- Sharp decline in office development and historic undersupply of Grade A space could impact services economy and ability to attract and retain leading businesses and talent
- City centre office space should be awarded same infrastructure status as data centres, gigafactories and laboratories under new planning rules to fast-track development and support Government growth plans
- Service industries account for 81% of UK GVA and 83% of UK employment.
The London Property Alliance (LPA), which represents the leading real estate developers and investors in central London, has called for office space in core business districts to be given the same infrastructure status as data centres and gigafactories to address a sharp decline in development and support the services economy.
In its consultation response on revisions to the National Planning Policy Framework (NPPF), which closed this week [24 September], the LPA highlights a sharp decline in office development in central London, with the number of major planning applications determined across the Central Activities Zone down 54% in 2023 vs 2013. According to Knight Frank, the vacancy rate of Grade A office space (new or newly refurbished) that meets the needs of leading businesses and their staff is at an all-time low of 0.6% and 0.4% in the City of London and Westminster respectively.
The LPA is calling for city centre office space to be considered as critical economic infrastructure in national planning policy to help boost productivity and growth, particularly for the service industry which accounts for 81% of the UK’s total economic output and 83% of employment.
Under the changes proposed by the LPA, planning proposals for offices would receive the same support as data centres, gigafactories and infrastructure, with local authorities having to set out in Local Plans where future demand for space will be met.
A separate report by the LPA published earlier this year, Good Growth in Central London, found that changes in planning policy would deliver a huge economic boost for the UK. According to the report authored by Arup, a more ‘balanced and flexible’ approach to planning in central London would enable an additional 41m sq ft of office space to be delivered by 2045 (vs current forecasts) which in turn would generate an additional £101bn (GVA) for the UK economy over the same period.
Charles Begley, Chief Executive, London Property Alliance, said: “Offices are the engine rooms of the UK economy, which is heavily dependent on the services sector. This supports a diverse mix of employment, boosting productivity, innovation and sustaining a wide variety of retail, leisure and hospitality businesses in our towns and cities.
“Modern, sustainable and amenity rich offices are critical in attracting talent and ensuring businesses are well placed to operate and compete globally. But attracting investment and securing planning consent has become increasingly challenging. The Government should not miss this opportunity to help reverse this trend, which is acting as a drag on growth, and supercharge the UK economy.”
Read the full response here
