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Future trends

Working Space: Does London have the right approach to industrial land?

Future trends

Because good land use allocation takes future needs into account, this section looks at how the key pressures on London’s industrial land are likely to change in the future.

Housing need

London has a population of approximately nine million, and according to pre-pandemic estimations, this is expected to rise to 10.8 million by 2041. 32 While Covid-19 has created a lot of uncertainty around population projections and future housing need, the city is still under enormous pressure to provide quality and affordable homes. 33

Changes to how we work and live

Empty shelves during the COVID-19 pandemic highlighted our dependence on industrial infrastructure such as logistics to get the goods and supplies that we need. The pandemic also resulted in a much greater proportion of the goods that people purchase being delivered to their door, rather than purchased in person –  in a shop or restaurant. According to the Office of National Statistics, online purchases made up 34.6 per cent of total UK retail sales in February 2021, compared to 18.3 per cent in February 2019. 34The lifting of restrictions may lead to a short-term reduction in e-commerce, but it is likely that some of this expanded demand will remain in place.

In addition to buying goods online, there’s been an increase in the expectations of consumers for fast, frequent deliveries of goods of various kinds – and this is likely to continue. Fulfilling these expectations will increasingly need last mile sites that are close to consumers, particularly in the case of perishable goods with short shelf-lives, and to ease congestion. These factors have  increased demand within already growing industrial sectors such as third-party logistics and ‘big box’ distribution. Industrial space take-up (the amount of space being leased) and investment volumes across London in Q1 2021 were double the amount recorded in the same quarter last year, with retailers and distribution centres accounting for 70 per cent of this take-up. 35

The pandemic has also highlighted how quickly changes can be made to the way we work, and the tools necessary to support this transition. As new technologies and innovations bring forward what has been termed the ‘Fourth Industrial Revolution’, the way we work and the types of jobs we do are expected to change further. London will require the land and talent necessary to remain competitive and support the emergence of new technologies –from the production of robotics and development of software, to the recycling and re-use of goods. Policy regulating land use will need to be responsive to economic changes and provide flexibility, so new sectors can emerge in the capital.

Demand for industrial land following COVID-19 and Brexit

The COVID-19 pandemic appears to have led to an increase in demand for industrial land in the UK, due in significant part to the increase in online shopping described above. 36 The pandemic also highlighted to companies the vulnerability of international supply chains to external events. It may trigger a generalised shift towards building more resilient production and logistics capacity, as organisation shift away from just-in-time management with long co-dependent and very lean supply chains, to a just-in-case footing favouring the local over the international, and the robust over the efficient.

Meanwhile, the exit of the UK from the European Union (EU) is likely to change goods transport across borders. Businesses may need more storage space due to increased processing times, and EU traders may need to locate some of their distribution activities in the UK to avoid some of the trade friction introduced by Brexit. 37 The opposite may also be true – some UK firms no longer trading with the continent – so while we know Brexit will impact demand on London’s industrial land, it’s still unclear how this restructuring will unfold.

  • 32 The Greater London Authority (2021) The London Plan. Retrieved from: https://www.london.gov.uk/sites/default/files/the_london_plan_2021.pdf
  • 33 The Greater London Authority (2016) The London Plan. Retrieved from: https://www.london.gov.uk/sites/default/files/the_london_plan_2016_jan_2017_fix.pdf
  • 34 Office of National Statistics (2021) Internet sales as a percentage of total retail sales: https://www.ons.gov.uk/businessindustryandtrade/retailindustry/timeseries/j4mc/drsi
  • 35 Knight Frank (2021) London & SE Industrial Market. Retrieved from: https://content.knightfrank.com/research/497/documents/en/logic-london-south-east-q1-2021-7980.pdf
  • 36 https://www.lsh.co.uk/explore/research-and-views/research/2021/mar/industrial-and-logistics-report-2021
  • 37 https://www.lsh.co.uk/-/media/images/lsh/research/ilm2021/industrial%20and%20logistics%20market%202021