Employment Land Review
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Employment Land Review Kettering Borough Council November 2018 Private and Confidential Kettering Borough Employment Land Review Quality Assurance Date November 2018 Version FINAL Filename and path S:\_Client Projects\1801 East Northants & Kettering ELR_East Northants and Kettering Councils\_Reports\Kettering Report\181122_Draft Kettering BC ELR Report_FINAL.docx Checked by Authorised by Limitation This report has been prepared on behalf of and for the exclusive use of Aspinall Verdi Limited’s Client and it is subject to and issued in connection with the provisions of the agreement between Aspinall Verdi Limited and its Client. Aspinall Verdi Limited accepts no liability or responsibility whatsoever for or in respect of any use of or reliance upon this report by any third party. Kettering Borough Employment Land Review Contents Executive Summary Report 1 Introduction 1 Scope of study 1 Study approach 1 Sources and definitions 3 Report structure 4 2 Study area 5 Kettering Borough context 5 Growth context 6 3 Office market assessment 8 Introduction 8 National context 8 East Midlands as an office location 8 Kettering Borough as an office location 9 Office demand 10 Supply and market balance 12 Development opportunities 15 Rents 16 Conclusion: office market 16 4 General industrial market assessment 18 Introduction 18 National context 18 East Midlands as an industrial location 20 Kettering Borough as an industrial location 20 General industrial demand 25 Supply and market balance 28 Development opportunities 30 Rents 31 Conclusion: general industrial market 32 5 Strategic distribution market assessment 34 Introduction 34 National context 34 East Midlands as a strategic distribution location 34 Kettering Borough as a strategic distribution location 35 Strategic distribution demand 37 Supply and market balance 39 Development opportunities 39 Rents 40 Conclusion: strategic distribution market 40 6 Site appraisal: demand 41 Caveats 42 The detailed assessment 43 Drawing conclusions 46 Kettering Borough Employment Land Review 7 Proposed/identified site assessment results 47 Sites potentially attractive for employment 49 Sites unattractive for employment 50 8 Existing employment site assessment results 51 Exiting employment sites that should be safeguarded 52 Exiting employment sites that should safeguarded in the short term 54 Tables & Figures Figure 2-1 Location and administrative boundary 5 Figure 2-2 The geographical areas 6 Figure 3-1 Examples of out of town office stock in Kettering 9 Figure 3-2 Eckland Lodge Business Park 10 Table 3-1 Annual office take-up, 2013-17 11 Table 3-2 Office take-up 2013-18 by unit size 12 Table 3-3 Availability of office space in the borough 13 Table 3-4 Kettering Town & Burton Latimer office stock and availability 13 Table 3-5 Rothwell and Desborough office and availability 14 Table 3-6 Rural Kettering office and availability 14 Figure 4-1 Outstanding development loans £bn 19 Table 4-1 Size bands 21 Figure 4-2 Telford Way Industrial Estate 21 Figure 4-3 Kettering Parkway 22 Figure 4-4 Station Road Industrial Estate (Weetabix) 22 Figure 4-5 Northfield Avenue 23 Figure 4-6 Pipewell Road Industrial Estate 24 Figure 4-7 Grange Road Industrial Estate 25 Table 4-2 Annual general industrial take-up, 2013-17 26 Table 4-3 General industrial take-up 2013-18 by unit size 26 Table 4-5 Availability of industrial space in the borough 28 Table 4-6 Kettering Town & Burton Latimer industrial stock and availability 28 Table 4-7 Rothwell and Desborough industrial stock and availability 29 Table 4-8 Rural Kettering industrial stock and availability 30 Figure 5-1 North Kettering Business Park 36 Kettering Borough Employment Land Review Figure 5-2 Latimer Business Park 36 Figure 5-3 Magnetic Park 37 Figure 5-4 Kettering Parkway (Knights of Old) 37 Table 5-1 Annual logistics take-up (over 100,000 sqft), 2013-17 38 Table 7-1 Demand proposed/identified site assessment summary 47 Figure 7-1 Proposed/identified employment sites 48 Table 8-1 Demand existing site assessment summary 51 Figure 8-1 Existing employment sites 52 Appendices Appendix 1 - Proposed/identified site assessments Appendix 2 - Existing employment site assessments Kettering Borough Employment Land Review 1 Introduction Scope of study 1.1 AspinallVerdi has been jointly commission by Kettering Borough Council and East Northamptonshire Council to undertake a review of the market for employment provision in the two authority areas, and to assess the suitability and achievability of employment sites from a market and business perspective. The review of sites involves reviewing existing as well as emerging employment land and premises to assist with policy formulation for jobs provision and site allocations within the Part 2 Local Plans for each Authority. 