GOOD GROWTH IN CENTRAL LONDON

Good Growth for Central London Analysis of the CAZ+ from 2020 to 2041

Generously supported by

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Foreword Good Growth in London’s Central Activities Zone Everyone knows central London. Films, television, books and photographs have filled our minds with images of its streets and history.

Landmarks such as Piccadilly Circus, St Paul’s and the ‘Post Office Tower’ are reference-points for people all over the world. But from Shoreditch to Soho, Carnaby Street to Canary Wharf - it is a real place where people work, live and play within an intense ‘downtown’ environment. It is also one of the most economically productive places on earth.

This report looks at the recent evolution of London’s ‘central activities zone’ (CAZ+), the area commonly referred to as ‘central London and the northern Isle of Dogs’ and which takes in growing areas south of the river. It shows how office, retail and employment have changed in the past two decades, suggesting that the centre of London has become even more efficient in the use of office space, while providing more homes for the growing number of people who live there. Part of the area’s success has been its capacity to facilitate the growth of population and employment within the most densely crowded part of the UK. There are challenges in accommodating new development within an already-crowded city centre. Planners must balance the legitimate demands of existing residents and businesses with the need to allow more environmentally benign development. Because of its flexibility, productivity and accessibility by public transport, the centre of the city can deliver remarkable levels of economic output with minimal environmental impact. Such benefits could be further enhanced by well-planned development in the coming years.

Nor does additional development necessarily

mean high-rise buildings in all parts of central London. The report makes clear there are marked differences in the density of employment and residents within the existing, relatively lowrise, West End. There will inevitably be opportunities for taller buildings in, for example, the City and Canary Wharf even if they are not encouraged in all parts of the CAZ. Against this backdrop, the report analyses possibilities to increase development in the central area during the next 20 years or so.

Targets for commercial and retail development mean the boroughs and City Hall will need to step up efforts to deliver more space for offices, shopping and homes. The arrival of Elizabeth Line services will create further opportunities for more densely developed streets and squares. Indeed, if there is not additional development along the new line it is almost inevitable that existing occupiers would be priced out by rising rents.

The analysis examines three options for the future: ‘good growth’, ‘planned growth’ and ‘decline of sorts’. In doing so, the Arup team have considered the options available to deliver significantly intensified uses of existing land and buildings or, alternatively, futures where central London grows only modestly or even declines somewhat.

The future is not pre-ordained. Other major cities in the UK and overseas compete for talent and investment. The centre of London can be planned in such a way that makes it attractive to development, delivers better buildings and provides homes for more residents. Or it can (accidentally or otherwise) go into reverse.

Between the 1950s and 1980s, inner and central London suffered rather more than ‘decline of

sorts’: population declined sharply. Employment held up between the 1950s and 1970s, but then also declined. Today’s buoyant and selfregenerating city centre cannot be taken for granted.

Economic and population growth in the centre of a 1000-year old city requires sensitive and proactive planning policies. Handled well, the boroughs would reap substantial public support by being able to improve the quality of streets, buildings and open spaces. There are also benefits in terms of increased local business rate receipts.

Given central government’s desire to ‘level up’ the economy of the Midlands and the North of England, London authorities will inevitably find themselves driven more towards raising their own resources locally.

Central London looks different than it did in 1990. By 2050 it will be different again. Good growth can provide resources to deliver better streets and services. Standing still, or worse decline, is not an option for any part of this critically important area if it is to deliver the homes and jobs required for the future. Choices face the central boroughs and the Mayor. How they respond will determine the future success of London and, indeed, the rest of the country.

Professor Tony Travers London School of Economics and Political Science March 2020

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Executive summary

The study area

Contents

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Executive summary

Study area

Baseline analysis

Defining good growth in the CAZ+

Model methodology

Scenarios

Scenario results

Recommendations

Appendices

Appendix 3

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Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Acronyms and abbreviations ACE – Art, Culture and Entertainment

Local Government

BCO – British Council for Offices

NO2 – Nitrogen Dioxide

BRES – Business Register and Employment Survey

NIA – Net Internal Area

CAGR – Compounded Annual Growth Rate

NPPF – National Planning Policy Framework NioD – Northern Isle of Dogs

CAZ+ - Central Activities Zone + Northern Isle of Dogs

OAPF – Opportunity Area Planning Framework

CPA – City Property Association

ONS – Office for National Statistics

EEA – European Economic Area

PTAL – Public Transport Accessibility Level

F&B – Food and Beverage

SPG – Supplementary Planning Guidance

FTE – Full Time Equivalent

SIC – Standard Industrial Classification

GLA – Greater London Authority

Sqm – Square metres

GVA – Gross Value Added

TfL – Transport for London

HCA – Housing and Communities Agency

ULEZ – Ultra Low Emission Zone

HGV – Heavy Goods Vehicle

VOA – Valuation Office Agency

LDD – London Development Database

WESPRA – West End Special Retail Policy Area

LPA – London Property Alliance

WCC – Westminster City Council

LSOA – Lower Layer Super Output

WPA – Westminster Property Association

MHCLG – Ministry of Housing, Communities &

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Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Acknowledgments We are very grateful to Charles Begley, Executive Director London Property Alliance and its members (shown opposite) for commissioning and sponsoring this work. Without them it would not have been possible.

