The focus on Croydon’s regeneration has often honed in on the town centre, but with the growth in the industrial and logistics sector the town is now looking to the Purley Way and beyond, embracing the importance of these areas in forming an industrial hub that serves London and the South.
On 5 March 2019, Develop Croydon, a not-for-profit Community Interest Company, founded by White Label, brought together a panel of experts, all with an interest in Croydon and the industrial sector, to identify the town’s strengths in the market, the challenges it faces and what the future could look like for both Croydon and the market.
Panellists
Stacey Meadwell, Former National Editor, Estates Gazette (Chair)
Oliver Bycroft, Director, Prologis
Heather Cheesbrough, Director of Planning and Strategic Transport, London Borough of Croydon
Rupert Crossland, Asset Manager, Valor Real Estate Partners LLP
Steve Dennington, Head of Spatial Planning, London Borough of Croydon
Tessa English, Director, JLL
Luke Fisher, Asset Manager, Capital Industrial
Alex Gale, Partner, SHW
Colin Lawrence-Waterhouse, Asset Manager – Industrial & Logistics Real Estate, Aviva Investors
Rupa Patel, Executive Director, Day Lewis
What is the current market position for Croydon?
Alex Gale: Croydon vacancy levels are currently 3.5%. What we have seen over the last five years is a sizeable increase in occupier activity, which has also driven rents, with some having doubled in that 5-year period. The interest has been across the board, from smaller 1,000sqft, to multi-let use and end users such as Amazon. Croydon has suffered with the fact there has been no new speculative development since 2008. However, that is all about to change with five sites now due to come through.
Part of the problem is that the current stock is older, many from the 1970’s, ‘80’s and the turn of the century. A lot of it, due to demand and values, has been refurbished but it does mean we have an aging stock which is not always built for purpose.
Tessa English: I agree, the stock is currently old and not enough development has taken place. There is a strong demand in Croydon for space as it serves South London and the South East region.
Colin Lawrence-Waterhouse: A lot of occupiers want to employ good quality staff who are highly trained. Those staff want a good place to work in a safe environment with good transport links and nearby amenities. The Purley Way is rich in transport links and amenities, but the industrial areas feel forgotten about and that is an issue UK wide. The focus in Croydon has been on regenerating the centre but the industrial area needs to similarly be enhanced in order to feed off that.
Heather Cheesbrough: We are trying to safeguard industrial. I agree that industrial has been unconsidered with focus largely falling on housing but this is a new era in industrial development and the new local plan can kick this off. We can’t have a healthy town centre without the Purley Way working.
Luke Fisher: There has been a huge loss of industrial space in Central London which has led to an increase in rents. For those coming out of central, Croydon is a more affordable option.
What impact has the change in retail trends had?
Rupert Crossland: Companies like Amazon and Ocado are taking up more space in order to meet their last mile delivery demands. This now requires a 24-hour turnaround as people want everything on the doorstep the next day. The companies in turn need the space in order to turn it around at that speed, that will affect the way we develop buildings now. They now want low site coverage with vans. Many companies now have smaller vehicles and the perception of large HGV’s monopolising sites is not valid. Ocado are also starting to use electric vehicles.
Oliver Bycroft: E-commerce businesses are already serving all London postcodes but currently many have to do this from distribution centres outside of the catchment area, if they are not able to find suitable premises. They want to have distribution centres near the addresses they are serving. Although this mean a concentration of traffic in the vicinity of the distribution centre, overall this takes miles off London’s roads and reduces environmental impact.
The London Plan needs to reconsider how it defines intensification of use, which at present uses square footage as a proxy for intensity/efficiency of use. With the development of the technology that goes into a modern distribution facility it can be the lower density sites that are most efficient as the flow of goods through the buildings is extremely efficient, it is actually the amount of yard space that constrains the optimal flows through the building as there needs to be sufficient parking and circulation for the large number of HGVs and vans required to keep pace with the flow of goods moving through the building. The plan and local authorities need to look at employment in this way now when considering planning policy and permissions.
Could Croydon consider the ‘Beds and Sheds’ concept?
Luke Fisher: It is difficult as it all depends on the design and build. We regularly speak to residential-led schemes and find that the industrial specification can be quite poor and is not a large part of the project.
Alex Gale: We have found it difficult to let commercial space in a residential development in the past. There does seem to be a lack of understanding for commercial vehicles and parking for industrial occupiers. There is often a design issue and with the current demands on logistics you can’t have an out of use restriction, which is difficult around residential units.
Oliver Bycroft: Restrictions can be put on later too. Although residents know they have moved into a block with industrial included, they can still protest and have the restrictions on hours of use retrospectively, this risk will deter potential occupiers.
Colin Lawrence-Waterhouse: It’s got to be a very clever scheme for it to work well. If a site is a sufficient size, industrial space should sit next to residential rather than beneath it and that would be the best solution in my view. Travis Perkins in St Pancras have student accommodation above their builders’ merchant branch which is a different configuration again but has broadly worked, aside from the circulation space in the branch yard being compromised.
Tessa English: You would have to specifically choose your occupiers if you were going to do it. There are co-location proposals going forward in inner London locations where developers have been working up proposals which includes mitigation to reduce noise disruption and also includes separate access and vehicle movements from the industrial and residential elements of the building. If residential developers are not guided or given the specialist advice, then they can include industrial that is not fit for purpose. There is a need for strong planning teams to ensure that doesn’t happen, while having flexibility in other ways to meet industrial demands.
Steve Dennington: There will be difficult conversations as we need to have a plan to keep industrial space but we also have to fit in residential demands.
