.t. So when comparing demand for units of over 100k sq.ft with supply account needs to be taken of the proportion of supply that will be taken up by units of under 100k sq.ft. I consider this further in Section 9 of my proof.
Given the scale of the PMA and exercise it is possible that my information on some sites may not be totally accurate. There though is often information and evolved circumstances that mean that some sites do not come forward when predicted. In general there is a tendency to underestimate rather than overestimate the time before sites come forward.
Adjustment for Market Equilibrium Vacancy Rates
Future demand for floorspace could be met either from existing vacant floorspace and/or the development of new floorspace. Whether it is appropriate to factor in existing vacant floorspace depends on whether the vacancy rate is above or below the market equilibrium vacancy rate (i.e. for an efficiently operating market).
The point of an equilibrium vacancy rate is that there should be a number of properties available on the market at any one time to allow potential occupiers to have a reasonable choice of types of properties and locations to meet their needs.
If the existing vacancy rate is above the market equilibrium then it is appropriate to factor in take-up of appropriate vacant stock before estimating future demand for new land. (or put another way at the end of the forecast period there should be a certain amount of vacant space, ready to meet demand beyond the period, rather than assuming all space is occupied). If the existing vacancy rate is below the market equilibrium then it is appropriate to allow for an element of future supply that allows the market to move back to its equilibrium vacancy rate. In effect this means subtracting an element of future supply before then matching up future supply with estimated future demand. As set out in Section 5.5 above I have assumed that the market equilibrium vacancy rate for floorspace is 8% of total stock.
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Gap Analysis
Having assessed demand and future supply I then compare these for the different PMAs. I estimate future supply in the short, medium and long term in terms of years’ worth of demand. For the short term a supply of less than 5 years indicates that there is not enough supply, for the medium term a supply of less than 10 years suggests there is not enough supply and for the long term a supply less than around 20 years suggests there is not enough supply.
I have estimated future supply with and without the four appeal schemes. As will be seen in Section 9 and 10 the appeal schemes make up a significant component of the potential short term supply.
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Relevant Property Market Area for Haydock Point
Introduction
This section sets out the information that I have used in defining appropriate PMAs for Haydock Point and the other appeal sites. As explained in Section 5.2 actual search areas will vary by company requirements, but this section outlines a set of PMAs that has been used in the demand and supply analysis.
The Product/Target Market
The target market is for ‘big shed’ occupiers, consisting of units at least 100,000 sq.ft, but in particular units of over 500,000 sq.ft and up to 1 million sq.ft. The market is for new Grade A space, typically with eaves heights of at least 10m for 100k sq.ft units 19 and with a plot ratio of at least 40% to allow sufficient space for access, hardstanding, parking, and landscaping.
Such occupiers of these units require good access to the national motorway network in order to serve their target markets. Therefore ideal sites are close to a motorway and/or dual carriageway junction and preferably without access restrictions such as junctions only allowing access and/or egress in one direction.
Ideal site locations are also located close to substantial market populations. Access to a larger population at a shorter distance allows occupiers to reduce delivery costs, shorten delivery times, and improve reliability of delivery. Hence, ideal site locations are often within close proximity to major conurbations.
Context: Motorway Network and Population Distribution
In the light of the target market requirements the figures below illustrate the context for defining the PMA.
The appeal sites are presented below in relation to the regional motorway and dual carriageway trunk road network in Figure 6.1 . This shows that the north south M6 and M61/western side of M60 corridor between Manchester and Liverpool is particularly well connected to the motorway network. The Haydock Point site in particular is next to Junction 23 of the M6 and the A580 dual carriageway between Liverpool and Manchester.
The context of scale and density of potential target population is shown in Figure 6.2 below. This shows that the corridor between Manchester and Liverpool is particularly well placed to serve the populations of both conurbations.
19 See for example D avid Newman’s proof of evidence for the Wingates appeal, para 5.58, p26.
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Figure 6.1 Liverpool Manchester Area Motorway Network and Appeal Sites
Source: Savills, 2021
Figure 6.2 North West Region Population Density Map
Source: Parallel ONS Population Estimates Mid-2018, www.parallel.co.uk, 2021
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Travel Time Analysis
This section reviews the travel times both from the Haydock Point site and identifies which locations give access to the largest population at the shortest travel time.
Travel times by road from Haydock Point are shown in Figure 6.3 below. It shows that within 30 to 45 minute drive the Haydock Point site gives access to the Liverpool and Manchester conurbations, and the majority of the population in the North West region.
Figure 6.4 identifies the total population that is within 35 minute drive from each lower super output area (LSOA) in the Liverpool Manchester area. The red central area contains the LSOAs which have access to the greatest population (3.2 to 4.0 million people) within 35 minute drive.
This shows that Haydock Point is situated in a part of the region that maximises population access. Here occupiers would be able to reduce delivery costs and timings to the surrounding conurbations. (Parkside has similar access and Symmetry Park and Wingates have slightly less good access).
Logistics User Analysis
The section reviews how particular logistics users are identifying their sites.
The logistics market has experienced several trends in logistics: rise of the Golden Triangle, larger container ships, changes in fuel costs, carbon emissions reduction targets and especially, the rise of eCommerce 20 . The Golden Triangle is an area of the East Midlands that gives distribution centres access to 98% of the population within four hours drive. Although the area is now becoming less attractive, due to shortage of quality labour, changing logistics networks to multiple regional distribution centres, and sourcing locations shifting to overseas placing greater importance on major ports 21 .
Regional network models require a distribution facility in the North West. This also access to Liverpool Port, one of the UK’s major ports. Key retailers such as ASDA, Tesco and Sainsbury’s have incorporated warehouse operations at port of entry, and as inbound volumes grow at Liverpool, similar demand for warehousing can be expected.
To ensure competitiveness, companies are optimising cost bases. Regional distribution centres can reduce transport costs. This is especially important in the context of requirement to reduce carbon emissions, improve first and last mile delivery, and periods of rising fuel costs.
20 Total Logistics Report 2017
21 Total Logistics Report 2017
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Hence, the PMA should allow good access to Liverpool Port, alongside surrounding areas of Liverpool and Manchester conurbations as logistics users seek to take advantage of quality labour, reducing transport costs and access to major ports.
Figure 6.3 Travel Times from Haydock Point
Source: Savills, 2021
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Figure 6.4 Area with Access to Population of over 3m within 35 Minutes’ Drive Time
Source: Savills, 2021
Market Intelligence and Views
A common view amongst North West regional agents is that the M6 corridor is a key reference point for considering property market areas. CBRE, in their market report for the Haydock Point scheme, included a plan showing a PMA focused on a 2.5 km zone around the M6, M62, and M56. This is shown in Figure 6.5 below.
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Figure 6.5 CBRE Map of Sites within 2.5 km of M6 Corridor Motorway Junctions
Source: Haydock Point Land Report, CBRE, April 2020, page 23
In my view this PMA captures much of the core area of the most significant PMA for large scale logistics in the North West. The market though does to a degree extend further than this and there are examples of large scale logistics schemes outside this area.
There is also a view that the M61 corridor is usually a separate sub-market area. For example in David Newman’s Wingates proof Section 5 he rightly considers the M61 corridor as a separate sub -market.
Selected PMAs and Relationship to Liverpool FEMA and GMSF
I conclude from the above information and analysis that the relevant PMA for Haydock Point is centred on the M6 north south corridor between Liverpool and Manchester. While local authority boundaries are often not contiguous with PMAs they allow easier comparison with local authority evidence base document. Consequently as an overall approach I have defined my PMA using local authority boundaries. I subsequently further test refined versions of PMAs later.
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The PMA boundaries have been drawn up in discussion with Savills and CBRE agents and taking in to account the above analysis. Two PMAs have been identified:
· M6 Corridor PMA · Wider M6 Corridor PMA
The M6 Corridor PMA covers three local authorities (St Helens, Warrington and Wigan) and the Wider M6 Corridor PMA covers 12 local authorities. These are shown in Figure 6.6 and in Table 6.1 below. The table also shows whether these local authorities are part of the Liverpool FEMA, the GMSF or neither. This shows that the M6 Corridor PMA includes one of the seven Liverpool FEMA LAs and one of the 10 GMSF LAs. It also includes Warrington which is not in either the Liverpool FEMA or the GMSF. The Wider M6 Corridor PMA includes six Liverpool FEMA LAs and four GMSF LAs.
When all of the Liverpool FEMA and GMSF LAs are included there are 19 LAs in total, i.e. including another four LAs with three of these being on the east side of Greater Manchester.
As I will show later although the M6 Corridor PMA only covers three of the total 19 LAs it captures a substantial fraction of the overall supply and demand.
Table 6.1 Narrow and Wider M6 Corridor PMAs and Local Authorities Local authority M6 Corridor PMA Wider M6 Corridor PMA GMSF or Lpool FEMA? St Helens Yes Yes Lpool FEMA Sefton No Yes Lpool FEMA Liverpool No Yes Lpool FEMA Knowsley No Yes Lpool FEMA Halton No Yes Lpool FEMA West Lancashire No Yes Lpool FEMA Trafford No Yes MCA Salford No Yes MCA Wigan Yes Yes MCA Bolton No Yes MCA Chorley No Yes Other Warrington Yes Yes Other Bury No No MC A Manchester No No MCA Stockport No No MCA Wirral No No Lpool FEMA Oldham No No MCA Rochdale No No MCA Tameside No No MCA Source: Savills, 2021
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Figure 6.6 M5 Corridor PMAs
Source: Savills, 2021
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Historic Demand in the PMA
Introduction
In this section I set out my analysis of historic take-up of industrial and logistics space in my selected PMAs. As set out in Section 5 I focus on the historic data on markets for:
· Over 100,000 sq.ft (9,300 m2), and · Over 500,000 sq.ft (46,500 m2).
I consider take-up of new space on greenfield and longer-term brownfield land. I present results in terms of sq.ft/m2 of new buildings and estimate demand in terms of hectares of development land by applying a plot ratio to the floorspace.