We are also hugely appreciative to Professor Tony Travers of the London School of Economics & Political science for his invaluable advice and generosity in advising, reviewing and supporting our work during this commission.

Having said all this, as always, any errors or omissions remain entirely the responsibility of the authors, along with the opinions and recommendations included in the report.

Alexander Jan, Chief Economist Ove Arup & Partners Limited Alexander.Jan@arup.com

The London Property Alliance brings together the WPA and CPA. These are not-for-profit advocacy groups with a combined membership of over 420 organisations. The Alliance provides a unified voice for the leading owners, developers, investors and professional advisors of real estate across Central London. Activity is based around three core principles: policy, research and engagement. The WPA and CPA make representations to policymakers at local and national level, publish thought leadership research reports and develop a strong engagement programme to allow members to expand their network and industry knowledge.

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Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Photo credits The photos used in this report have a worldwide copyright license to be used for free. We would like to thank the photographers to encourage them to continue sharing great images of Central London.

Annie Spratt

Paul Schellekens

Chris Davis

Robert Bye

Christof Timmermann

Rocco Dipoppa

Collins Lesulie

Roman Fox

Fas Khan

Sabrina Mazzeo

Gavin Biesheuvel

Sander Crombach

Greg Mak

Sid Balachandran

Janne Rakkolainen

Simon Hutsch

John Dogag

Simon Zhu

Joseph Chan

Theo Tsongidis

Karl Bewick

Toa Heftiba

Lachlan Gowen

Tom Coe

Luke Stackpoole

Viktor Forgacs

Matthew Foulds

Will Kennard

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Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Important notice This report has been prepared specifically for and under the instructions and requirements of the London property Alliance, under an appointment dated 1st July 2020 in connection with assessment of future growth scenario for the CAZ+.

This report is prepared for use and reliance by our client only. No third party is entitled to rely on this report unless and until they and we sign a reliance letter in the form attached to our appointment. We do not in any circumstances accept any duty, responsibility or liability to any third party whatsoever (including property investors whether by bond issue or otherwise) who has relied on this report in circumstances where they and we have not signed a reliance letter in the form attached to our appointment. Accordingly, we disclaim all liability of whatever nature (including in negligence) to any third party other than to our client, or to any third party with who we have agreed a reliance letter (and such liability is subject always to the terms of our agreement with the client and the reliance letter with the third party).

In preparing this report we have relied on information provided by others and we do not accept responsibility for the content, including the accuracy and completeness, of such information.

In no circumstances do we accept liability in relation to information used by us which has been provided by others.

We emphasise that the forward-looking projections, forecasts, or estimates are based upon interpretations or assessments of available information at the time of writing. The realisation of the prospective financial information is dependent upon the continued validity of the

assumptions on which it is based. Actual events frequently do not occur as expected, and the differences may be material. For this reason, we accept no responsibility for the realisation of any projection, forecast, opinion or estimate.

Findings are time-sensitive and relevant only to current conditions at the time of writing. We will not be under any obligation to update the report to address changes in facts or circumstances that occur after the data of our report that might materially affect the contents of the report of any of the conclusions set forth therein.

No person other than our client and any party to who reliance has been expressly permitted by us pursuant to a reliance letter may copy (in whole or in part), use or rely on the contents in this report without out prior written permission. Any copying or use of this report (in whole or in part) by any party whatsoever shall be accompanied by or incorporate this notice at all times.

We accept no responsibility for, and have not authorised, the contents of any report, prospectus, supplementary prospectus, listing particulars, supplementary listing particulars, presentation or other document or communication in respect of the sale, acquisition, offering or transfer of any shares or securities or interest in them, whether on the primary or secondary market or otherwise, which uses, includes or incorporates any report, deliverable or information, or any element thereof, prepared by us under or in connection with this agreement Ove Arup & Partners Limited March 2020

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Executive Summary

8

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Executive summary Purpose of this study Following on from its West End Good Growth report for the GLA and Westminster City Council in 2018 and a similar commission for the Heart of London Business Alliance (HOLBA), Arup was commissioned by the London Property Alliance (LPA) (comprising the Westminster Property Association (WPA) and City Property Association (CPA)) to provide insights into the performance of the CAZ+ from a “Good Growth” perspective. Using a similar approach to the previous assignments, the focus of this work has been to think about the extent to which central London can be said to be fulfilling its wider strategic and day to day aims – as set out by policy makers - to deliver on economic growth, employment, floorspace for commercial activities, tax generation and housing. At the same time, there is a focus on the mixed and varied use of the CAZ+, sustainability and meeting the needs of residents. This report is a first attempt by Arup for the LPA to look at a range of these measures and how different geographies of the CAZ+ are progressing. It may be possible to revisit and update our analysis on an annual or bi-annual basis in future years.

