LB Islington Employment Land Study

LB Islington Employment Land Study Prepared for LB Islington 1 By RAMIDUS CONSULTING LIMITED Date: 26th January 2016 LB Islington Employment Land Study London Borough of Islington LB Islington Employment Land Study A report by Ramidus Consulting Limited In association with CAG Consultants and TBR January 2016 Ramidus Consulting Limited Founded in 2003, Ramidus is a specialist, independent built environment research and advisory business. Our focus is on land and property markets: how they are changing; their relationship to the wider economy and their role in economic development. We undertake our work for both private sector clients and public sector policy makers, helping them to understand the impact of economic change on locations and markets. Ramidus is a modern business, comprising a network of skilled and experienced individuals. We assemble teams for specific tasks, ensuring that clients receive first class support. Contact For all enquiries relating to this report: Rob Harris Principal Ramidus Consulting Limited Tel: 07836 563 416 Email: [email protected] Prepared for LB Islington i By RAMIDUS CONSULTING LIMITED Date: 26th January 2016 LB Islington Employment Land Study Contents Page Management summary iv Acronyms ix 1.0 Introduction 1 1.1 The study 1.2 Method statement 1.3 Report outline 2.0 Planning policy context 8 2.1 National planning context 2.2 London Plan context 2.3 Local planning policy context 2.4 Planning policy in neighbouring boroughs 2.5 Summary 3.0 Economic profile 30 3.1 Overview 3.2 Population and labour supply 3.3 Economic structure 3.4 Labour market and travel-to-work 3.5 Firm structure 3.6 Competitiveness and functional economic area 3.7 Summary 4.0 Development of employment land 47 4.1 Overview 4.2 Schemes consented through the full planning process 4.3 Schemes consented through prior approval 4.4 Overall changes in B-use space 4.5 Summary 5.0 Commercial property market 61 5.1 Central London property market context 5.2 Commercial stock 5.3 The Central Activities Zone 5.4 Rest of the Borough 5.5 Small occupiers and the flexible space market 5.6 Tech City: myth or reality? 5.7 Summary 6.0 Employment site assessment 83 6.1 Employment Growth Areas 6.2 Locally Significant Industrial Site 6.3 Town Centres 6.4 Employment Priority Areas 6.5 Summary 7.0 Future requirements 114 7.1 Employment forecasts 7.2 Employment land and premises Prepared for LB Islington ii By RAMIDUS CONSULTING LIMITED Date: 26th January 2016 LB Islington Employment Land Study 7.3 Vacancy rates 7.4 Future growth drivers 7.5 Sensitivity tests 7.6 Supply pipeline and balance 7.7 Other employment land uses 7.8 Summary 8.0 Conclusions and recommendations 132 8.1 Planning policy and economic profile 8.2 Development of employment land 8.3 Property market and employment sites 8.4 Future requirements 8.5 Recommendations: overall 8.6 Recommendations: within the CAZ 8.7 Recommendations: outside the CAZ Appendices 139 Appendix 1: Consultations Appendix 2: Breakdown of key employment sectors Appendix 2: Activities in Islington with >1,000 employees Appendix 3: Employment forecasts, Islington, by sector Appendix 4: Sectoral definitions used to create land use mapping Prepared for LB Islington iii By RAMIDUS CONSULTING LIMITED Date: 26th January 2016 LB Islington Employment Land Study Management Summary The LB Islington Local Plan aims to provide for future employment growth; to afford an appropriate level of protection to existing employment land, and to encourage the redevelopment and expansion of existing employment spaces. The policies aim to meet demand for employment space with a range of types and sizes of new, flexible workspaces. Most designated employment clusters are situated within the Central Activities Zone (CAZ), reflecting the existing concentration of employment uses there, and the significance of this location for meeting future demand for office floorspace, both for Islington and London’s global city role. Economic profile Islington has directly shared in the growth of the central London economy over recent decades. The CAZ area dominates the Borough’s economy with 70% of its jobs concentrated in two wards. The Borough’s workforce is, in general, well qualified and highly skilled. Islington has witnessed strong population growth in recent years, with growing competition between residential and commercial property development activity. The loss of employment floorspace has been counter-balanced until now by an increase in job numbers through intensification of land use: employment grew by almost 30,000 between 2005 and 2015. However this process of intensification is unlikely to be sustainable given the impact of Permitted Development Rights (PDR) and London Plan forecasts that, by 2036, employment in Islington will grow by 27.1%, from 196,000 to 249,000 jobs. Development of employment land The extension of PDR allowing B1(a) office space