Overall my key conclusion is that historic annual average demand in the M6 Corridor PMAs for space on greenfield and longer-term brownfield land is around 310k sq.ft for units over 500k sq.ft and around 690k sq.ft p.a. for units over 100k sq.ft. This represents 60% of the total demand for units over 100k sq.ft across all 19 LAs but is concentrated in just three LAs (Warrington, St Helens and Wigan).
I present my estimates of historic demand for units less than 100k sq.ft to provide context and to allow comparison with some of the LA research reports (that assess total demand). However it is more difficult to estimate demand for this segment of the market and pick up on all the relevant data. I consider it likely that my figures for this part of the market are significant under estimates.
Historic Take-Up of New Space
My analysis of historic take-up of new space over 100k sq.ft is shown in Figure 7.1 below. This includes results for the Liverpool FEMA, GMSF and all 19 LAs that make up all of the PMAs for comparison.
The figure shows that demand has varied significantly by year, with a peak in 2010 as the economy recovered from the 2008 Credit Crunch, a low point of 2013, another peak in 2015 and a low point in 2019. Data for 2020 is incomplete but evidence suggests the market is strong. It can be seen that generally the M6 corridor PMA data is similar to the total 19 LAs but that there is more variability in the results for the Liverpool FEMA and GMSF LAs.
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Figure 7.1 Historic Net Occupation of New Industrial Space, over 100k sq.ft
Total 19 LAs
Total Wider M6 Corridor PMA
m2 m2 pa
Total GMCA
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: CoStar, Savills, 2021
Historic Take-Up of Net Additional Greenfield Space
I have taken the CoStar data, compared it with data provided by the four appeal site agents, and deducted development on recent brownfield sites/redevelopment of existing allocations to estimate annual average historic take-up for new space on greenfield and longer-term brownfield land by size of buildings and by PMA. Results are presented in Table 7.1 and Figure 7.2 below.
Table 7.1 Average Annual Historic Take-Up of New Greenfield Space by PMA and Unit Size Threshold, sq.ft Over 500k sq.ft Over 100k sq.ft Under 100k Total estimated sq.ft take -up Total 19 LAs 518,097 1,318,575 907,422 2,225,996 Total Core M6 310,422 688,827 134,218 823,045 Total Wider M6 437,515 1,152,022 63 2,298 1,784,321 Total Lpool FEMA 129,474 309,728 523,908 833,636 Total GMCA 127,093 482,143 334,731 816,873 Source: CoStar, appeal agents, Savills, 2021
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Figure 7.2 Average Annual Historic Take-Up of New Space by PMA and Unit Size Threshold
2,500,000
2,000,000
1,500,000
1,000,000
Average sq.ft p.a sq.ft Average
500,000
Total 19 LAs Total GMCA
Source: CoStar, appeal agents, Savills, 2021
The table and graph show that annual average demand for units over 500k sq.ft on greenfield and longer- term brownfield land is around 310k sq.ft in the Core M6 PMA and 440k sq.ft in the Wider M6 PMA. For the Core M6 PMA this increases to around 690k sq.ft for units over 100k sq.ft and 825k sq.ft for all space. Take-up of units over 500k sq.ft represents around 40% of total take-up.
The data emphasises the importance of the three Core M6 PMA LAs to the overall market. They are around 16% of the total number of LAs but capture over 50% of the over 100k sq.ft market. This increases to 60% of the over 500k sq.ft market.
These estimates are around 20% lower than CoStar data on all new development and lower still compared to all deals including second hand space. (For example the Savills Q3 2020 logistics market report gives a figure of total take-up for the North West region of just under 4 million sq.ft 22 ).
I have checked the figures against information given in the other co-joined appeals. They generally quote and use data from the five and ten year average demand in the North West region of 2.25m sq.ft and 2.5
22 ‘UK Logistics Market Overview Q3 2020’, Savills, page 4.
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m sq.ft p.a. for grade A space over 100k sq.ft 23 . This is slightly under double my figure of 1.3 m sq.ft p.a for average take-up for the 19 LAs for Grade A space over 100k sq.ft ( Table 7.1 above). The difference is explained by my focus on development on greenfield and longer-term brownfield land and the smaller geographic area (the 19 local authorities do not cover the whole North West region).
Historic Demand for Greenfield Land
I have converted historic annual average demand for floorspace in to estimated historic annual average demand for greenfield and longer-term brownfield land. Results are presented in Table 7.2 below.
Table 7.2 Annual Historic Estimated Take-up of Greenfield Land by PMA and Unit Size Threshold, ha p.a. Over 500k sq.ft Over 100k sq.ft Under 100k Total estimated sq.ft take -up Total 19 LAs 14 35 21 56 Total Core M6 8 18 3 22 Total Wider M6 12 31 15 45 Total Lpool FEMA 3 8 12 20 Total GMCA 3 13 8 21 Source: CoStar, Savills, 2021
The table and graph show that annual average demand on greenfield and longer-term brownfield land in the Core M6 PMA for units over 500k sq.ft is around 8 ha p.a. and for units over 100k sq.ft it is 18 ha p.a. This increases to around 12 ha and 31 ha p.a. respectively for the Wider M6 PMA.
Conclusions
The above results present a robust base on which to estimate future demand. In particular care is needed in interpreting figures as the data on its own does not reveal whether the market is demand or supply constrained. I consider this and other factors further in the next section to derive my estimate of future demand.
23 See: Andrew Pexton’s Parkside proof paras 3.3 and 5.20; Andrew Aherne’s Symmetry Park proof para 68; and
David Newman’s Wingates proof paras 1.7, 6.14 and 6.16.
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Estimated Future Demand in the PMA
Introduction
There are a number of reasons why future demand may differ from historic demand. In this section I review and assess factors that could cause a change. I take account of local authority work on these factors. I draw conclusions on how to adjust historic demand to give an estimate of future demand.
Overall my view is that there are a number of reasons to conclude that future average annual demand is expected to be significantly higher than historic average demand. Relevant factors include: evidence of suppressed demand; changes in the logistics and retail sectors including growth in internet shopping and consequent warehousing requirements; and the impact of the Liverpool SuperPort proposals. The consequence of taking these factors in to account is to assume that future average annual demand will be around 30% higher than historic annual average demand.
Market Signals
Market signals, including trends in rents and vacancy rates, give information on whether a market is demand or supply constrained. If a market is supply constrained this implies there is an element of suppressed demand that can be added on to take-up data to represent actual demand that would be expressed if enough supply were available.
As set out in Section 5.5 a vacancy rate below what is considered to be an equilibrium vacancy rate can be a signal that a market is tight and that there is not enough supply available to ensure it is functioning optimally. This is usually taken to be 8% of total stock. The Savills Q3 2020 report gives a vacancy rate for the whole of the North West for units over 100k sq.ft of 5.25%. Figure 8.1 also shows that the vacancy rate in the North West has dropped significantly in the last couple of years, taking the region below the national average.
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Figure 8.1 North West and UK Vacancy Rates, 100k sq.ft + Properties, 2016-2020
Source: CoStar, Savills, 2021
Vacancy rates by unit size and PMA are shown in Table 8.1 below. This shows that vacancy rates are even lower for the PMAs and for larger units that the NW average. CoStar data tends to underestimate total stock so these figures are probably over-estimates of vacancy rates. This strongly suggests that the market is supply constrained.
Table 8.1 Vacancy Rates by Unit Size and PMA Under 50k sq.ft 50,000+ 100,000+ 300,000+ 500,0 00+ Total 19 LAs 2.5% 3.8% 3.7% 1.8% 0.0% Total Core M6 2.2% 4.4% 3.5% 2.1% 0.0% Total Wider M6 2.9% 4.0% 3.7% 2.1% 0.0% Total Lpool FEMA 4.7% 4.4% 4.1% 0.9% 0.1% Total GMCA 1.8% 3.4% 3.8% 2.6% 0.0% Source: CoStar, Savills, 2021 Current Market Requirements
There are approximately 50 industrial and logistics requirements currently in the North West for units over 100k sq.ft (9,290 sq.m). The total floor area requirement is between 1.0m sq.m. to 1.3m sq.m. (10.7m to 14m sq.ft). The requirements are for a mixture of existing buildings or build to suit. Further details are given in Appendix 2 of Andrew Pexton’s Parkside proof of evidence. The scale of this requirement suggests there is a degree of suppressed demand.
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Drivers of Future Demand in the PMA
Relevant positive factors that could affect future average annual demand include:
· Changes in the logistics and retail sectors including growth in internet shopping and consequent warehousing requirements · The impact of the Liverpool Port proposals · Brexit, in potentially generating more need for warehouse space to hold goods.
Relevant negative factors that could affect future average annual demand include:
· Brexit, in potentially reducing economic growth · Covid19 recession impact on overall economic health and performance.
The Haydock Point Total Logistics report 24 is one particularly detailed example of work looking at the characteristics of and future trends in the logistics sector. Overall it concludes that there are a number of reasons to expect the logistics sector to grow strongly in future years. I summarised examples of relevant points in Section 4 above. This is further emphasised by strong demand for logistics space in the Covid19 crisis and a general view that this is accelerating existing trends rather than being a temporary change.
I have given more detailed consideration to the potential impact of the Liverpool Port proposals and my analysis is presented in Appendix B . I conclude that the continuing development of the port is likely to enhance demand in the sub regional distribution and warehouse market. Table 8.1 below is the Liverpool City Region’s estimated increased secondary demand from Liverpool’s SuperPort (based on the increased capacity of Liverpool2) on land required for warehousing via road over the next 20 year across the wider city region. It shows that 340 ha is estimated to be required over the next 20 years, equating to 17 ha per annum.