In the aftermath of UK’s decision to leave the European Union - and for other reasons - London’s CAZ+ is going through a period of very considerable change. Structural changes in the retail market, the advent of the Elizabeth (Crossrail) line, an evolving financial services sector (including the dramatic growth of Fintech) are all examples of this. From a planning perspective, Camden’s revised supplementary planning document for its part of central London, Westminster City Council’s revised draft City Plan and the new draft London Plan to 2041 represent further change from a development control perspective.

As detailed in this document, the future of the CAZ+ is of vital importance to London, its citizens and the UK economy as a whole. Growth levels for employment and housing in the CAZ+ have been set out in the 2016 and (draft) 2019 London Plans but whether these numbers are achievable – or as we advocate (in some cases) can be exceeded - and what needs to be done to secure them, is (based on historical performance) likely to be a major challenge for many of the ten boroughs, City Hall, investors and anyone with a stake in the future of central London. The latest challenge – in the form of the Covid-19 virus out break may prove to be a challenge not only for London but may world cities, at least in the short term.

In this context, 2020 provides a timely opportunity to assess whether the CAZ+ can deliver on and meet its broader good growth obligations. These include an assessment not only of the traditional sectors that make up the CAZ+ economy (such as finance, legal, food & beverage and “conventional” retail) but also fintech, entertainment, cultural institutions, future retail (with a focus on ‘experiential’ offers, flagships) – and an understanding of how these fit together to maximise good growth.

This research assesses future growth scenarios for the CAZ+. We recognize that the numbers projected for the growth scenarios are never going to be “accurate” or “right”. But we hope the at the analysis stimulates debate and that it can be used to inform a range of decision-makers in understanding and highlighting the progress on good growth that is being made in CAZ+. The benefits accruing from the good growth scenario for London and Londoners and indeed anyone with a stake in central London - including at a national level - are potentially very substantial and we believe, well worth pursuing.

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Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Executive summary Study methodology The figure opposite summarises our overall approach to generating our good growth assessment for various scenarios along with our recommendations. We have followed a structured approach combining a comprehensive review of relevant planning policies along with detailed economic modelling to allow us to synthesize our good growth with analysis as to how the CAZ+ has been performing since around 2000.

To arrive at our projections for the CAZ+, we constructed a range of scenarios that have been used to.

The results of these have then been subject to an assessment alongside recommendations as to how this type of growth can then be best delivered. The main body of this report is largely structured to follow this approach. Appendices provide supplementary detail.

To inform projections for the CAZ+, we undertook a detailed analysis to estimate the effects of major trends which we consider are likely to have an impact on the characteristics and composition of land uses. The analysis was undertaken in two parts:

•

A review of the existing planning policy context, historical data and growth targets covering key variables (employment, GVA, floorspace and so forth)

•

A review of the drivers of change across principal sectors of economic activity

CAZ+ growth targets

Good Growth vision for the CAZ+

Baseline analysis CAZ+ existing economic conditions

Trend analysis

Policy review

Scenario development and modelling

Scenario results Source: Arup

Good Growth assessment

Recommendations

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Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Executive summary Summary of results Three scenarios were developed as to how the future economic conditions in the CAZ+ might develop. These were based on an interrelated set of assumptions about key sectoral relationships and trends emerging from a number of drivers of change involving local planning, labour and international trade policies, as well as different levels of infrastructure investments and quality of the urban environment.

These scenarios have been developed up to 2041 and are reproduced overleaf.

•

The good growth scenario sees a net increase of 3.6 million sqm of employment floorspace and a gain of nearly 392,000 gross* jobs for CAZ+

•

The planned growth scenario sees a net increase of 1.0 million sqm of employment floorspace and a gain of 233,000 gross jobs

•

The ‘decline of sorts’ scenario sees a net loss of 1.6 million sqm of employment floorspace and a loss of 122,000 gross jobs All monetary results are expressed in £2019 prices

(*ie before accounting for any offset in employment in other parts of London)

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Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Executive summary Recommendations to secure good growth in the CAZ+ Governance and leadership 1. Ensure that the case for good growth for the CAZ+ is understood in the context of the rest of the UK’s economy and that the case for a thriving CAZ+ area is made to and supported by Central Government.

2. Improve collaboration between a range of CAZ+ stakeholders, including the GLA, Boroughs, business improvement districts (BIDs), investors, the construction industry and neighbourhood forums, to respond quickly to emerging disruptive factors

6. Consider whether new and/or existing revenue streams could be used more effectively to help resource activities tackle the externalities of success. The aim of this recommendation and recommendation 4 would be to secure long-term sustainable funding of city management services for the CAZ+ area. (See also recommendation 7 below).

7. Improve transparency around Section 106/CIL payments so that there is better understanding of the contribution the private sector is making through these financial mechanisms.

