The case for industrial and logistics as part of urban mixed-use development


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Industrial and logistics, dirty, noisy businesses, in ugly buildings: why would you want that as part of your urban development mix? What value could it add?

The poor cousin to other uses, industrial and logistics space is often isolated into specific locations but when it comes to social value and placemaking it could have an important role to play in towns and cities.

Technological advances mean it is less about smoke and chimneys than it once was, potentially making it a less intrusive neighbour. There is also a growing recognition that industrial uses are an essential part of a functioning town or city. Add to that the pressure on local authorities to maximise the use of urban land and provide sustainable communities, bringing employment closer to residential areas could provide a solution.

There is also a positive case to be argued for light industrial and logistics’ contribution to social value.

ESG topics are rising up the agenda for both businesses and local authorities and providing space for light industrial and logistics helps maintain, and create, a broader range of jobs, ensuring that developments benefit the wider community.

More localised distribution and jobs can help reduce commercial vehicle journeys and commuting which is better for the environment.

The industrial sector is not facing the same drop in demand and oversupply as retail, the opposite in fact, but local authorities could be an important driver for facilitating light industrial and logistics as part of urban mixed-use schemes.

Currently, other higher value uses have eaten into the supply of urban land for light industrial and last-mile logistics. The Greater London Authority’s draft London Plan is an example of how to redress this. It does not put a red line around existing industrial land but rather seeks to encourage more intense industrial use and mixing in other uses where it is appropriate.

In doing so, it is possible that industrial spaces can fulfil multiple requirements placed on the use of land.

Manufacturers and other industrial users are also not immune to the growing pressure from the workforce to provide that elusive work/life balance,”

says Fiona Thomson, Partner at Trowers & Hamlins. “Proximity to family and leisure facilities and an appealing working environment is important if they are to hold on to a talented work force.”

This does require greater consideration of placemaking in mixed-use schemes. “Local authorities are becoming more commercial in terms of delivery, they are willing to put up the land and act as co-investor in retail regeneration schemes, much of which is about adding in a broader mix of uses,” says Rebecca Wardle, Partner at Trowers & Hamlins. “Over time that mix will, I suspect, include an element of light industrial.”

On paper, light industrial and logistics tick a lot of ESG boxes, the problem is that there are few schemes which demonstrate how they can successfully integrate with residential in a way that doesn’t detract from overall value and which helps create a sense of place.

It’s not a sector designers traditionally focus on when considering placemaking. But discussion within the industry about the ‘beds and sheds’ conundrum is starting to translate into development which could help demonstrate the value in real terms.

At Hackney Wick in East London, industrial land earmarked for regeneration fell within the Olympic Park legacy zone. The London Legacy Development Corporation wanted to transform the site while remaining true to its traditional uses. In the distant past, the area would have been a mix of residential and different employment uses. In more recent decades uses have become more compartmentalised.

The final scheme designed by dRMM architects has 175 homes over light industrial, retail and workspace, not only creating something that is more authentic to the area’s historic past but also generating a broader mix of jobs and space for existing businesses who might otherwise have had to move out of the area.

Design plays a key part, at Hackney Wick, light industrial (creative workshop space) is fully integrated, it is part of the ground-level activity in the main thoroughfare.

While industrial values don’t match historic retail values, it can help with creating a diverse portfolio.

Wardle says, “From a financial perspective you are not putting your eggs in one basket which means you diversify the risk. And if you have a scheme which is flexible enough in its design you can move with changing market demands.”

The rationale behind adding light industrial and logistics into urban mixed-use schemes is compelling but there are still challenges to overcome before it becomes more acceptable.

Social value needs a set of standards, a benchmark against which is can be measured, similar to BREEAM ratings for sustainability. The property industry thrives on precedence, evidence and accepted measures and while social value is a much more important part of the dialogue there is, as yet, no means for demonstrating the benefits to investors and developers.

Investors are assessed according to their ESG credentials but on a per-project basis, there is no one way of capturing things like biodiversity credentials, well-being benefits, jobs and skills creation.

Measuring the social value of industrial uses remains a problem as it does with all use classes but solving that problem could help the case for adding it into the development mix,” says Yvette Bryan, Partner at Trowers & Hamlins.

“It is very hard to quantify, at the moment, how one mix of schemes is better than another in social value terms, or whether it will deliver an extra X pounds of value to society. However, there does seem to be a lot of interest amongst investors and developers, as it is another way of measuring themselves and their performance against their peers.”

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