Posted: 13 Jun. 2022 5 min. read

With increasing demand for logistics space, what is the future for co-location of residential and industrial uses?


Considering the increasing demand for logistics space in recent years, we were delighted to host a round table discussion about industrial co-location.

Co-location is a relatively new concept in the built environment, which involves industrial and other uses occupying a single site. In response to the loss of former industrial land, Policy E7 “Industrial intensification, co-location and substitution” of the London Plan (2021) sets out the Mayor of London’s approach to promoting and assessing projects that intensify the use of industrial land and co-locate industrial with other uses. At our round table discussion, we asked the following question: 

“With the constant rising demand for industrial space, is co-location a long-term feasible solution to increasing supply of industrial floorspace?”

Alongside the architectural practice Aukett Swanke, we invited a range of industrial and residential developers, occupiers, investors, and local authorities to share their views on this question.


Barriers to co-location

A major topic of conversation at our workshop was how the perception of developers and occupiers can be a barrier to delivering successful co-location projects. Industrial and residential developers are often sectorised, resulting in a focus on the negative impacts associated with the alternative use, especially when uses are vertically stacked. For example, noise and air quality are common concerns among residential developers, while industrial developers are concerned about restricted operational hours on their tenants and the construction costs incurred to provide noise, vibration and air quality mitigation.

Careful consideration is needed to design out conflicts between residents and industrial occupiers while keeping construction and operational costs down. For example, enclosed yards and insulated transfer decks will reduce noise and amenity impacts while ensuring operation of hours will not be affected. Separate accesses can be designed for traffic and pedestrian movements to avoid conflicts between HGVs and residents. Public realm enhancements can also be used as a buffer between industrial and residential uses.

At our workshop, we presented some good examples of how developers are responding to these challenges and providing industrial space that meets occupiers’ requirements. We must quickly learn from the best examples and not repeat mistakes that have been made in the past.


Market uncertainties

Despite mitigation measures, investors remain sceptical about their ability to let industrial units within co-location schemes, due to potential operational constraints for occupiers. 

Commercial space needs to be flexibly designed and future proofed. This is especially the case for projects with residential above industrial, where both uses need to have long design lives. The costs of construction will often need to be subsidised by residential values or increased density; and investors will be very keen to secure pre-lets for industrial units. Even though industrial vacancy rates in London are at an all-time low and there seems to be burgeoning demand in the sector, tenants can be reluctant to commit to taking space in co-location schemes if alternatives are available.


Role of the planning system

During our discussion, we highlighted ways that the planning system can work better to enable the delivery of co-location projects and to avoid it being a barrier to entry for developers. Participants commented that it can take a lot longer to get planning permission for co-location schemes due to the need to address how uses interact. They also said that something may have to give in how projects address relevant planning policies. The increased costs of mitigating impacts and providing high quality industrial space may mean that planning authorities will need to be prepared to compromise on their policy ambitions that affect viability.

Planning authorities can also be proactive in facilitating co-location. One suggestion was to undertake land audits to identify opportunities for co-location. Examples are emerging of planners taking the initiative to actively promote a positive mindset towards supporting the Mayor of London’s ambitions, set out in the London Plan, for making the best use of industrial land.


Looking to the future

The London Plan has brought co-location to the forefront and seen it set for major growth. It is clear from our workshop that there is much interest in delivering successful and sustainable co-location projects. Looking to the future, London is seeing great growth in these types of development, and it is vital that they are well considered in the planning and design processes. 

In working with our clients, leading discussions about co-location and chairing an industry working group into the topic, we look forward to considering how evolving concepts will successfully co-locate land uses. 

If you would like to explore co-location opportunities further with Deloitte, please get in touch with Jeremy Castle or Christy Ng. 

Sign up for the latest updates

Key contacts

Jeremy Castle

Jeremy Castle

Director

Jeremy Castle’s career spans more than 25 years. He is well known as a leader of planning teams for major urban regeneration projects. He has worked on a wide variety of development projects as an adviser and on the client side. As a client, his most recognisable projects are Central Saint Giles and Battersea Power Station. Since joining Deloitte in 2012, he has led teams for major projects in London, including the reuse of the Broadcast/Media Centres on the Queen Elizabeth Olympic Park for a new technology hub, a project in Nine Elms to deliver 1,500 homes and the relocation of wholesale food markets to Dagenham. Jeremy also spent more than 2 years seconded into one of Deloitte’s largest public sector clients, where he led projects across London through the planning stage.

Christy Ng

Christy Ng

Assistant Manager

Christy is a Chartered Town Planner of the Royal Town Planning Institute (RTPI). Since joining Deloitte in 2018, Christy has provided town planning advice to private and public sector clients across the UK. She has a variety of planning experience, ranging from master-planning, strategic industrial development, town centre regeneration, through to securing smaller planning permissions for a mix of uses.