Transport, infrastructure and housing

3. Ensure that London government adopts a more flexible good growth planning approach – for example in relation to retail and “experiential” uses and allowing floorspace growth close to major transport nodes. This would allow the CAZ+ to fulfil more of its economic potential.

8. Make the best use of new transport capacity that will benefit the CAZ+ to facilitate growth in employment and where practicable, housing for the benefit of those who wish to work or live in the CAZ+.

4. Regularly review how the CAZ+ area is performing against a set of Good Growth objectives and targets and highlight successes and opportunities for further improvement

9. Support policies that are aimed at providing a range of housing tenures to meet various needs and affordability criteria.

Finance and incentives 5. Encourage key stakeholders to lobby Central Government with a single voice for greater devolution (including over fiscal powers and specifically business rate retention) for the CAZ+ area as part of the wider London and UK cities’ empowerment agenda.

Quality of life 10. Strengthening the enforcement and management of construction sites, utility activities, road works and anti-social behaviour to mitigate the negative impacts of built environment activities on local neighbourhoods.

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Study area

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Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

The study area CAZ+ spatial definitions

4,170,305

100%

Hackney

2,625,310

3%

648,901

12%

19,897,618

57%

Camden

3,149,382

19%

Kensington and Chelsea

2,382,915

5%

14,365,321

65%

3,646,578

10%

531,609

8%

Southwark

1,042,674

13%

Wandsworth

2,072,295

3%

CAZ West End

Westminster Riparian South Lambeth

35,005,419

Aldgate

Holborn

Barbican

Canary Wharf

City of London

Borough

16%

Waterloo

4,016,707

Vauxhall

Islington

Source: Arup

33%

Source: Arup

11,461,223

Tower Hamlets

CAZ+ total

Share within CAZ+

Victoria

City and the East

Area of intersect (sqm)

Knightsbridge

Area

Baker St

The Central Activities Zone (CAZ) has a distinct economic geography, containing a range of concentrations of largely service sector industries, cultural features and neighbourhoods. Although separate from the CAZ, the Northern Isle of Dogs (NioD) has very close functional relationships with the CAZ in terms of its global financial and business services functions. As such it is often included by planners or economists when studying the centre of London defined as the “CAZ+. Unusually for a major city, the centre of London is shared across no fewer than ten London boroughs, (as shown below and in the map opposite). The methodology used for this study (detailed in Section 4) accounts for the proportion of each borough that falls within the CAZ+ boundary.

Euston

CAZ+ study area

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Baseline analysis

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Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Baseline analysis CAZ + | its national importance The CAZ+ represents the vibrant heart and globally instantly recognizable core of London. Despite the uncertainty caused by Brexit, it remains one of the world’s most attractive and competitive business locations. It accommodates one third of London’s jobs with remarkable pulling power for attracting international and highly-skilled workers. It generates almost 10% of the UK’s output and large tax (fiscal) surpluses that are spent on providing vital public services elsewhere in the country. It contains the seat of national Government and is internationally renowned for its culture, night-time economy, tourism, shopping and heritage. It is home to more than 300,000 residents.

The density, scale and mix of business functions and activities in the CAZ are unique and are underpinned by the high level of accessibility provided by public transport, walking and cycling networks within the area connecting to other parts of Inner and Outer London, as well as to other parts of the country. This “hyper-connectivity” within the capital and beyond allows regional labour supply to access the area. This agglomeration results in exceptional levels of productivity of national significance, which are not replicated anywhere else in the United Kingdom.

A report produced by Arup (2019) on “London’s relationship to the rest of the UK” highlighted the importance of intra-firm linkages in driving economic activity in the UK and indicated that a substantial number of UK firms extend further than their headquarter locations, which are mostly located in London. This suggests that what is good for London is good for the rest of the UK and vice versa. London and the CAZ+ needs to leverage its contribution to nationwide and employment, productivity and growth.

The CAZ has important clusters in areas such as tech, the creative industries and life sciences, adding to its strength in the business, professional and financial services sector, arts and culture, health, education and law. A supportive policy approach to the wide variety of business space requirements, quality, and rental values is essential to enable these sectors to flourish and for small and mediumsized enterprises to fulfil their economic potential alongside larger businesses.

On the following two pages we have summarised key metrics for the CAZ+ and shown those key metrics relative to the country, before exploring them further in the report.

Key takeaways • • • •

The CAZ+ represents an area of national and global significance – attracting and retaining people and business is crucial to its long term success and the success of the UK economy as a whole.

With increasing globalisation and digital innovation, competition from other global cities is an ever-present competitive pressure.

Much of the success of the CAZ+ is due to its hyper-connectivity to other parts of Greater London and the wider south east region.

Retaining a rich mix of uses in the CAZ+ including residential is important to maintain the culture and vibrancy of the area and create grass roots pressure to maintain public services.