Table 8.2 LCR Estimate of Increased Demand Arising from Liverpool SuperPort ha 0-5 years 6-10 years 11 -15 years 16 -20 years Total Additional land needed (ha) 85 85 83 87 340 St Helens Share (16.6%) (ha) 14.2 14.2 13.8 14.5 56.7 Source: Liverpool City Region SuperPort (2014), Savills analysis
I recognise that the economic impact of both Brexit and the current Covid19 recession could negatively impact on demand. Nonetheless, now that the Brexit trade deal is concluded I anticipate impacts of Brexit are likely to be more modest than previously feared. Moreover whilst the Covid crisis has created a substantial economic shock that should not be taken to mask that the fundaments of this sector of the economy remain robust. Thus, whilst it is appropriate to carry out sensitivity tests on these possible impacts
24 Haydock Point Economic Statement Update May 2020, Appendix 1.
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and scenarios land use planning needs to be ready to respond to positive demands and so greater weight should be given to potentially positive factors than negative factors.
Savills research has found that the average size of new units has been increasing in recent years. Results are shown in Figure 8.2 below.
Figure 8.2 Average Unit Size of B2/B8 Deals
LA Estimates of Adjustments to Future Demand in the PMA
The various LA studies informing their allocations and policies have considered the degree to which future demand is expected to differ from historic demand. Relevant points include:
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· The GMSF includes an allowance of flexibility for increased future demand of 25%, and a reweighting of historic average annual demand of 3% to allow for the one-off impact of the 2008 Credit Crunch 25 · The Liverpool FEMA and associated documents based their forecasts on their growth scenario which is a 30% uplift on the base case scenario 26.
This work has directly informed evolving planning policy and provides a useful reference point for my assessment.
My Estimate of Adjustments to Future Demand in the PMA
In the light of the above factors and the approaches taken by the Liverpool FEMA and GMSF I have applied a similar uplift to historic demand in estimating future demand. I have assumed that future annual average demand will be 29% higher than historic annual average demand. The results of applying this assumption are shown in Table 8.2 and Figure 8.2 below.
Table 8.3 Future Estimated Demand for New Space by PMA and Unit Size Threshold Over 500k sq.ft Over 100k sq.ft Under 100k Total estimated sq.ft take -up Total 19 LAs 668,992 1,702,609 1,171,708 2,874,318 Total Core M6 400,833 889,448 173,309 1,062,757 Total Wider M6 564,941 1,487,549 816,455 2,304,004 Total Lpool FEMA 167,184 399,936 676,497 1,076,432 Total GMCA 164,109 622,567 432,221 1,054,788 Source: CoStar, Savills, 2021
25 ‘It is standard practice in assessing future needs to add a further figure to any base fo recast of need derived from data (past completions rates or employment forecasts). The purpose of the ‘margin’ for demand is to address a variety of factors including: Any unforeseen increase in demand for land (i.e. a margin of error linked to the inherent uncertainty of any forecasts of need); aspirations to increase the overall size and competitiveness of the GM economy; and Accounting for demand which have been suppressed by a lack of supply.’, GMSF Employment Topic Paper, January 2019, page 18, paras 3.53-3.54 (Ref 10.9). Also see page 21, para 3.64 where the figure of 25% is stated. The paper gives an estimate of future demand of 221,000 m2 p.a. and para 3.65 but this is not directly comparable with our figures as it includes new and second hand demand. 26 See for example ‘Liverpool FEMA’, page 72, para 6.3 and ‘Liverpool City Region Areas of Search Assessment
Liverpool City Region’, August 2019, page 11, Table 6 (Ref 10.21). 437 ha/339 ha gives a 30% increase.
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Figure 8.2 Future Estimated Demand for New Space by PMA and Unit Size Threshold
Under 100k sq.ft
100 -300k sq.ft 300 -500k sq.ft Over 500k sq.ft
Average sq.ft p.a Average sq.ft
Total Core M6 Total Wider M6 Total Lpool FEMA
Source: CoStar, Savills, 2021
The table and graph show that in the Core M6 corridor annual average demand for units over 500k sq.ft on greenfield and longer-term brownfield land is around 400k sq.ft p.a. and for units over 100k sq.ft it is 890k sq.ft. For the wider M6 PMA this increases to around 565k sq.ft and 1.5 million sq.ft respectively. This represents 52% and 87% of total demand for the 19 LAs.
Demand for Greenfield and Longer-Term Brownfield Land
I have converted my estimate of future average demand for floorspace in to estimated future annual average demand for greenfield and longer-term brownfield land. Results are presented in Table 8.4 below.
Table 8.4 Future Estimated Demand for Greenfield Land by PMA and Unit Size Threshold, ha p.a. Over 500k Over 300k Over 100k Under 100k Total sq.ft sq.ft sq.ft sq.ft estimated take -up Total 19 LAs 18 33 45 27 72 Total Co re M6 11 19 24 4 28 Total Wider M6 15 29 39 19 58 Total Lpool FEMA 4 9 11 16 26 Total GMCA 4 10 17 10 27 Source: CoStar, Savills, 2021
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The table shows that my estimate of annual average demand for units over 500k sq.ft on greenfield and longer-term brownfield land is around 11 ha in the Core M6 and around 15 ha in the Wider M6 PMA. For the Wider M6 PMA this increases to around 50 ha for units over 100k sq.ft and around 60 ha for all space.
Comparison with LA Studies
A comparison of estimated annual average demand for floorspace and land for the LCR, GMSF and St Helens ELN work is set out in Table 8.5 below.
Table 8.5 Comparison of Demand Estimates Floorspace Land total Floorspace over Land for total demand, demand, ha 100k sq.ft demand, floorspace over m sq.ft p.a. p.a. m sq.f t p.a. 100k sq.ft, ha p.a. My estimate 19 LAs 2.9 72 1.7 45 My estimate M6 Corridor PMA 1.1 28 0.9 24 My estimate Wider M6 Corridor PMA 2.3 58 1.5 39 My estimate Lpool FEMA 1.1 26 0.4 11 My estimate GMCA 1.1 27 0.6 17 LCR estimate 1.0 22 0.3 7 GMSF estimate 2.4 64 St Helens estimate 0.4 10 Source: Various, Savills, 2021
The table shows that my estimate of demand for the LCR is closely aligned with the LCR evidence base, both being around 1 million sq.ft p.a. demand. My estimate for the GMSF (1.1 million sq.ft p.a) is significantly less than their estimate (2.4 million sq.ft p.a). However my estimate for the Wider M6 PMA is comparable with the GMSF figure. A key difference is that my figures include Warrington whereas the GMSF and LSF exclude Warrington. Warrington has accounted for a significant amount of historic demand in the corridor in recent years.
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Supply of Industrial Land and Premises
Introduction
In this section I present my analysis of the supply of land for industrial and logistics space. I first set out the different elements of supply. I explain the elements of supply that I have included in my analysis. I then present my analysis of overall supply. Finally I review information on when the sites in my analysis are likely to be available for development and their market attractiveness and categorise by availability in the short, medium and long term.
Elements of Supply
As set out in section 5 of my proof my approach looks at the overall demand for and supply of greenfield and longer-term brownfield land. This means that the supply of second hand buildings is not included.
The components of supply I include are:
· New premises over 100k sq.ft that are immediately available and are on allocated/permitted developed greenfield sites (i.e. not re-development of existing allocations). It includes existing buildings that were speculatively built and have not yet been occupied. · Premises over 100k sq.ft that are under construction, same criteria as available premises. This element includes buildings that are being built speculatively as well as those that are pre-let but not occupied. · Sites that can accommodate at least 100k sq.ft of development (equating to sites of approximately 2.3 ha or greater) which are allocated in emerging and adopted local plans plus the appeal sites. Some of the sites allocated in the emerging local plans and the appeal sites are presently in the Green Belt and they are identified as capable of contributing to supply on the assumption that they would satisfy Green Belt policy. (I give attention to the sub-category of sites that can accommodate 500k sq.ft of development, equating to sites of approximately 11 ha or greater).
I take the point at which supply is taken-up to be when land is developed and buildings are occupied (as this is the point at which policy objectives e.g. on job creation are realised). This means that I consider pre- lets as being future supply until they are occupied. I take this approach as pre-lets do not necessarily come to fruition and just because a site is not on the market now does not mean it will not be developed and/or come on to the market in future.
Not all of the land of the sites that meet the above criteria will be developed for units over 100k sq.ft. Some sites will not be suitable to fully occupy with such large units and/or promoters may take the view that they
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want to include an offer of smaller units as well. (For example around 20% of the proposed floorspace on the Wingates scheme is for units less that 100k sq.ft – see Table 2.6 above). I have estimated the likely proportion of total capacity that will be for the sub-100k sq.ft market and deducted this from the total supply.
Appendix D lists sites included in the other proofs but not included in my analysis, together with an explanation of why they are not included.
Overall the consequence of my approach is that my estimate of supply is less in some respects than the other co-joined appeals, but my estimate of demand is also less (see section 7.3 above).
Total Supply
I estimate supply based on my analysis of local plan allocations, discussions with local agents, and a review of the market proofs of the co-joined appeals. This focuses on the most prominent supply and largest allocations. There may be a small number of sites not covered in my analysis but these are particularly likely to be unsuitable for large shed development and/or on the fringe of the relevant PMAs and unlikely to appeal to the majority of the market.
My analysis shows in Table 9.1 and Figure 9.1 below the supply of sites large enough to accommodate at least 100,000 sq.ft (equating to sites of approximately 2.3 ha or greater 27 ) of development by LA and PMA. It shows that total estimated supply for the Core M6 PMA for sites large enough to accommodate at least 100k sq.ft (assuming no other constraints) is 962 ha and for the Wider M6 PMA it is 1,547 ha over all time periods.
The figures for total supply assume that the four appeal sites and the new call in of Omega South West Extension are all allowed to come forward. If the appeal sites are not included then 179 ha of supply is deducted (see Table 2.6 above) and the total estimated supply for the Core M6 Corridor PMA is 783 ha (19% reduction) and for the Wider M6 Corridor PMA it is 1,347 ha (13% reduction) over all time periods. The amount of available land is around 50 ha less if the Omega South West Extension is also excluded.
