Written evidence from Gazeley UK Ltd (ARSS
19)
SUMMARY
The logistics sector plays a crucial role within
the UK economy and on the basis of international comparison it
is highly efficient and successful.
Gazeley UK Ltd is a major development player within
the British logistics sector.
The logistics sector requires a continuing supply
of very large buildings of up to one million sq ft in floor area
on individual sites of five acres and above, or parks of up to
about 500 acres. The buildings are operated by or on behalf of
retailers, manufacturers or third party hauliers. These units
serve regional or national markets and typically draw on labour
forces from a number of local authority areas. The logistics sector
depends on the national highway and rail networks and a variety
of measures, some funded by developers, to upgrade these systems.
Gazeley's experience is that individual local planning
authorities acting alone are frequently unable, reluctant or unwilling
to address the provision of major logistics facilities which serve
a regional or national function, within their areas. The characteristics
of the logistics sector are such that they can only be considered
from a planning policy perspective on a broad canvas.
There have been good examples within recent Regional
Spatial Strategies where the needs of the logistics sector were
being addressed in a comprehensive manner.
The abolition of RSS's can be seen already to be
slowing and making more difficult the procurement of major new
logistics developments.
There is a strong overriding need for appropriate
planning policies at a sub national or regional level to address
the unique requirements of the logistics sector. This would assist
major stakeholders and decision makers within this key commercial
sector which makes a vital contribution to the national economy.
1. Gazeley—a leader in UK logistics
development
1.1 Gazeley UK Ltd is one of the major commercial
property developers in the world, focussing particularly on the
needs of the logistics sector. Over the last 23 years Gazeley
has completed 60 m sq ft (6 m sq metres) of floorspace across
the globe for a variety of occupiers engaged in retail, distribution
and manufacturing activities. Our customers comprise leading UK,
American, German, French, Italian, Spanish and Japanese companies.
1.2 Gazeley has offices and associated activities
in most major countries in continental Europe. Through our ultimate
parent company, Dubai World, we have related businesses engaged
in logistics development throughout the world, notably in the
Middle East and China.
1.3 In the UK our flag ship developments include
Magna Parks in Lutterworth, Leicestershire and Milton Keynes—the
former, comprising 8m sq ft (743, 000sq metres) of completed floorspace
and accommodating c.6,500 jobs is the largest dedicated logistics
facility in Europe.
1.4 Whilst most buildings developed by Gazeley
are occupied for distribution related activities, some units accommodate
large scale manufacturing or processing companies.
2. Significance of the logistics sector
2.1 Over the last 20 years the logistics sector
has undergone fundamental technological and organisational changes
which parallel changes in the nature of retailing and in the way
that goods are sourced and handled. In contrast to the manufacturing
sector the logistics sector has experienced steadily rising employment
levels. There continues to be strong occupier demand for new buildings
as supply chain requirements constantly change. Take up of strategic
sized warehouses (ie over 100,000 sq ft) in the UK during the
first half of 2010 was 10.2m sq ft (948,000 sq metres). Development
activity for the logistics sector takes place in all regions but
with a particular focus on the East and West Midlands, the South
East, Yorkshire/Humberside and the North West.
2.2 Retail distribution in the UK is widely regarded
as the most efficient in the world. This enables retailers to
offer competitive pricing, to provide rapid response times and
wide stock ranges to customers and to minimise inventories. The
logistics sector is critical to the success of UK plc.
2.3 The UK logistics sector turns over £7
billion per annum and employs 2.3 million people—equivalent
to about one in 12 of the country's workforce. Over 200,000 companies
are engaged in logistics.
3. Characteristics of logistics developments
3.1 In order to achieve continuous improvements
in productivity and cope with greatly expanded product choices,
the average size of a strategic scale warehouse in the UK has
increased to c.290,000 sq ft (27,000 sq m). Depending on the nature
of the occupier's business, such buildings may serve a national,
regional or sub regional function for distribution of goods. Depending
on individual company operations goods may pass through standalone
warehouses from supplier to retailer or via more complex hub and
spoke networks. In recent years there has been an increased focus
on port related warehouse operations. Provision of rail accessibility
is also increasingly important.
3.2 The buildings which Gazeley develops range
between 100,000—1,000,000 sq ft (9,300 sq m-93,000 sq. m.)
in floor area, with heights of up to c 60 ft (20m). These units
have extensive lorry and car parking areas and ancillary features
such a vehicle washing units, buildings for vehicle maintenance,
product re-cycling, renewable energy plants, flood storage areas
and in some case railway sidings with associated external stacking
areas. Such large developments require extensive landscaping on
an appropriate scale to screen and soften the visual appearance.
Other more sophisticated units may function as data centres in
which computers store and handle vast quantities of financial
and other commercial records. Individual plots range upwards from
about five acres to a large Magna Park project of over 500 acres.
3.3 The units almost invariably operate on a
24/7 basis and attract significant vehicle movements. The buildings
typically employ between 200-700 people in a variety of skill
areas. The work force is likely to be attracted from within a
30 minute drive time and therefore will reside in a number of
different local authority areas.
3.4 The operations frequently require sophisticated
handling equipment the costs of which may exceed those of the
buildings themselves. The completed capital value of such completed
units typically ranges from about £15 million-£80 million.