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Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Baseline analysis CAZ + | Key metrics (2020 estimates) Commercial floorspace (sqm)

Residential

Dwellings

154k

Residents

310k

Retail

2.0m

Office

20.7m

Hotel

2.9m

F&B

1.0m

London total

Land area 2.2% of London’s total

0.01% of UK’s total

44% of London’s total

11% of UK’s total

Employment 31% of London’s total

7% of England and Wales’ total

CAZ+ proportion

Business Rates Revenue 55% of London’s total

19% of England’s total Source: Arup analysis

Entertainment 1.2m

Economic output

UK total

Economy

Enterprises

585k

Equivalent to 22% of all units in London

Jobs

1.9m

In 2020, equivalent to 31% of all jobs in London

GVA

£211bn

In 2020, equivalent to c11% of UK’s output (2019 prices)

Business rates £4.6bn In 2020, generated annually (2019 prices)

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Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Baseline analysis Cultural and heritage assets The CAZ+ contains a substantial proportion of London’s cultural, entertainment and heritage infrastructure, many of which are of national and global importance. This “ecosystem” is underpinned by network of smaller venues that plays an equally significant role in bringing variety to the cultural offer. Ranked as the third most visited city in the world in 2019, cultural tourism makes a significant contribution to London’s economy, supporting an estimated 80,000 jobs. Successive London Plans have identified strategic clusters of cultural, entertainment and visitor attractions: • The West End; • Areas around Soho, Coven Garden, Piccadilly, Haymarket and Shaftsbury; • Palaces and Parks; • South Bank; • North Bank; and • Knightsbridge and South Kensington Museum quarter.

Cultural assets in the CAZ+

Local and specific clusters can be identified looking at the GLA’s Cultural Infrastructure Map. Notable clusters include: • Artists workspaces in North East (Hackney, Hackney Wick and Hoxton) and South (Waterloo); • Cinemas (Soho and New West End); • Commercial and private galleries (significant cluster in Mayfair and St James and a few in Shoreditch); • Fashion/textile design and manufacturing businesses (Bloomsbury cluster, and in Shoreditch); • Jewellery design and manufacturing (around Hatton Garden); • Listed building (predominantly in Westminster – Marylebone/Mayfair/Oxford Circus/Piccadilly Circus – but also Shoreditch, Highbury and Islington, Bank/Monument) • Music venues (Shoreditch, Camden, Dalston) Whilst at present the Northern Isle of Dogs (NIoD) has a lower density of cultural assets than the rest of the CAZ, it is often host to international events in the sporting world such as the Canary Wharf Squash Classic, and hosting stages of the London Marathon.

Source: GLA; Arup

Key takeaways • • •

•

London’s cultural attractions - which are highly concentrated in the CAZ - are critically important in maintaining and securing London’s position as a world city for entertainment and tourism, which in turn act as a driver for investment.

They also help London to be an attractive “liveable city” for residents in and outside of the CAZ+ area Businesses reliant on high-skilled workers tend to cluster in locations offering quantity an quality of cultural and leisure amenities.

Supporting cultural assets and tourism is therefore a strategic priority which should (continue to be) reflected in planning policies and decisions.

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Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Baseline analysis CAZ+ residential dwellings | annual net additions

Residential dwellings

1,885

Residential dwellings

2011

CAZ+

141,438

153,481

City and the East

33,015

36,650

CAZ West End

78,148

83,396

Riparian South

30,275

33,435

CAZ+ average dwelling density (people/dwelling) Dwelling tenure of net additional units 2011-19

Key takeaways

•

Social Rented, 6% Intermediate , 5%

1,570 1,313

1,285 954

1,085 885 685

621

485

285 85 2013

City and the East

2014

2015

CAZ West End

2016

2017

Riparian South

2018

CAZ+

2019

Dwelling density (2018 estimates)

2.27 Affordable Rent, 3%

Market, 86%

The CAZ+ is home to many hundreds of thousands of residents.

The 10 boroughs covering the CAZ+ (as with others) have challenging housing targets.

Maintaining and improving the variety of tenure, geographical spread and quality of homes in the CAZ+ can ensure that the CAZ+ remains attractive to businesses, visitors and those who live here.

International research by Arup has identified the importance of thriving residential communities in city centres to their wider wellbeing and economic success as long as the potential conflicts between different activities is be properly managed through planning and enforcement activities.

Source: Costar

• • •

2.06

1,445

2012

2020

1,634

1,485

Dwellings

The annual net addition of residential dwellings grew substantially between 2013 and 2014, reflecting a general upturn in the housing market in the city, post-financial crisis. However since 2014, net additions have dropped off slightly with around 1,300 additional units added in 2018. The City and the East, and the Riparian South (see page 12 for a definition of these and other areas used) grew their residential stock by around 2,800 and 2,400 respectively between 2012 and 2018, whilst the CAZ West End, notably an area more than double the size of the other two sub-areas, grew by just over 4,000 residential units in the same period.