27 Also assuming the sites are of a suitable shape and topography and other factors such as existing utilities infrastructure across the sites and constraints due to former mining do not inhibit their ability to accommodate larger
units. In practice such constraints will limit the actual ability to accommodate larger units and I estimate this impact
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Figure 9.1 Total Estimated Supply of Employment Land by LA and PMA
600
500
400
300 Ha
100k to 500k sq.ft >500k sq.ft sites 200
100
-
Sources: Savills analysis, 2021
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Table 9.1 Total Estimated Supply of Employment Land by LA and PMA by Size, Ha LA/PMA >500k sq.ft sites 100k to 500k sq.ft Sites > 100k sq.ft St Helens 257 18 275 Sefton - - - Liverpool - - - Knowsley 37 9 46 Halton 36 30 66 Wirral - 10 10 Trafford 212 - 212 Salford 159 - 159 Wigan 80 88 167 Bolton 53 4 57 Bury - - - Oldham - 9 9 Manchester - - - Rochdale 288 18 306 Stockport 26 - 26 Tameside 31 - 31 Chorley 27 - 27 West Lancashire - 17 17 Warrington 503 18 520 Total 19 LAs 1,709 220 1,929 Total Core M6 839 123 962 Total Wider M6 1,365 182 1,547 Total Lpool FEMA 331 84 414 Total GMCA 849 119 967 Sources: Savills analysis, 2020 Review of Individual Sites
As I elaborate in Section 10 the supply vs demand situation in the short term (1-5 years) and medium term (6-10 years) context is particularly relevant to this appeal. Consequently I present my review of the potential for sites to come forward in this timeframe. I have first assessed the sites with regard to their access to strategic roads, constraints and their overall commercial attractiveness. I then assess the sites by how much floorspace capacity each site has and the timeframe for when each site will be potentially available. I focus on sites in my Core M6 and Wider M6 PMAs. The relevant sites are shown on Figure 9.2 below.
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Figure 9.2 Sites Potentially Available to Meet Large B2/B8 Demand
Sources: Savills analysis, 2021
I have used the following approach in assessing sites:
• Motorway access : This reflects the ease of access to motorways assuming immediate site investment is in place in the short term. Whether this investment can be put in place is a judgement, including taking account of where schemes are in the planning process and how quickly they can secure planning permission. • Other constraints : This reflects the challenges, time needed and difficulties in getting a site ready for immediate development, including securing planning permission. It also reflects site conditions, such as ground conditions, topography, land ownership etc. that may affect the nature of what can be developed when.
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• Market attractiveness and readiness (to the M6 corridor market): This reflects the attractiveness of the site if immediate requirements for the site can be addressed. To a degree this mirrors the motorway access criteria, but also takes in to account distance from the Core M6 corridor, so sites further east around Manchester and closer to Liverpool and the Wirral are likely to be less attractive to this market. The traffic light system I have applied to this element ranges from poor (red), intermediate (amber), good (light green) and excellent (dark green).
The assessment of motorway access is based on the distance between the middle of the site and the closest motorway junction. Figure 9.3 presents a map with the sites and motorway junctions. The closer a site is to the motorway junction the more favourably it is viewed. Sites that have poor access are those with a distance greater than 2.5km and are coloured red. This is summarised and presented in Table 9.2a for the Core M6 PMA and Table 9.2b for the Wider M6 PMA.
Figure 9.3 Access to Motorway Junctions in the Core M6 PMA
Source: Savills (2021)
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This shows that some of the sites are poorly related to the motorways. This includes ‘Port Salford’ (S2) and ‘Port Salford Extension’ (S1), ‘Land South of Pennington’ (Wi3) and ‘South Lancashire Industrial Estate Extension’ (Wi2).My assessment of the sites’ strategic road access, constraints and overall commercial attractiveness are also presented in Table 9.2a and Table 9.2b . The sites are arranged within their respective PMA and are assessed using a traffic light system. Within their PMA they are ordered according to their overall commercial attractiveness. Site references use their LA letters and then a number.
I give greater detail on my site assessments in Appendix C .
My assessment of how much floorspace I estimate can come forward in which period for each site is summarised in Table 9.3a , Table 9.3b , Table 9.4a and Table 9.4b below. Our judgments on the timeframes for delivery are based on the sites’ physical barriers to delivery, commercial attractiveness and relevant administrative processes. The four appeal sites and Omega SW Extension are in bold.
I draw several conclusions from Table 9.3 and 9.4 alongside consideration of Table 9.2. My analysis highlights the extent to which the supply of commercially attractive sites with considerable capacity and which are deliverable in the short term is highly constrained. There are seven sites that have capacity in the short term (1-5 years) to provide a total of at least 1,000,000 sq.ft of floorspace to the market, five of which are located in the Core M6 PMA. Of those five sites in the Core M6 PMA, all five of them have a level of commercial attractiveness which I assess as ‘good’ or ‘excellent’. Of the five sites in the Core PMA, four of them look to have capacity to deliver units of at least 500,000 sq.ft. Three of the four appeal sites have such capacity (Haydock Point, Parkside West and Land West of Wingates) with Symmetry Park limited to smaller units of 300,000 sq.ft or less. The four sites in the Core M6 PMA that also have good or attractive commercial attractiveness, short term capacity to deliver at least 1 million sq.ft and units of at least 500,000 sq.ft in size are:
· Omega South West Extension (SH5) (also now called-in) · Haydock Point (SH4) · Parkside West (appeal site), Newton-le-Willows (SH1) · Land at Bradley Hall Farm, Cliff Road (within Warrington Garden Suburb) (Wa1) The two other sites that meets that criteria outside of the Core M6 PMA are: · Logistics North (Lidl site & Site F2/H development land) · Land West of Wingates Ind. Estate (appeal site) (B1).
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Table 9.2a Site Assessments: Core M6 PMA
Market Site Area Cumulative Motorway Othe r Attractive - Ref Site LA (ha) Area (ha) Access Constraints ness
SH4 Haydock Point St Helens 42.3 42.3 Land at Bradley Hall Farm, Cliff Road Wa1 Warrington 121.9 (within Warrington Garden Suburb) 79.6 Omega South Western Extension, SH5 St Helens 171.9 Land north of Finches Plantation 50.0 Wa7 Omega Park (Phase II) Mountpark Warrington 11.4 183.3 Wa5 Alpha 167 Lingley Mere Warrington 3.2 186.5 Wa6 Former Shearings Depot Stretton Warrington 3.0 189.5 Land North of Penny Lane/Haydock SH9 St Helens 192. 4 Green 2.9 SH1 Parkside West (Appeal site) St Helens 47.9 240.3 SH2 Parkside West (Phase 2 Extension) St Helens 31.7 272.0 SH7 Land to West of Haydock Industrial St Helens 7.75 279.8 Estate Wi1 Symmetry Park, Wigan Wigan 54.4 334.2 SH6 Land at M illfield Lane St Helens 20.6 354.8 Wa4 Fiddlers Ferry Power Station Warrington 330.0 684.8 Wi5 East of Atherton Wigan 7.9 692.7 Wi6 Chaddock Lane, Astley Wigan 13.4 706.1 SH3 Parkside East, Newton -le-Willows St Helens 64.6 770.7 South Lancashire Industrial Estate Wi2 Wigan 804.7 Extension 34.0 Wi3 Land South of Pennington Wigan 45.7 850.4 Wi4 South of Hindley Wigan 12.0 862.4 Wa2 Port Warrington Extension Warrington 63.0 924.4 Land at Arply Meadows, Eastford Road Wa3 Warrington 955.5 (associated with Port Warrington) 30.1 SH8 Land to West of Sandwash Close St Helens 6.96 962.4 Source: Various; Savills (2021)
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Table 9.2b Site Assessments: Wider M6 PMA Market Site Area Cumulative Motorway Other Ref Site LA Attractive - (ha) Area (ha) Acces s Constraints ness Logistics North (Lidl site & Site F2/H Bolton B2 20.4 982.6 development land) Venus 217, Knowsley Industrial Estate Knowsley K3 5.8 988.3 (Existing, speculatively built) Academy Business Park, Knowsley Knowsley K4 2.9 991.3 (Existing, speculatively built) K2 Halsnead Garden Village Knowsley 22.5 1,013.8 F2/G Multiply, Logistics North (Existing, Bolton B3 4.0 1,017.7 speculatively built) B1 Land West of Wingates Ind Estate Bolton 33.1 1,050.8
