East Hampshire District Council Employment Land Review Update Final Report May 2013 Employment Land Review Update East Hampshire District Council FINAL REPORT May 2013 13432/MS/CGJ/LE Nathaniel Lichfield & Partners 14 Regent's Wharf All Saints Street London N1 9RL nlpplanning.com This document is formatted for double sided printing. © Nathaniel Lichfield & Partners Ltd 2013. Trading as Nathaniel Lichfield & Partners. All Rights Reserved. Registered Office: 14 Regent's Wharf All Saints Street London N1 9RL All plans within this document produced by NLP are based upon Ordnance Survey mapping with the permission of Her Majesty’s Stationery Office. © Crown Copyright reserved. Licence number AL50684A East Hampshire Employment Land Review Update : Final Report Executive Summary This Employment Land Review Update has been prepared by Nathaniel Lichfield & Partners (NLP) on behalf of East Hampshire District Council. It is intended to inform the preparation of the Council’s Local Plan: Joint Core Strategy to 2028. The study provides current information on the existing employment sites and premises, and assesses future space needs for B class employment uses (offices, industry and warehousing) under a range of different growth scenarios. It also considers the current and future balance of demand and supply for employment land in the District, and appropriate policy approaches in relation to employment space for the final Local Plan: Joint Core Strategy. The key findings of the study are as follows: 1. East Hampshire has a successful economy which has proved relatively resilient through the recession, recording job growth in excess of the regional and national average over the past 12 years; a marginal decline in industrial jobs has been offset by strong service sector job growth. The District’s business base is dominated by Small and Medium-sized Enterprises (SME’s) with high levels of business start-up and self- employment. Output per worker is relatively low due in part to a mismatch between lower skilled jobs available, and a more highly qualified resident workforce. East Hampshire has historically underperformed in attracting significant levels of inward investment. 2. The District’s commercial property market is largely localised and industrial in character, largely driven by the District’s SME business base looking to expand and/or upgrade. East Hampshire lacks the critical mass to be able to attract larger occupiers and compete with larger, more established centres nearby in business space terms. The principal settlements of Petersfield, Alton, Bordon and Horndean accommodate the majority of employment space, although rural business space has become more in demand as the District’s agriculture sector continues to diversify. Demand for employment space remains steady while low levels of vacancy prevent normal ‘churn’, intensification and upgrading of older sites. An underlying shortage of good quality business accommodation (particularly of a larger scale) could potentially threaten East Hampshire’s longer term ability to attract and retain the business base needed to achieve continued economic growth. 3. Reflecting these market characteristics, East Hampshire’s current stock of employment space is dominated by industrial uses which represent 86% of all floorspace with office space accounting for just 14% of the stock. The overall stock of space is larger than many adjoining authorities. The District has seen moderate levels of new employment development over the past 11 years, largely driven by new completions of industrial space. At the same time, losses of B class space – largely industrial – has placed increasing pressure on remaining space to accommodate the District’s economic activity. 3893914v6 East Hampshire Employment Land Review Update : Final Report 4. The District’s office stock is predominantly concentrated within the market towns of Alton and Petersfield, while factory and warehousing space is clustered around the more industrial areas of Bordon and Horndean, as well as Alton and Petersfield. An assessment of the District’s employment sites undertaken as part of this study indicates that East Hampshire has a reasonable range of employment sites of differing quality and type. The majority are characterised by mixed B1/B2/B8 uses, although some specific B1 sites were also evident. 5. Three different scenarios of future employment space requirements have been considered for the period to 2028, based on a number of approaches which reflect economic growth, past development trends and potential housing supply factors. All scenarios point to lower future economic growth in East Hampshire than the District has achieved in the recent past, partly reflecting a more pessimistic post-recession economic outlook, although still higher than the baseline scenario assessed in the 2008 ELR. The overall space requirements related to these different scenarios range from 82,450sqm to 159,940sqm for all types of employment space, implying in broad terms a need for between 18.8 ha and 38.6 ha of employment land (some of which will be met by existing commitments and pipeline supply). The study concludes that the overall employment space requirements set out in the Joint Core Strategy be updated to reflect the future requirements identified by this study, which draws on more recent data and provides benchmarks across a range of scenarios which use different approaches. 6. In terms of future industrial needs, a modest positive requirement has been identified which, based on the existing portfolio of sites and pipeline supply, East Hampshire would currently be unable to meet. Although a significant amount of industrial stock exists across the District, the majority of this is fully occupied, limiting market churn and scope for upgrading and renewal. There are a number of potential options for how additional supply might be provided, whilst the need to minimise future losses of industrial space should also be recognised, taking account of the increasing pressures placed upon employment land in an area of land supply constraints. 7. The District is expected to see reasonably strong office job growth over the plan period and in quantitative terms, East Hampshire would appear to have sufficient office floorspace to meet business needs under all scenarios of future growth. Nevertheless, future policy should focus on re-structuring East Hampshire’s portfolio of office sites and improving a range of qualitative site issues, particularly in light of a number of identified risks to pipeline office supply coming forward by 2028. This includes considering the allocation of new employment site(s) within East Hampshire’s strongest office locations to provide the choice and flexibility for occupiers, and sites of the scale and size to enable East Hampshire to retain indigenous firms and attract larger office occupiers. 3893914v6 East Hampshire Employment Land Review Update : Final Report Contents Executive Summary 1.0 Introduction 1 Background ................................................................................................ 1 Scope of Study ........................................................................................... 2 Structure of Report ..................................................................................... 3 2.0 Economic Context 4 Overview .................................................................................................... 4 Economic Conditions and Trends ................................................................. 5 Conclusions ............................................................................................. 13 3.0 Overview of Employment Space 15 Current Stock of Employment Space ........................................................... 15 Emerging Supply of Employment Space ...................................................... 21 Employment Space in Adjoining Areas ........................................................ 23 Conclusions ............................................................................................. 26 4.0 East Hampshire Commercial Property Market 27 Overview .................................................................................................. 27 Market Geography ..................................................................................... 27 Market Segments ..................................................................................... 28 Needs of Local Businesses ....................................................................... 32 Future Growth Potential ............................................................................. 34 Conclusions ............................................................................................. 34 5.0 Review of Employment Sites Portfolio 36 Overview of Sites ...................................................................................... 37 Conclusions ............................................................................................. 37 6.0 Future Requirements for B Class Employment Space 40 a. Forecasts of Job Growth ........................................................................ 41 b. Past Development Rates ....................................................................... 43 c. Future Labour Supply ............................................................................. 44 Net Employment Space Requirements ........................................................ 46 Convert to Gross Floorspace Requirements ................................................