1,685

Source: London Development Database

Whilst known globally and nationally as a commercial hub, it is crucial to remember that the CAZ+ is also home to more than 300,000 people. The number of homes in the CAZ+ has increased in the last 10 years, from 141,438 in 2011 to an estimated 153,481 dwellings (2020), covering an estimated area of 2.4m sq. of floorspace. This is more than four and half times as much floorspace as retail uses in the CAZ+.

1,726

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Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Baseline analysis

Appendix 1

Appendix 2

Appendix 3

CAZ+ residential growth 2011-2018

Residential population

With more residential growth in the West End CAZ, there will be a need to balance this with demand for employment space. This will mean carefully managing the pace, location and quality of growth in the commercial and residential sectors and limiting adverse impacts. On a more positive note, developing further complementary education and skills programmes across the sub-area, or reserving a certain portion of new commercial stock for local start-ups, social enterprises, or third sector organisations might be a way of strengthening linkages between residential communities and businesses – perhaps with an emphasis on less well off parts of the community.

2011

400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 -

CAZ West End

Riparian South

CAZ+

347,968 291,821

2011

2012

2013

2014

2015

2016

2017

2018

Source: ONS, Arup

GLA analysis indicates that the population of the CAZ+ will increase by around 128,000, or 37% in the years to 2050. The borough which is expected to see the largest growth is Westminster (47,500) based on the quantum of area inside the CAZ+ (some 65% of Westminster’s total). This level of growth is perhaps therefore not surprising, but it does indicate a substantial level of residential development that will be required if these projections are to play out in reality.

population

City and the East

Some 55,000 people lived in the CAZ+ in 2018 compared to 2011, due largely to a increase of around 28,000 in the West End and almost 18,000 in the City and the East. By contrast the Riparian South’s population in those seven years grew by around 10,000 reflecting their smaller geographical areas and perhaps the amount of land that is actually under development (Nine Elms and Vauxhall). As the previous page highlighted, residential density is relatively low in the CAZ+ (and certainly by London’s historical standards). This means there is an opportunity for further growth.

Residential population

Recommendations

Population density (2018 estimates)

2018

CAZ+

291,821

347,968

City and the East

69,319

87,085

CAZ West End

154,832

182,578

Riparian South

67,671

78,305

Key takeaways •

•

Source: Costar

•

The CAZ+ residential population is set to grow particularly in the CAZ West End. Although density will remain low by historical standards.

Residential populations play an important role in the shaping of a city, not least because they elect and hold political leaders to account and provide pressure to deliver better public services that workers and visitors also benefit from.

As CAZ+ grows as a centre of employment and commercial activity, the needs of residents need to be taken into account. Often there are opportunities that are mutually beneficial to both residents businesses.

20

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

120

Baseline analysis

The City and the East sub-area, where the highest concentration of commercial floorspace is located, is the only area which has experienced overall growth since 2001, returning to pre-crisis growth rates in 2011. Despite a considerable downturn during the financial crisis, commercial floorspace growth for City and the East has remained higher than the 2001 rate.

In overall terms, commercial floorspace has not grown significantly in the CAZ+ despite strong growth in employment numbers. Taken together, it is perhaps not surprising that vacancy rates have hit some of their lowest levels in key sub-markets, steadily decreasing over the past 10 years.

Appendix 1

Appendix 2

Appendix 3

Commercial floorspace indexed growth (2000=100)

110 105 100

95 90 85 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 City and the East

CAZ West End

Riparian South

CAZ+

Commercial floorspace ‘heatmap’ using 2020 data

Index

Higher

Key takeaways •

•

Lower 21

Source: Costar

concentration of floorspace

•

There has been considerably higher growth in commercial floorspace in the City and the East compared to the other parts of the CAZ+, led by the City of London, Tower Hamlets and (within Tower Hamlets) Canary Wharf Group.

The other two sub-areas of the CAZ+ have seen lower rates of (or even negative) growth. In the case of CAZ West End this is despite the advent of Crossrail. Residential concerns about the actual and or perceived impact of growth are important factors.

In the Riparian South, the decline in commercial floorspace may well have been because of redevelopment in the Vauxhall Nine Elms area.

Source: Valuation Office Agency; Arup

With respect to supply of commercial floorspace, the CAZ+ has experienced a slight increase in commercial floorspace since 2001 thanks to relatively modest but steady growth, post the financial crisis. However, there has been a reduction in available commercial floorspace in CAZ West End (despite the anticipated arrival of Crossrail and Tube upgrades) and the Riparian South. The latter has experienced the biggest fall in growth across the three sub-areas, but interestingly saw a increase in floorspace between 2007 and 2009 when the two other areas (City and the East, CAZ West End) saw slower or indeed negative growth. The overall downward trend in commercial floorspace (all types) in the Riparian South might be due to land being redeveloped (for example, Nine Elms/Vauxhall).

Recommendations

115 Index growth (2000=100)

Commercial floorspace (all types)

Scenario results

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Baseline analysis Commercial floorspace (all types) (cont.)