C1 Great Knowley Chorley 14.1 1,064.9 C2 North of Euxton Lane Chorley 13.1 1,078.0 WL1 G Park, Skelmersdale W Lancs 16.9 1,107.4 Liberty Park, Widnes (Existing, Halton H3 2.9 1,080.9 speculatively built) Liberty Park, Widnes (Development Halton H4 9.6 1,090.5 land) H5 St Michaels Halton 20.2 1,127.6 K1 Knowlsey Business Park (K800) Knowsley 15.0 1,343.5 S1 Port Salford Extension/Expansion Salford 107.2 1,240 .1 S2 Port Salford Salford 52.0 1,292.1 T1 Davenport Green Trafford 36.4 1,328.5
H6 Viking Park Halton 5.3 1,132.9 H2 HBC Field Halton 12.1 1,355.6 T2 Carrington Plains Trafford 20.1 1,391.8 Voltage Park, Carrington (Gas Works Trafford T3 27.0 1,418.8 Site T4 Shell Carrington Trafford 64.5 1,483.3 T5 Carrington North Power Station 2 Site Trafford 16.0 1,499.3 Carrington Gateway (Phase 1 of Future Trafford T6 20.0 1,519.3 Carrington) T7 Broadway, Partington Trafford 27.8 1,547.1 H1 Gorsey Point Halton 16.1 1,371.7 Source: Various; Savills (2021)
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Table 9.3a Core M6 PMA Estimated Supply of Floorspace by Site Over Time, sq.ft GEA Ref Site Short term Medium term Long term Total
SH4 Haydock Point 1,799,341 0 0 1,799,341 Land at Bradley Hall Farm, Cliff Road Wa1 1,000,000 2,000,000 0 3,000,000 (within Warrington Garden Suburb) Omega South Western Extension, SH5 2,000,000 0 0 2,000,000 Land north of Finches Plantation Wa7 Omega Park (Phase II) Mountpark 428,492 0 0 428,492 Wa5 Alpha 167 Lingley Mere 167,000 0 0 167,000 Wa6 Former Shearings Depot Stretton 150,000 0 0 150,000 Land North of Penny Lane/Haydock SH9 125,000 0 0 125,000 Green SH1 Parkside West (Appeal site) 1,000,000 0 0 1,000,000 SH2 Parkside West (Phase 2 Extension) 0 1,000,000 1,000,000 2,000,000 SH6 Land at Millfield Lane 0 0 775,043 775,043 Wi1 Symmetry Park, Wigan 1,442,000 0 0 1,442,000 Wa4 Fiddlers Ferry Power Station 0 0 12,432,420 12,432,420 Land to West of Haydock Industrial SH7 291,865 0 0 291,865 Estate Wi5 East of Atherton 0 0 296,683 296,683 Wi6 Chaddock Lane, Astley 0 0 503,701 503,701 SH3 Parkside East, Newton-le-Willows 0 0 2,430,953 2,430,953 South Lancashire Industrial Estate Wi2 0 640,446 640,446 1,280,892 Extension Wi3 Land South of Pennington 0 0 1,721,600 1,721,600 Wi4 South of Hindley 0 0 452,088 452,088 Wa2 Port Warrington Extension 0 0 1,500,000 1,500,000 Land at Arply Meadows, Eastford Road Wa3 0 0 1,1 33,566 1,133,566 (associated with Port Warrington) SH8 Land to West of Sandwash Close 0 262,114 0 262,114 Total Core M6 PMA 8,403,698 3,902,560 22,886,500 35,192,757 Total excluding appeal sites 4,162,357 3,902,560 22,886,500 30,951,416 Total excluding appeal sites and SW of Omega 2,162,357 3,902,560 22,886,500 28,951,416 Source: Various; Savills (2021)
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Table 9.3b Wider M6 PMA Estimated Supply of Floorspace by Site Over Time, sq.ft GEA Ref Site Short term Medium term Long term Total
Logistics North (Lidl site & Site F2/H B2 1,106,000 0 0 1,106,000 development land) Venus 217, Knowsley Industrial Estate K3 217,765 0 0 217,765 (Existing, speculatively built) Academy Business Park, Knowsley K4 110,000 0 0 110,000 (Existing, speculatively built) K2 Halsnead Garden Village 847,665 0 0 847,665 F2/G Multiply, Logistics North (Existing, B3 149,198 0 0 149198 speculatively built) B1 Land West of Wingates Ind. Estate 1,004,070 0 0 1,004,070 C1 Great Knowley 0 0 531,203 531,203 C2 North of Euxton Lane 0 0 493,529 493,529 Liberty Park, Widnes (Existing, H3 110,000 0 0 110,000 speculatively built) H4 Liberty Park, Widnes (Development land) 360,336 0 0 360,336 WL1 G Park, Skelmersdale 0 590,000 0.0 590,000 H5 St Michaels 0 0 761,015 761,015 H6 Viking Park 0 0 200,000 200,000 S1 Port Salford Extension/Expansion 0 0 3,443,200 3,443,200 S2 Port Salford 0 0 1,291,200 1,291,200 T1 Davenport Green 0 342,706 1,028,118 1,370,824 K1 Knowsley Business Park (K800) 800,000 0 0 800,000 H2 HBC Field 454,725 0 0 454,725 H1 Gorsey Point 765,000 0 0 765,000 T2 Carrington Plains 0 0 757,247 757,247 Voltage Park, Carrington (Gas Works T3 0 0 1,017,198 1,017,198 Site T4 Shell Carrington 0 0 2,429,973 2,429,973 T5 Carrington North Power Station 2 Site 0 0 602,784 602,784 Carrington Gateway (Phase 1 of Future T6 0 0 753,480 753,480 Carrington) T7 Broadway, Partington 0 0 1,047,337 1,047,337 Total Wider M6 PMA 5,924,759 932,706 14,356,285 21,213,750 Source: Various; Savills (2021)
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Table 9.4a Core M6 PMA Estimated Supply of Land by Site Over Time, ha
Ref Site Short term Medium term Long term Total
SH4 Haydock Point 42.3 0.0 0.0 42.3 Land at Bradley Hall Farm, Cliff Road 26.5 53.1 0.0 79.6 Wa1 (within Warrington Garden Suburb) Omega South Western Extension, 50.0 0.0 0.0 50.0 SH5 Land north of Finches Plantation Wa7 Omega Park (Phase II) Mountpark 11.4 0.0 0.0 11.4 Wa5 Alpha 167 Lingley Mere 3.2 0.0 0.0 3.2 Wa6 Former Shearings Depot Stretton 3.0 0.0 0.0 3.0 Land North of Penny Lane/Haydock 2.9 0.0 0.0 2.9 SH9 Green SH1 Parkside West (Appeal site) 47.9 0.0 0.0 47.9 SH2 Parkside West (Phase 2 Extension) 0.0 15.8 15.8 31.7 SH6 Land at Millfield Lane 0.0 0.0 20.6 20.6 Wi1 Symmetry Park, Wigan 54.4 0.0 0.0 54.4 Wa4 Fiddlers Ferry Power Station 0.0 0.0 330.0 330.0 Land to West of Haydock Industrial 0 7.75 0.0 7.75 SH7 Estate Wi5 East of Atherton 0.0 0.0 7.9 7.9 Wi6 Chaddock Lane, Astley 0.0 0.0 13.4 13.4 SH3 Parkside East, Newton-le-Willows 0.0 0.0 64.6 64.6 South Lancashire Industrial Estate 0.0 17.0 17.0 34.0 Wi2 Extension Wi3 Land South of Pennington 0.0 0.0 45.7 45.7 Wi4 South of Hindley 0.0 0.0 12.0 12.0 Wa2 Port Warrington Extension 0.0 0.0 63.0 63.0 Land at Arply Meadows, Eastford Road 0.0 0.0 30.1 30.1 Wa3 (associated with Port Warrington) SH8 Land to West of Sandwash Close 0 6.96 0.0 6.96 Total Core M6 PMA 241.6 100.6 620.1 962.2 Total excluding appeal sites 97.0 100.6 620.1 817.6 Total excluding appeal sites and SW
of Omega 47.0 100.6 620.1 767.6 Sources: Savills analysis, 2021
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Table 9.4b Wider M6 PMA Estimated Supply of Land by Site Over Time, ha
Ref Site Short term Medium term Long term Total
Logistics North (Lidl site & Site F2/H B2 20.4 0.0 0.0 20.4 development land) Venus 217, Knowsley Industrial Estate K3 5.8 0.0 0.0 5.8 (Existing, speculatively built) Academy Business Park, Knowsley K4 2.9 0.0 0.0 2.9 (Existing, speculatively built) K2 Halsnead Garden Village 22.5 0.0 0.0 22.5 F2/G Multiply, Logistics North (Existing, B3 4.0 0.0 0.0 4.0 speculatively built) B1 Land West of Wingates Ind. Estate 33.1 0.0 0.0 33.1 C1 Great Knowley 0.0 0.0 14.1 14.1 C2 North of Euxton Lane 0.0 0.0 13.1 13.1 Liberty Park, Widnes (Existing, H3 2.9 0.0 0.0 2.9 speculatively built) H4 Liberty Park, Widnes (Development land) 9.6 0.0 0.0 9.6 WL1 G Park, Skelmersdale 0.0 0.0 16.9 16.9 H5 St Michaels 0.0 0.0 20.2 20.2 H6 Viking Park 0.0 0.0 5.3 5.3 S1 Port Salford Extension/Expansion 0.0 0.0 107.2 107.2 S2 Port Salford 0.0 0.0 52.0 52.0 T1 Davenport Green 0.0 9.1 27.3 36.4 K1 Knowlsey Business Park (K800) 15.0 0.0 0.0 15.0 H2 HBC Field 12.1 0.0 0.0 12.1 H1 Gorsey Point 16.1 0.0 0.0 16.1 T2 Carrington Plains 0.0 0.0 20.1 20.1 Voltage Park, Carrington (Gas Works T3 0.0 0.0 27.0 27.0 Site T4 Shell Carrington 0.0 0.0 64.5 64.5 T5 Carrington North Power Station 2 Site 0.0 0.0 16.0 16.0 Carrington Gateway (Phase 1 of Future T6 0.0 0.0 20.0 20.0 Carrington) T7 Broadway, Partington 0.0 0.0 27.8 27.8 Total Wider M6 PMA 144.3 9.1 431.5 584.9 Sources: Savills analysis, 2021
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Estimate of Larger Unit Capacity
As mentioned above just because sites are big enough in size to accommodate larger units does not mean that they are actually able to do so. Other constraints and characteristics of the site, and its location, surrounding land uses and relationship to the market will also influence and constrain the actual mix of unit types. As I am focused on supply to meet the demand for units of 100k sq.ft and bigger it is appropriate to estimate what proportion of the total supply in practice can be used for these units.
I have analysed CoStar data on deals by unit size on new development to estimate the distribution of unit sizes. Results are shown in Table 9.5 below.