1.2 In addition, we have been instructed to assess the potential latent demand for employment provision affecting the wider region, and whether there is potential for capturing an element of this market, especially from “overheating” in neighbouring areas. For example life sciences in the Peterborough/Cambridge area. 1.3 Although this is a joint commission two separate reports for each study area have been prepared. Study approach 1.4 The study is split into two main elements, firstly we provide an assessment of the property market for employment space, covering offices, general industrial space and strategic distribution. Below, for each of these categories we will consider in turn demand, supply and the balance of the market. The main purpose of the analysis is to identify where there is potential demand for new floorspace, and hence a need for development land to be identified in the emerging plan. 1.5 In relation to demand, we identify the types of business that are taking space in the borough or may consider doing so, and what property they are looking for in terms of size and quality. In relation to supply and market balance, we analyse the stock which is currently available, recently developed and in the pipeline, and the rental values and capital values that properties in the area are achieving. The purpose of our analysis is to determine: • How far the existing floorspace stock is meeting current and foreseeable occupier requirements; • Hence, how far there is likely to be demand for more or different space, now or in the future; • Conversely, if property and land are oversupplied, overall or in particular sections of the market. 1.6 These findings help assess the potential demand for new employment floorspace, and hence the quantity and qualitative mix of development sites that the new Local Plan should identify for employment uses. 1 Kettering Borough Employment Land Review 1.7 A strength of the market facing analysis is that it considers real-life property transactions, including the values (rents and prices) realised in such transactions, and whether these values are enough to support viable development. This provides evidence of effective, or viable, demand – which means that potential occupiers will pay enough, and (where relevant) have enough covenant strength1, to support financially viable development. This is important because only sites that are viable will be delivered in practice, and in line with national planning policy, sites in Local Plans should be identified for employment only if they are likely to be delivered. Thus, the revised National Planning Policy Framework advises that plans should be deliverable (para 16b3) and planning should avoid safeguarding employment sites that have no reasonable prospect of being used for that purpose (para 120). 1.8 Our analysis below splits the industrial market: • General industrial uses – including production space (factories and workshops) also small to medium-sized warehousing (B1c, B2 & B8). • Large-scale strategic warehousing, in units of around 100,000 sqft or more, typically provided as new build on specialist logistics parks (B8). This is considered in the following section. 1.9 We distinguish these two sub-sectors because they have different market drivers as discussed later. 1.10 The second element of the study is the site appraisals. In this section we assess existing and proposed/identified sites for employment sites, from a demand perspective. For proposed/identified employment sites we consider whether, if a site were to be allocated for employment use is there viable market demand for the site. For existing sites, we consider whether they are well occupied, still fit for purpose, have scope to redevelop/expand/or refurbish, and whether the they should be safeguarded for their current use in the emerging Part 2 Local Plan. 1.11 It is important to note that our site assessment only answers part of the question on whether sites should be safeguarded, released or allocated because it takes no account of supply-side constraints, including policy constraints – which are being assessed separately by the Local Authority. Nor does the analysis at this stage take account of quantitative balance of total demand and supply. Furthermore, it is import to stress that sites/existing estates should not be considered in isolation but seen collectively within the context of the local market to ensure that there is not an over allocation/safeguarding, or under allocation/managed release of employment areas 1 A business tenant has strong covenant if there is good evidence that they will be in good financial health, and able to pay the rent, through the period of the tenancy. 2 Kettering Borough Employment Land Review 1.12 Therefore, to make final recommendations on land allocations it is necessary to bring together the two site assessments, demand and supply, with the overall calculation of market balance. This analysis will be undertaken by the local authority. Sources and definitions 1.13 Our property market research has drawn on four main sources: • We have relied on the property market database Estates Gazette Interactive (EGi) and commercial property research reports for evidence of take-up, availability and values, both for the market overall and individual properties; • Total stock figures have been derived from analysis of Valuation Office Agency (VOA) data on business rate assessments.