CAZ+ commercial floorspace by property type 2020 (estimates)

Looking at a 2020 snapshot, the City and the East, and the CAZ West End areas have approximately the same volume of commercial floorspace, around 12 million sqm, whereas the Riparian South has around a third of that (4 million sqm). In all three sub-areas, the vast majority of this commercial floorspace is office, but there is a greater mix of uses in the West End than in the City or Riparian South. Riparian South enjoys nearly twice as much entertainment space as the other areas whilst the West End dominates in terms of retail.

Area

628,400 125,000 300,200 30,500 172,700 1,219,500 187,900 131,800 899,900 194,000 63,500 92,300 38,200 2,041,900

Office

Hotel

F&B

10,033,600 808,400 327,600 1,599,000 184,600 67,100 5,822,300 226,700 125,100 510,300 116,100 44,100 2,102,000 280,900 91,300 8,507,500 808,400 327,600 2,365,900 463,900 112,200 52,200 56,000 2,400 6,089,400 1,120,700 396,100 2,103,000 454,000 178,500 516,900 224,900 66,500 1,574,100 212,100 111,500 11,900 16,900 500 20,644,000 2,903,000 1,016,700

12,000,000

Entertainment 197,400 58,300 80,600 15,200 43,300 197,400 215,300 45,900 401,000 313,000 134,100 178,900 1,172,600

10,000,000

8,000,000

Source: Costar, Valuation Office Agency; Arup

City and the East CAZ+ Islington CAZ+ City of London CAZ+ Hackney CAZ+ Tower Hamlets CAZ West End CAZ+ Camden CAZ+ Kensington and Chelsea CAZ+ Westminster Riparian South CAZ+ Lambeth CAZ+ Southwark CAZ+ Wandsworth CAZ+ total

Retail

12,540,500

11,995,300

Sqm

Floorspace (sqm)

14,000,000

6,000,000

4,000,000

3,242,500

2,000,000

Key takeaways • • •

There is much more of a mix of commercial uses in the CAZ West End when compared to the other two sub-areas. This is partly a function of historical factors but also the CAZ West End being the largest area overall (some 57% of the CAZ+).

In terms of commercial floorspace, City and the East dominates with over 10m sqm Despite its modest size (just 10% of the CAZ+) Riparian South is the largest “provider” of entertainment space.

City and the East

Retail

Office

CAZ West End

Hotel

F&B

Riparian South

Entertainment

22

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Baseline analysis Office rents

The West End has the highest office rents of the three sub-areas of around £700 per sqm. Highest office rents are found in Mayfair, followed by Covent Garden, well above the London average of around £540 per sqm. City and the East and Riparian South have similar average office rents, at around £530 per sqm. The lowest rents can be found in the East London fringe.

Financial crisis

City and the East

12.0%

Costar data

Costar forecast

%

10.0% 8.0% 6.0% 4.0% 2.0% 0.0%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

A vacancy rate of around 5% is generally considered to be optimal the office real estate market to be able to function efficiently.

Intensification of floorspace in the CAZ West End perhaps explains its low vacancy rate combined with historical undersupply of new floorspace and the pressure of Crossrail in driving demand.

The highest rental values are also found in the CAZ West End – reflecting these supply and demand side factors.

Financial crisis

CAZ West End

Riparian South

City and the East

23

Source: Costar; Arup

•

Riparian South

14.0%

Key takeaways

•

Costar forecast

Office vacancy rates

Source: Costar

Commercial property vacancy rates

CAZ West End

•

Costar data

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Most of the sub-markets have seen a similar trend in rents, experiencing substantial rises well after the 2008 financial crisis (in 2013) - with growth slowing at the beginning of 2017. Based on CoStar projections, rents are expected to remain broadly constant until the start of 2022 but pick up thereafter.

900 800 700 600 500 400 300 200 100 -

Source: Costar; Arup

As noted earlier in the report at present, there are very low vacancy rates in the West End and Riparian South, and medium to high rates in the City and the East. In the West End, the average vacancy rate is around 3.5% (2019 figures). This low level has arguably been achieved through intensification of use of existing spaces resulting from increasing employment and an under supply of space. The vacancy rates for City and the East and Riparian South in 2019 were 6.1% and 3.5% respectively.

£/sqm nominal

Office rents and vacancy rates

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Baseline analysis 1,400,000 1,200,000

400,000 200,000

In Central London2, 70% of this construction is new-build and 30% is refurbishment, though this varies between the sub-areas; in the West End, the split is 54% to 46% new build to refurbishment, whilst in Midtown (which largely lies between the West End and City), it is 48% to 52%.

In the West End, technology, media and telecoms (TMT) companies are taking 46% of the new floorspace coming online, with 30% being taken by professional services. In Midtown, corporates are taking 57% of new space. In the City, 36% are being taken by financial services, with 19% being taken by serviced offices – 100% of the new space being built in Docklands is serviced offices. At Vauxhall Nine Elms, 94% of the new is being taken by TMT companies. Overall TMT is taking 43% of all new floorspace in the development pipeline.

1

Note this includes all of Docklands, not just North of the Isle of Dogs.