to be converted to residential through a prior approval process, has resulted in office space being lost outside the CAZ (except in those areas covered by an Article 4 direction). In the eight years prior to 2013, when the PDR were introduced, there was a small net gain in B1 space. Our analysis suggests there is now an on- going annual net loss of 1.3% of B1 space across the Borough. The pipeline shows the continuing impact of conversion via prior approvals. There are nearly six times as many residential units proposed compared with the number completed in the two years since the extension of PDR; and these will involve the loss of five times as much B1(a) space. In terms of B2 and B8, the story is almost exclusively one of loss. Since 2005 Islington the Borough has lost over 100,000 sq m of stock. This is partly related to economic restructuring as well as to pressure from the residential sector. Property market The central London commercial property market has recovered strongly from the Financial Crisis and Islington’s CAZ area has shared in this with strong take-up and, latterly, growing developer interest. A growing number of corporate in-movers, as well as start-ups and businesses operating in the creative and digital sectors, illustrates the attractiveness of the area. There is an opportunity to benefit from an expanding Tech City and from growth in the creative and digital sectors more widely. The priorities of occupiers continue to evolve: changing workstyles are driving new approaches to space use, and traditional locational ties are being increasingly challenged. Growing numbers of occupiers appear to be more footloose than previously; and this applies both to the corporate and SME markets. These Prepared for LB Islington iv By RAMIDUS CONSULTING LIMITED Date: 26th January 2016 LB Islington Employment Land Study dynamics have encouraged a rapid expansion of the flexible space market (providing serviced offices, ‘hybrid’ space, light industrial, studio and production space, and co-working spaces). There is an opportunity to consider how to intensify ‘industrial’ land use in the Borough with a greater provision of hybrid space (which combines features of office, light industrial, studio and production space). Employment sites Islington’s employment sites need to be seen in two distinct categories: those inside the CAZ, and the rest. The CAZ area performs a critical function by absorbing growth from the Central London economy. As hinted above, the greatest threat here is if an A4 Direction is not introduced before the CAZ exemption is lifted. From a wider, London economy perspective, it will be important to ensure that CAZ activities are able to expand into the area north of Pentonville Road and east of King’s Cross/Regent Quarter, and that Tech City activity can expand into the Shoreditch-King’s Cross corridor. Beyond the CAZ, much B-use stock has already disappeared to residential development in recent years and, apart from a small number of concentrations, B2 and B8 space is now highly marginalised in the Borough. The marketability of the remaining stock is being compromised as plots are lost to residential, reducing their critical mass, and making them more isolated and less self-sustaining in market terms. Despite evidence of occupier demand, particularly from smaller businesses, while it might be possible as part of the planning process to encourage small scale B-use in mixed use developments, in many cases there is unlikely to be significant developer interest in re-provision of employment space to accommodate future jobs growth. Future requirements As noted, Islington’s workforce is forecast to grow significantly, particularly within Professional and Technical Services, which generate most demand for office space. In order to meet expected demand, and adjusting for a target vacancy rate of 8%, our forecasts suggest a target of 400,000 sq m of office floorspace between 2014 and 2036. Current permissions coming through the planning system will generate a loss of some 12,000 sq m of office space, and at present there is no identified pipeline of new office proposals that will come close to meeting the forecast target. The biggest threat to growth therefore is restricted supply caused by potential new office developments being outbid, in terms of land value, by residential development. The opening of Crossrail in 2018 will provide opportunities to significantly increase office development at Farringdon and bring additional development pressures to the Clerkenwell area. In the longer term, the potential of Crossrail 2 provides opportunities for Angel to develop as an integral part of the CAZ. What remains of Islington’s industrial activity is projected to continue to diminish: there is a forecast loss of employment in industrial sectors equivalent to around 90,000 sq m of floorspace over the period 2014-2036.

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