3.5 The development requirements of the logistics
sector can therefore be seen to be highly significant.
4. What are the strategic planning issues
for the logistics sector?
4.1 In relation to logistics it is critical that
the planning system can facilitate provision of the right quantity,
of the right type of development, in the right locations taking
into account all other policy considerations.
4.2 The development needs of the logistics sector
are critically determined by location: the location of markets
i.e. where the largest population centres are to be found; the
location and access to key transport routes ie the principle motorways,
trunk roads, railways and container ports; and
the location of a suitable labour force. In view of these requirements,
major logistics developments can only occur in a limited number
of places.
4.3 Almost inevitably major developments for
the logistics sector raise issues that impact more than one individual
local authority area. These needs must be considered on a wider
basis.
4.4 A good example of the way in which the needs
of the logistics sector have been addressed in a regional spatial
strategy may be seen in the RSS for the East Midlands approved
in March 2009. The East Midlands accommodates a larger share of
the logistics sector than any other individual region.
4.5 Policy 21 of the East Midlands RSS, a copy
of which is attached, was based on research commissioned by the
East Midlands Regional Development Agency into the characteristics
of, future demand and potential locations for strategic distribution
warehousing. The RSS identified a need for 308 hectares (761 acres)
of rail connected distribution sites and 76 hectares (188 acres)
of non rail linked sites in the region. It also targeted an additional
30 freight trains per day to carry goods in the region. The policy
identifies five general locations within the region where strategic
warehousing should be directed and identifies the appropriate
highway and rail requirements together with other relevant planning
policy considerations. A strong policy consideration is to encourage
transfer of freight to those limited parts of the rail network
which for reasons of adequate height clearance are capable of
accommodating trains loaded with large containers.
4.6 Steps have been taken by the various stakeholders
to bring forward proposals to fulfil this policy but the demise
of the RSS is already casting doubts as to what will be implemented.
5. The Need for a Regional Perspective
5.1 Local planning authorities have been accustomed
to the need to have regard for the strategic or regional planning
perspective when producing their own development plans. This is
essential since issues raised by the type of developments described
above, have implications beyond the boundaries of the individual
council. An individual local authority could not normally be expected
to have the necessary resources available to research this specialist
sector.
5.2 Similarly it is essential to consider the regional
dimension when planning applications are submitted for major developments
which raise wide strategic considerations. This is especially
important since many local development documents are woefully
out of date or have failed properly to address the wider needs
of the logistics sector.
5.2 Gazeley has been a regular contributor to
the production of regional spatial strategies (RSS's), (and indeed
with the structure plans and regional planning guidance which
proceeded them), to ensure that the approved documents recognise
the significance and needs of the development sector of which
we are a part. We note with some satisfaction that RSS's in those
parts of the country where we have been most active such as the
East Midlands, West Midlands and Eastern England, do now recognise
the key planning issues facing the logistics sector.
6. Consequences of abolition of regional spatial
strategies
6.1 No detailed planning policy advice exists
at the national level in respect of the specific needs of the
logistics sector. With the abolition of RSS's a policy vacuum
therefore now exists.
6.2 Major logistics developments are not easy
to navigate through the planning system at the best of times and
the absence of relevant policy can already be seen to be making
this process considerably more difficult. Without a regional policy
focus, some local planning authorities with whom Gazeley deals
are now displaying an entirely parochial view, as was the case
before the adoption of suitable regional policy. We have experienced
the response that since a strategic distribution warehouse project
does not meet a strictly "local need" in terms of employment
or function, then provision does not have to be made in a local
development document. If this attitude continues to be replicated
by the majority of local authorities, then the supply of facilities
which meet wider needs will be blocked off.
6.3 Inevitably there will be an adverse impact
on the national economy and overall efficiency if new infrastructure
to meet the needs of the various supply chains within the UK is
prevented.
6.4 Gazeley is most concerned that a policy vacuum
at the regional level has been created following the abolition
of regional spatial strategies.
7. Requirement for a wider planning perspective
7.1 In our view there is a clear need for a sub
national or regional perspective on the delivery of future major
logistics. Gazeley would not wish to be unduly prescriptive as
to how such policy guidance is produced. The over riding need
is for policy which is relevant, up to date and able to give a
clear lead to local decision makers and other key stakeholders
in this sector. The very largest rail connected logistics projects
are likely to be considered by the Infrastructure Planning Commission
for whom we believe high level regional policy guidance on this
topic is important.
7.2 Such policy must attempt to quantify the
approximate amount of floorspace which each region will need to
accommodate.
7.3 At least for those regions which are key
to the logistics sector, the policy should identify those general
areas where future requirements will need to be accommodated,
taking into account their relative locational advantages.
7.4 The policy should identify what key transport
infrastructure is required in the case of each identified area
of search and the manner in which this is to be delivered. This
should deal as appropriate with the necessary highway and rail
improvements.
7.5 Finally the policy should indicate the other
key planning and environmental requirements, such as the use of
renewable energy, which must be achieved.
7.6 Without such policy provision it is our firm
belief, based on our experience of the situation prior to the
existence of RSS's and upon what we have observed in recent months,
that progress to deliver modern logistics requirements will become
increasingly hampered.
September 2010
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