Table 9.5 Distribution of Unit Sizes on New Development Over 500k 300 -500k sq.ft 100 -300k sq.ft Under 100k Total sq.ft sq.ft estimated take -up Total 19 LAs 23% 19% 17% 41% 100% Total Core M6 38% 28% 18% 16% 100% Total Wider M6 25% 22% 18% 35% 100% Total Lpool FEMA 16% 16% 6% 63% 100% Total GMCA 16% 21% 23% 41% 100% Source: Savills analysis, 2021
This shows that 38% of new development in the Core M6 PMA and 25% of new development in the Wider M6 PMA was for units over 500k sq.ft. The figures for units over 100k sq.ft are 84% and 65% respectively. While this analysis is not directly comparable, and much will depend on individual site characteristics, it does illustrate that the fraction of total supply for larger units will be less than the total land large enough for such units. I have taken this in to account, together with a review of the larger sites in the PMAs, to estimate that 69% of new development in the Core M6 PMA and 65% of new development in the Wider M6 PMA will be available for units over 500k sq.ft. The figures for units over 100k sq.ft are 90% and 80% respectively. I believe these figures are conservative estimates.
Comparison of Appeal Sites
Whilst the five appeal sites have capacity to accommodate more than 1,000,000 sq.ft I have identified relevant distinctions between them. Four of the sites are located in the Core M6 PMA. (The Land West of Wingates Industrial Estate is in Bolton which is located in the Wider M6 PMA and part of the M61 corridor sub-market.) Whilst Symmetry Park is located within the Core M6 PMA I understand that ground conditions limit the size of the units to 300,000 sq.ft. Most of the proposed units at Symmetry Park are between 100,000
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and 200,000 sq.ft. This leaves Haydock Point, Omega SW and Parkside West as the sites with sufficient capacity to deliver units greater than 500,000 sq.ft in the Core M6 PMA.
I have also distinguish between the five appeal sites in terms of their access to the strategic road network.
Haydock Point is located adjacent to Junction 23 of the M6 where that motorway intersects with the A580. The direct access to the M6 and the A580 facilitates immediate lorry movement in all directions. This compares with the other appeal sites:
· Parkside West is also located close to the M6 but more than a mile from the two closest junctions (Junction 22 or Junction 23). Lorries would need to use the congested A49 Winwick Road to access the motorway or rely on the delivery of a new link road. The A49 also has residential properties facing it in this section. These factors are likely to reduce the commercial attractiveness of the site and likelihood of securing occupiers. (These constraints are to a degree illustrated by the long time the Parkside site has taken to come forward for successful development). The problems with the A49 access are intended to be addressed by the Parkside Link Road but such large infrastructure projects are often subject to delay. · Symmetry Park’s access to the strategic road network is also partly indirect as south bound traffic on the M6 would have an indirect route to the site. · Although Land West of Wingates Industrial Estate is located outside of the Core M6 PMA, it has reasonably good access to the M61 via the A6 which runs along the north-eastern side of the estate. · Omega SW has good access to the motorway network.
Overall I conclude from my analysis that Haydock Point has by far the most direct access to the strategic road network.
Supply of Sites Capable of Accommodating 1 million sq.ft Building
Whilst my analysis in section 9.4 discusses sites with capacity to accommodate premises of at least 500,000 sq.ft in the short term, the capacity to accommodate sheds of around 1 million sq.ft in the right location is also relevant to some industrial operators.
Amongst the six sites that have either good or excellent commercial attractiveness identified in section 9.4 that could deliver floorspace of at least 1 million sq.ft in the short term, four have the scale and the planning context that might enable them to deliver units of at least 1 million sq.ft. The largest unit proposed at Parkside West (Appeal Site), Newton-le-Willows (SH1) is 560,000 sq.ft. I do not know whether a larger unit could be accommodated. At Land at Bradley Hall Farm, Cliff Road I understand that such a unit of such
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scale may not be acceptable in planning terms because of the residential context and likely objections from the community. If this were the case then the potential sites that could accommodate premises of 1 million sq.ft could be limited to the following three or four (but with only the first three within the Core M6 PMA):
· Haydock Point (SH4) · Parkside West (SH1 and SH2) · Omega South West Extension (SH5) · Land West of Wingates Ind. Estate (B1). Conclusion
My review of all the sites that have good or excellent commercial attractiveness in the supply pipeline finds that six of them could deliver large sheds (at least 500,000 sq.ft) in the short term (1-5 years) and at least one (Haydock) and possibly three or four could deliver even larger sheds (at least 1 million sq.ft) within the same timeframe. This includes four of the appeal sites (Haydock Point, Parkside and Land West of Wingates Industrial Estate and Omega South West).
Amongst the three or four appeal sites that could deliver at least 1 million sq.ft, Haydock Point has the most direct access to the strategic road network and requires the least amount of road infrastructure to bring development forward.
Of all the sites that are likely to be able to deliver 1,000,000 sq.ft in the short term, two or three of them are located within the Core M6 PMA.
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Balance of Supply and Demand in the PMA
Introduction
This section draws together my analysis of demand and supply to assess the nature of need for the Haydock and other appeal schemes.
Adjustment for Market Equilibrium Vacancy Rate
As set out in Section 5.9 the exercise of comparing demand and supply should take account of a view on what a suitable market equilibrium vacancy rate/buffer is. This is the vacancy rate at which the market is operating efficiently and providing a suitable range of choice of premises on the market for potential occupiers. For buildings this is usually taken to be 8% of total stock. If the vacancy rate is below this level then it is appropriate to add an element on to supply beyond the requirement to meet demand to allow the market to move up to the equilibrium position. This does not mean that the extra land and buildings will themselves all be vacant, but rather that with the extra capacity the overall market will have this vacancy rate.
As set out in Section 8.2 the North West logistics and industrial market overall currently has a vacancy rate of 5.25% and the M6 Corridor PMA and large unit submarkets have even lower vacancy rates. It is thus appropriate to make an extra allowance of land to allow the market to move back to equilibrium. Table 10.1 below presents my estimate of the requirement for extra land for different segments of the market.
Table 10.1 Equilibrium Vacancy Rate Land Requirement, ha 100 -300k sq.ft 300 -500k sq.ft 500k sq.ft+ Total 300k Total 100k sq.ft + sq.ft+ Total Core M6 36 27 40 67 103 Total Wider M6 107 85 119 204 311 Source: Savills analysis, 2020
This shows that I estimate there is a requirement for around an addition 100 ha to bring the Core M6 100k+ sq.ft market in to equilibrium, and a requirement for around 300 ha of land to bring the Wider M6 100k+ sq.ft market in to equilibrium. This evidences an immediate and acute need for additional land to be available.
Demand and Supply Comparison
In comparing demand and supply I have focused on the short term (1-5 years) situation and the markets for 500k sq.ft and 100k sq.ft+ in the M6 Corridor PMAs. The supply assessment assumes that all four appeal sites come forward for development in the short term. It also is based on our assessment of what
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other sites will be available in the short term, as set out in Section 9.4 above. Results for the 500k sq.ft market are presented in Table 10.2 and for the 100k sq.ft market in Table 10.3 below.
Table 10.2 Balance of Short Term Supply and Demand for Sites Able to Accommodate 500k sq.ft Buildings 28 Area Per Supply Supply Supply as Adjustment Supply annum Pipelin e of adjusted for years’ for as years’ demand New use for worth of equilibrium worth of for land Greenfield larger units demand vacancy demand (ha) Land (ha) (years) net of equilibrium vacancy Total Core M6 10.6 166.7 114.4 10.8 -3.7 7.0 Total Wider M6 15.0 273.8 178.0 11.9 -8.0 3.9 Source: Savills analysis, 2021
Table 10.3 Balance of Short Term Supply and Demand for Sites Able to Accommodate 100k sq.ft Buildings Area Per Supply Supply Supply as Adjustment Supply annum Pipeline of adjusted for years’ for as years’ demand New use for worth of equilibrium worth of for land Greenfield larger units demand vacancy demand (ha) Land (ha) (years) net of equilibrium vacancy Total Core M6 23.6 241.6 217.4 9.2 -1.5 7.7 Total Wider M6 39.5 385.8 308.7 7.8 -2.7 5.1 Source: Savills analysis, 2021
These tables show that I estimate that:
· for the 500k+ sq.ft market in the short term there is potentially around 7.0 years ’ worth of supply in the Core M6 PMA and around 3.9 years’ worth of supply in the Wider M6 PMA. · for the 100k+ sq.ft market in the short term there is potentially around 7.7 years ’ worth of supply in the Core M6 PMA and around 5.1 years’ worth of supply in the Wider M6 PMA.
This suggests that if all four appeal sites were permitted and came forward in the short term then the market could just about meet demand and reach an equilibrium point at which it was operating optimally.
Demand and Supply and the Appeal Sites
I have also considered what the implications would be if the appeal sites were excluded from supply. I first consider the original four appeal sites and then consider the addition of Omega SW. The total area of the four appeal sites (excluding Omega SW) is 178 ha for the Wider M6 PMA and 145 ha for the Core M6 PMA
28 The table excludes parts of the appeal sites not proposed for buildings over 500k.sq.ft.
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(i.e. excluding Wingates in Bolton). However not all of this land is available for larger units so I have adjusted for this as well. When this is deducted from supply results for the 500k+ sq.ft market are presented in Table 10.4 and for the 100k+ sq.ft market in Table 10.5 below.
Table 10.4 Short Term Balance for Sites Able to Accommodate 500k+ sq.ft Buildings Exc Four Appeal Sites Area Per annum Supply adjusted Supply as years Adjustment Supply as years demand for land for use for worth of for equilibrium worth of (ha) larger units demand vacancy demand net of (years) equilibrium vacancy Total Core M6 10.6 76.5 7.2 -3.7 3.5 Total Wider M6 15.0 104.6 7.0 -8.0 -1.0 Source: Savills analysis, 2020
Table 10.5 Short Term Balance for Sites Able to Accommodate 100k+ sq.ft Buildings Exc Four Appeal Sites Area Per annum Supply adjusted Supply as years Adjustment Supply as years demand for land for use for worth of for equilibrium worth of (ha) larger units demand vacancy demand net of (years) equilibrium vacancy Total Core M6 23.6 72.8 3.1 -1.5 1.5 Total Wider M6 39.5 137.6 3.5 -2.7 0.8 Source: Savills analysis, 2021
These tables show that I estimate that:
· for the 500k+ sq.ft market in the short term there is potentially around 3.5 years ’ worth of supply in the Core M6 PMA and around -1.0 years’ worth of supply in the Wider M6 PMA. · for the 100k+ sq.ft market in the short term there is potentially around 1.59 years’ worth of supply in the Core M6 PMA and around 0.8 years’ worth of supply in the Wider M6 PMA.