Heather Cheesbrough: Croydon’s housing target has doubled so we need to make every area work harder. Purley Way is an important employment area and we need to engage and listen but we need to find possible sites for residential, using high-density and potentially green belt. Residential gives us more opportunity to improve transport in the area too.
Colin Lawrence-Waterhouse: Could surrounding boroughs work together more to create industrial zones, not necessarily in Croydon if residential is needed more here? Could we help to steer where future industrial sites are located using our knowledge and experience of the sector to ensure they are as future proof as possible?
Heather Cheesbrough: We are working with the South London Partnership. There is currently a fragmented industrial offer in South London. We will need to improve our relationship with Sutton Council to create a joined-up offer and discuss housing targets as they have more industrial land. Currently we are all struggling to meet the different uses needed in our individual areas. The importance of industrial is recognised.
What effect is automation having on the industry and what it needs to offer?
Rupa Patel: The physical size of property can be an issue if you want to invest in automation. We would need to extend our current space to fit this in, looking at both space and height. We need to think about planning flexibility to make this possible.
Oliver Bycroft: It depends on the operation. I think automation is becoming more important, but it is expensive for companies to invest in. For some occupiers this cost doesn’t work, particularly those with short term leases. In the future I imagine there will be standardisation of the technology so multiple companies moving different types of goods can use the same technology and they will rent it instead.
Luke Fisher: I agree, if you could rent automation it would be good for occupiers, especially those in Croydon where shorter leases are more common.
Is Croydon’s infrastructure able to meet the demands of the logistics sector?
Oliver Bycroft: In regard to power infrastructure, it seems Croydon has an advantage as it has a lot of data centres, which require large amounts of power. However, will need to look at the impact of electric vehicles both in logistics but with personal use increasing too.
Heather Cheesbrough: We know Five Ways junction and the surrounding area is an issue and it will be remodelled so it is not a bottleneck. This is a highway scheme but will be making it a walking and cycle friendly route too. It is fully funded and due to start in 2021.
Alex Gale: Tramlink has been fantastic. It is a big selling point as it can bring staff in from a larger area. It would be great to have future extensions. However, Imperial Way also needs more public transport for people needing to get into the area.
Luke Fisher: Improvement of the pathways and cycleways from the tram stops would be really beneficial and overall access to the industrial areas from the tram stops does need to be improved.
Heather Cheesbrough: Our walking and cycling strategy has now got £20m investment. People do tend to drive into Croydon and we need to reduce that. We can now look at that particular issue as part of this strategy. How can we get more people walking around Purley Way and Imperial Way?
Colin Lawrence-Waterhouse: Caravans parked on public roads and car parking in general is a long running challenge, especially on tight roadways within industrial areas where HGV access can become restricted very quickly. We don’t know how to reduce that impact while waiting for commuting habits to change, but no doubt closer monitoring by local authorities combined with increased parking restrictions would help keep key access routes clear.
Alex Gale: Yes, roads do get blocked quite easily as cars are parked both sides of the road. Could it be organised to stop parking on one side of the road in some areas?
Rupa Patel: For us parking can be a love-hate issue. Our lorries do get stuck on the roads but customers and our employees do need somewhere to park.
Heather Cheesbrough: We are looking at a new parking strategy and thus far mainly focused on residential but need to look at it from a business perspective too. We are also looking at buses and bus routes to ease congestion and TfL are now onboard to look at the tram strategy to consider an extension.
Oliver Bycroft: Lift shares could work well, we use an online platform at all our other sites which helps people share the costs of commuting and has had good results. Could we collaborate together with businesses in the Purley Way to possibly get a tailored bus route too?
Is perception an issue?
Luke Fisher: Calling them sheds is often an issue as it’s not as attractive for kids coming out of school.
Alex Gale: If we bring in new stock it might help change perceptions with more attractive buildings.
Rupa Patel: We do have an issue with recruitment, we have very few Croydon based applicants applying for our manual labour roles. There is brilliant talent here and I think businesses need to step up and get more students involved in the business so they can understand the opportunities.
Tessa English: Children don’t understand how the market works or how logistics works and that creates issues. There is no education on why warehouses are located where they are. They don’t have a concept of how the things they order online get to them.
Oliver Bycroft: Occupiers are waking up to this as kids don’t know what jobs are available. We need to get into schools and get kids to understand what opportunities there are and we need to create better environments to work.
Rupert Crossland: Warehouse work isn’t low-paid now, but there isn’t an understanding of that either.
Oliver Bycroft: Turley’s report recently showed that the average wage in the logistics sector is above the national average.
Heather Cheesbrough: Could creating an environment like Chiswick Park help?
Rupert Crossland: It would need to be a designated industrial area with big spaces needed for that. Difficult to do in areas where the buildings are all owned by different people.
Heather Cheesbrough: Maybe working in partnership to get occupiers and owners to work together and make an area collectively to create a park feel.
Colin Lawrence-Waterhouse: Staff want a good work-life balance but to develop a new scheme that best offers that, you have to start with a clear site under a single ownership where you can more successfully plan amenity and green spaces into the scheme. Piecing together an existing brownfield site like that in Croydon would take considerable time, plus you’d lose industrial space and potentially businesses in the short and medium term as you demolish existing buildings to redevelop. It’s not easy to start again from scratch in an already built up area without significant forward planning.
This event was the first in a series of round table events that Develop Croydon will be hosting. Actions from this debate will be taken forward with attendees and additional parties and further dialogue will be had during the Develop Croydon Conference, 19 November.