This compares with a market requirement for at least five years of supply over the short term. The clear conclusion is that if the four appeal sites (excluding Omega SW) were refused demand and need would not be met and the market would remain significantly below its equilibrium vacancy rate. Even if no account were taken of the requirement to bring the market back to equilibrium vacancy rate there is not enough supply to meet demand over the next five years in the Wider M6 PMA.
If the SW of Omega Park site is also excluded (as it has been called in for determination) then the market is in an even worse situation. Results are shown in Table 10.6 and Table 10.7 below.
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Table 10.6 Short Term Sites Able to Accommodate 500k+ sq.ft Buildings Exc Five Appeal Sites Area Per annum Supply adjusted Supply as years Adjustment for Supply as years demand for land for use for worth of equilibrium worth of (ha) larger units demand vacancy (years) demand net of equilibrium vacancy Total Core M6 10.6 26.5 2.5 -3.7 -1.2 Total Wider M6 15.0 54.6 3.6 -8.0 -4.3 Source: Savills analysis, 2020
Table 10.7 Short Term Sites Able to Accommodate 100k+ sq.ft Buildings Exc Five Appeal Sites Area Per annum Supply adjusted Supply as years Adjustment Supply as years demand for land for use for worth of for equilibrium worth of (ha) larger units demand vacancy demand net of (years) equilibrium vacancy Total Core M6 23.6 22.8 1.0 -1.5 -0.6 Total Wider M6 39.5 87.6 2.2 -2.7 -0.5 Source: Savills analysis, 2021
These tables show that even before account is taken of the need to have a buffer of vacant property on the market supply is substantially below the required five years’ worth of demand in both the Core and Wider M6 PMAs and for both the 500k sq.ft + and 100k sq.ft + markets. Furthermore what supply there is depends largely on just one site - Land at Bradley Hall Farm, Cliff Road (within Warrington Garden Suburb). This scheme is not certain to come forward within the short term and it is extremely risky to rely on only partially meeting demand by bringing forward one site. A much more appropriate strategy is to have a number of sites being brought forward.
Sensitivity Test: Lower Demand
As set out in Section 9 I have assumed that annual average future demand is higher than historic annual average demand. (This is consistent with the assumptions and forecasts used by for example the Liverpool FEMA and the GMSF). As a sensitivity test I have considered a scenario in which future annual average demand is only the same as the historic annual average figure. Results for the 500k+ sq.ft market are presented in Table 10.8 and for the 100k+ sq.ft market in Table 10.9 below.
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Table 10.8 Sensitivity Test: Historic Demand, Short Term, 500k+ sq.ft, Excluding Five Appeal Sites Area Per annum demand Supply adjusted f or Supply as for land (ha) use for larger units years’ worth of demand Total Core M6 8.2 26.5 3.2 Total Wider M6 11.6 54.6 4.7 Source: Savills analysis, 2020 Table 10.9 Sensitivity Test: Historic Demand, Short Term, 100k+ sq.ft, Excluding Five Appeal Sites Area Per ann um demand Supply adjusted for Supply as for land (ha) use for larger units years’ worth of demand Total Core M6 18.3 22.8 1.2 Total Wider M6 30.6 87.6 2.9 Source: Savills analysis, 2020
These tables show that I estimate that:
· for the 500k+ sq.ft market in the short term there is potentially around 3.2 years ’ worth of supply in the Core M6 PMA and around 4.7 years’ worth of supply in the Wider M6 PMA. · for the 100k+ sq.ft market in the short term there is potentially around 1.2 years ’ worth of supply in the Core M6 PMA and around 2.9 years’ worth of supply in the Wider M6 PMA.
These figures do not take in to account to adjustment to have a buffer of vacant property on the market. This suggests that if all five appeal sites were refused demand and need would not be met and the market would remain significantly below its equilibrium vacancy rate. If account were taken of the requirement to bring the market back to equilibrium vacancy rate there the situation is even worse.
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Economic and Social Benefits
Introduction
This section sets out the anticipated economic and social benefits of the scheme for St Helens and the UK more widely. The information and analysis is largely taken from the ‘Economic Statement - Update, Haydock Point, PLP, May 2020’ document (CD 17.3).
In summary the scheme is anticipated to generate benefits including:
· Up to 265 jobs per year for the five year construction programme · 2,290 to 2,760 on-site full time equivalent (FTE) jobs in the completed development · Significant wider multiplier effects resulting in a total net additional jobs of around 3,000 · Likely further significant jobs and economic benefits in terms of the role users of the park can play in improving the overall efficiency of the North West and UK economies · Apprentice opportunities for local people during the construction and operational phases. · Peel have prepared a draft Local Employment Strategy (LES) that ensures that the benefits for local people and businesses are optimised during each phase of the development. Social and Economic Need
St Helens is in particular need of a range of new job opportunities for its resident workforce. The Economic Statement includes data comparing St Helens with Wigan, the North West region and England. On most of these indicators St Helens performs less well than the other areas. Some of these statistics are presented in Table 11.1 below. These emphasise the importance of creating new local job opportunities to help enhance the prospects of St Helens residents.
Table 11.1 Socio Economic Data on St Helens, Wigan, the North West and England Statistic St Helens Wigan The North West England
Unemployment rate (2015-2016) 7.3% 4.9% 5.5% 5.2% Residents with no qualifications (2011) 27.9% 27.3% 24.8% 22.5% Average (median) resident earnings (2016) p.a. £25.9k £27.1k £26.2k £28.5k Source: Haydock Point Economic Statement Update May 2020, chapter 5
St Helens has also been steadily getting more deprived. In 2010 St Helens was ranked 51 st out of 326 local authorities. By 2015 St Helens borough ranked 36 th out of 326 local authority areas, placing it just outside of the top 10% most deprived areas in England. The 2019 based Indices of Deprivation show a continuing
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trend of deprivation intensifying in the borough. A research summary people published by St Helen’s Council highlighted that St Helens was the 26 th most relatively deprived authority in 2019 29 .
St Helens ranks worst compared to neighbouring authorities in 2019. Compared to its ranking of 26 th most deprived Bolton is 34 th , Wigan is 75 th and Warrington is 148 th . 30
Key Benefits of the Development
The Turley work assesses the estimated economic benefits during the construction and operation phases. Two development scenarios were assessed:
· 80% B8 logistics and 20% B2 Industrial Use · 100% B8 Logistics
Overall estimated economic benefits are summarised in Figure 11.1 below.
Construction Phase
The Turley work estimates that between 245 and 266 gross full-time equivalent (FTE) jobs will be created annually over the five year construction period 31 . Of these an estimated 80 will be direct net additional jobs created in St Helens 32 . The development would create a range of different job opportunities by occupation, including managerial, professional and associated professional and technical occupations 33 .
The project is also anticipated to generate a range of wider supply chain and multiplier effects. The report estimates that 133 FTE jobs and £27 million will be created in the wider impact area 34 .
29 See Haydock Point Economic Statement Update May 2020, paras 5.27 to 5.30. 30 IMD data 2019 31 Para 6.6, p36 32 p40 33 Para 6.10, p38
34 pp40-41
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Figure 11.1 Key Economic Benefits of the Scheme
Source: Haydock Point Economic Statement Update May 2020, Appendix 3
Operational Phase
The Turley work estimated that when completed and occupied the development will support between 2,290 and 2,760 gross FTE jobs on site 35 . There will also be multiplier off-site jobs associated with supply chains etc. On total for the 80% B8 20% B2 scenario Turley estimate 1,245 jobs for St Helens residents and over 3,000 FTE net additional jobs in total. This is shown in F igure 11.3 below.
35 There may be some existing agricultural jobs lost but these will be minimal compared to the new jobs created.
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Figure 11.3 Haydock Point Economic Estimated Operational Jobs (80% B8 Scenario)
Jobs for residents in the rest of North West
1,245
Source: Haydock Point Economic Statement Update May 2020, Appendix 3
My understanding is that this analysis takes in to account displacement as well as multiplier effects. Displacement effects relate to the displacement of economic activity elsewhere as a consequence of the scheme. This for example could take the form of conventional retail jobs being lost to new internet- orientated logistics jobs if these are a consequence of the scheme. However given the context of broader trends and the generally supply-constrained nature of the property market I do not anticipate that these effects will be significant for the Haydock scheme.
The development is estimated to provide job opportunities in a range of occupations.
The report estimates that the operations of the Proposed Development will generate a £62 million p.a. GVA uplift in productivity within St Helens. This increases to £159 million for the North West.
The above estimates relate to a conventional economic impact assessment which limits itself to the on-site jobs and the supply chains associated with these jobs. However in the case of strategic logistics and manufacturing activities I anticipate that there will be wider benefits in terms of increased efficiencies across a broad range of economic activities that benefit from cheaper and more timely delivery of goods. The value of such logistics operations probably extends well beyond their immediate employment. Such a context is for example recognised elsewhere in the country, with for exa mple the Greater London Authority’s draft London Plan and evidence base explicitly shifting focus from on-site employment protection to protection of industrial and logistics floorspace capacity in recognition of the valuable role this plays in supporting the
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rest of the capital’s economy 36 . I anticipate that similar effects are relevant in the North West as well, with development on sites such as Haydock playing a valuable role in enhancing the economics of the Manchester and Liverpool conurbations.
Optimising Benefits for Local People
The proposed development takes into consideration the importance of enhancing local labour and supplier uptake of local employment, along with contract opportunities which are an important priority for the council and a major contribution that the Haydock Point development can make to the economy of St Helens.
The applicant has produced a Draft Local Employment Strategy (LES) 37 , which will be secured through a Section 106 Agreement. This LES ensured that benefits for local people will be optimised through each phase of the development.
Peel will encourage each first occupier, to work in collaboration with key local partners (such as St Helens Council, St Helens College and St Helens Chamber) to develop the Operational Phase LES to maximise employment and training opportunities for local people, in addition to contract opportunities for local businesses. Continued monitoring will take place to ensure that measurable progress is being made in implementing the LES.
The development and these supporting initiatives are particularly valuable in the context of the pressing need St Helens has for economic development that benefits its residents.
Wider Social Value
The above benefits and initiatives probably do not fully capture the socio-economic benefits of the proposals for local communities. Recent research has highlighted a wider range of wider social value benefits that can flow from quality development and employment generation. Such benefits can include:
· Reduced social security costs from residents being in more productive jobs/out of unemployment · Reduction in crime and associated costs · Improved health and wellbeing benefits from being in healthier environments
Research has estimated that the social benefit of an individual returning to work is around £15,000 per year in savings to central government and the NHS 38 . For illustrative purposes if we assume 10% of the total
36 Intend to Publish The London Plan, p278, December 2019 37 Reproduced at Haydock Point Economic Statement Update May 2020 (CD 17.3), Appendix 4.
38 Economic Statement – Update, Haydock Point, PLP Investments, p53, May 2020
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3,000 net new jobs are taken up by unemployed people this would equate to a saving of £45 million over 10 years.
In conclusion the Haydock scheme is located in a borough with one of the most pressing needs for new economic opportunities in the North West and it is expected to create significant new jobs, training opportunities and wider social benefits for St Helens’ resi dents.
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Summary and Conclusions
Scope of Evidence
This proof of evidence covers my analysis of overall demand for and supply of space for logistics and industry in appropriate property market areas in the North West of England, with attention on the market for larger units and in particular for units above 100,000 sq.ft (9,300 m2) and 500,000 sq.ft (46,500 m2). I consider the context of the North West region and the property market area broadly following the M6 corridor between Manchester and Liverpool. I consider the potential role the Haydock Point site would play in addressing demand/need and how it compares to alternative sources of supply.
Haydock Point and the Co-Joined Appeal Schemes
Haydock Point is a particularly attractive scheme for large scale logistics occupiers. It is a highly advantageous position on junction 23 of the M6 where it intersects the A580 and A49, can accommodate up to around 1.8 million sq.ft (167,000 m2) and is particularly rare in being able to accommodate a single unit of almost 1 million sq.ft. If the appeal is allowed it will be able to come forward in the next five years.
In total the five co-joined appeal schemes propose around 6.1 million sq.ft (570,000 sq.m) of logistics and industrial space. Around 50% of this is proposed for units of over 500k sq.ft and 47% for units between 100k sq.ft and 500k sq.ft. Haydock Point makes up 31% of the units over 500k sq.ft and it and Omega South West are the only schemes that offers units of around 1 million sq.ft.
Approach to Assessment of Market Need
My approach focuses on estimating future demand for greenfield and long term brownfield land for logistics and industry by reviewing historic data on completions of such space, assessing how this could change in future, and projecting the adjusted trends forward. This approach is similar to the approaches used by relevant local authorities in the region.
The relevant property market area (PMA) for Haydock Point and the other appeal sites is locations with easy access to the national motorway network in the M6 corridor between Liverpool and Manchester. Exact boundaries will vary between occupiers and I have considered a Core M6 PMA of St Helens, Warrington and Wigan local authorities and a relatively wide PMA covering 11 local authorities as reference points. These PMAs partly overlap with the Liverpool City Region and partly overlap with the Greater Manchester Spatial Framework (GMSF) authorities. Neither of these city areas fully capture the M6 corridor market and so a synthesised approach is relevant.
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Demand
My review of historic market demand concludes that historic average demand for units over 100k.sq.ft on greenfield and longer term brownfield land has been around 690k sq.ft p.a in the Core M6 PMA and around 1,150k sq.ft p.a. in the Wider M6 PMA. In terms of land I estimate this equates to a take-up rate of 18 ha and 31 ha p.a. respectively.
I consider that there are a number of underlying factors that suggest that future average demand will be higher than historic rates. Relevant matters include:
· the continuing shift to on-line retail · the Liverpool SuperPort and the shift towards port orientated national logistics clusters, and · the current in-balance in the market with significant under-supply.
Taking these factors in to account, and drawing on the work for the Liverpool City Region and GMSF, I use a similar uplift factor to these two major local plan evidence research exercises of an uplift of around 30% on historic growth. This gives an annual average demand for floorspace over 100k sq.ft of around 890k sq.ft p.a in the Core M6 PMA and around 1,490k sq.ft p.a in the Wider M6 PMA . Converting this in to land gives a requirement for 24 ha and 39 ha p.a. of greenfield/longer term brownfield land respectively.
Supply
I have reviewed information on potential sites to meet this estimated demand. I have focused on sites that could come forward in the next five years to meet the immediate pressing needs for large logistics space. I estimate that in total, including land brought forward on the five appeal sites, there is around 242 ha of land potentially available in the short term (1-5 years) and another 100 ha in the medium term (6-10 years) in the Core PMA.
Supply and Demand Balance
I have compared this supply with my estimate of demand. Given the current market is below an assessed equilibrium vacancy rate/buffer allowance for buildings of 8% I have made an allowance for extra land and development required to bring the market back to equilibrium. My analysis concludes that if the five appeal sites are allowed there is around seven years’ worth of supply for the 500k+ sq.ft market and around eight years’ worth of supply in the 100k+ sq.ft market to meet short-term (up to five years) of demand. This suggests that if all five appeal sites were permitted and came forward in the short term then the market would be roughly in equilibrium.
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If the five appeal sites and are not allowed then I estimate that there is a deficit of around one to four years’ worth of supply for the 500k+ sq.ft+ market and a deficit of around one year of supply in the 100k+ sq.ft market. This suggests that if all five appeal sites were refused demand and need would not be met and the market would remain significantly below its equilibrium vacancy rate. In addition what alternative supply there is has a significant reliance on just one site, Land at Bradley Hall Farm, Cliff Road (within Warrington Garden Suburb) which is in the Green Belt and is not certain to come forward in the timescale.
This would mean that the North West economy would not be able to grow as much as it would otherwise with consequent negative impacts on GVA and jobs.
There are a number of reasons to conclude that my estimate of future demand may be an underestimate. These include: the PMA area covers local authorities and so includes land that is too far away from motorway junctions and not suitable for the market; the analysis does not take account of employment land lost to other land uses with consequent reduction in total land; and does not taking full account of: non B2/B8 uses that are appropriate uses on industrial land.
The Haydock Point site in particular is well placed to meet the pressing need for schemes. It offers the potential to accommodate a unit of almost 1 million sq.ft. While the market for such large units is lumpy and so not easy to quantify there is likely to be periodic requirements for such space and very little alternative to the Haydock Point scheme to accommodate this. In addition Haydock Point is ideally placed in the M6 corridor to meet user requirements.
Economic Benefits
I have reviewed work estimating the economic and social benefits of the scheme for St Helens and the UK more widely. The information and analysis is largely taken from the ‘Economic Statement - Update, Haydock Po int, PLP, May 2020’ document.
In summary the scheme is anticipated to generate benefits including:
· Up to 265 jobs per year for the five year construction programme · 2,290 to 2,760 on-site full time equivalent (FTE) jobs in the completed development · Significant wider multiplier effects resulting in a total net additional jobs of around 3,000 · Likely further significant jobs and economic benefits in terms of the role users of the park can play in improving the overall efficiency of the North West and UK economies · Apprentice opportunities for local people during the construction and operational phases.
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· Peel have prepared a draft Local Employment Strategy (LES) that ensures that the benefits for local people and businesses are optimised during each phase of the development.
The above estimates relate to a conventional economic impact assessment which limits itself to the on-site jobs and the supply chains associated with these jobs. However in the case of strategic logistics and manufacturing activities I anticipate that there will be wider benefits in terms of increased efficiencies across a broad range of economic activities that benefit from cheaper and more timely delivery of goods. The value of such logistics operations probably extends well beyond their immediate employment. I anticipate that development on sites such as Haydock Point will play a valuable role in enhancing the economics of the Manchester and Liverpool conurbations.
In conclusion the Haydock scheme is located in a borough with one of the most pressing needs for new economic opportunities in the North West and it is expected to create significant new jobs, training opportunities and wider social benefits for St Helens’ residents.
The scheme is expected to generate significant local economic benefits, equating to around 2,300 to 2,800 additional operation jobs and £62 million additional GVA to the local economy p.a. These figures are probably underestimates, maybe to a significant degree, as they do not take account of the wider role the logistics sector plays in supporting businesses in the regional economy.
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Glossary
3PL Third party logistics AGS Accelerated Growth Scenario ASHE Annual Survey of Hours and Earnings ELN Employment land needs FEMA Functional economic market area FTE Full time equivalent FTN Freight transport network GM Greater Manchester GMCA Greater Manchester Combined Authority GMSF Greater Manchester Spatial Framework GIA Gross internal area GVA Gross value added HGV Heavy good vehicle HMA Housing market area L2 Liverpool 2 deep water container terminal LCR Liverpool City Region LEP Local Enterprise Partnership LES Local Employment Strategy LPA Local planning authority LSOA Lower super output area m2 Metres squared MHCLG Ministry of Housing Communities & Local Government NDC National Distribution Centre OAN Objectively assessed need p.a. Per annum RDS Regional Distribution Centre SHELMA Strategic Housing and Employment Land Assessment SoS Secretary of State Sq.ft Square feet TfN Transport for the North TTWA Travel to work area VOA Valuation Office Agency
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