Note this area broadly covers the CAZ+, but includes all of Docklands (see note above) and does not include Vauxhall and Nine Elms.

2

Key takeaways •

•

City and the East

Office

Hotel

Retail

CAZ West End

Entertainment

Riparian South

F&B

City and the CAZ West East End Office

Hotel

Retail

Riparian South

Entertainment

F&B

Commercial properties under construction based on a snapshot of 2020 data Higher

Lower 24

Source: Costar

•

The majority of proposed development is for office use with hotels next in line. This is also true for development under construction.

The technology, media and telecoms sector is taking most of the new spaces coming online, which might have future implications for the digital infrastructure requirements in the CAZ+.

The Riparian South is mostly seeing commercial development in retail and office categories reflecting in part the dominance of Vauxhall/Nine Elms.

-

1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 -

concentration of floorspace

Of the other uses in the pipeline, both the West End and the City and the East have some 118,000sqm of hotel floorspace under construction or proposed, as well as around 41,000 of F&B floorspace each. Whilst the Riparian South has no significant development in either of these uses, it has the highest volume of retail use being built of the three sub-areas, possibly reflecting some levelling up, or serving the needs of new resident populations.

Sqm

Sqm

1,000,000 600,000

Appendix 3

Development under construction

1,600,000

800,000

Appendix 2

Source: Costar; Arup

According to the Deloitte Winter 2019 Crane Survey, the City and Docklands 1 have 560,000 sqm of commercial floorspace under construction, 230,000 sqm of which is already let. This is the lowest level in the area in three years, down from a high in Q3 2016 when there was around 930,000 sqm under construction.

Appendix 1

Proposed development

Commercial development pipeline Most of the current development within the CAZ+ is happening in the City and the East, followed by the CAZ West End. But Riparian South represents just 10% of the total CAZ+ land area so the level of development under construction and proposed is actually the highest when this is taken into account.

(City and the East accounts for 33% of the CAZ+ and Core West End 57%.)

Recommendations

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Annual business rates generated within the CAZ+ area 2020 (estimated) - (£m 2019 prices)

Baseline analysis

2,776

3,000

Retail Office Hotel

2,500

F&B

The CAZ+ generates an estimated £4.5bn in business rates annually (2020 estimates in 2019 prices).

Across all geographies, the office property market is the highest contributor to business rates.

352

£m 2019

City and the East

CAZ West End

Riparian South

Commercial property average rateable value per sqm growth | index (2000=100) | 2019 real prices City and the East

CAZ West End

Riparian South

CAZ+ Source: Valuation Office Agency; Arup

185

Index (2000=100)

•

Whilst there is more commercial floorspace in the City and the East, it generated less than half the estimated business rate revenue seen in the CAZ West End in 2020.

Riparian South floorspace generates far less in business rates that the other comparator areas (a reflection in part of its much more modest size) but it has seen higher growth in rateable values over the past 18 years, indicating a ‘levelling up’ which is likely to continue.

This may well be driven by the growth in high quality building stock that is coming on line.

1,321

500

The West End has a slightly more diverse base than the other two areas in terms of business rates.

Around 75% of its business rates come from offices, whereas in the City and the East it is around 80%. Whilst this is a marginal difference, it should be noted that 10% of business rates generated in the West End come from hotels, compared to 6% in the City and the East. Disruptors such as Airbnb may affect this income stream in the future increasing the attractiveness of other types of visitor related taxation. The resilience of business rates from retail for all areas in the CAZ+ is also under pressure as growing concerns over high streets and competition from online retail continue apace.

•

1,500 1,000

The boroughs making up the Riparian South too have substantially lower rateable values across all sectors when compared to their north of the river counterparts. Given the high levels of commercial (and residential) development in the Riparian South, one could expect to see continued higher growth in rateable values in that area compared to the (already higher rates) in the West End and City and the East as the range and quality of new space that comes on to the market is delivered.

Key takeaways

Entertainment

2,000

Source: Valuation Office Agency; Arup

Business rates (all uses)

Around 60% of business rates revenue comes from the CAZ West End, followed by City and the East (30%) and finally the Riparian South (below 10%). Given that the volume of commercial floorspace in each of these two areas is broadly comparable (see previous pages) this at first seems surprising.

However this result is understandable when taking into account some of the lower rateable values for office space in the City and the East. Some of these historically lower rateable values in the City and the East compared to the West End perhaps reflect the larger supply of space that was able to keep pace with demand. In turn, lower rates and substantial floorspaces, have attracted businesses, developed the agglomeration of sectors such as finance related services and insurance and built the global reputation of the area.

Appendix 3

165 145 125 105 85 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

25

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Employment density

The CAZ West End has the lowest employment density of the three CAZ+ sub geographies but as we note elsewhere in the report, generates the highest office business rate yields – perhaps a reflection of the quality of the buildings on offer and the fact that businesses are willing to pay a premium for proximity to an array of amenities (parks, cultural venues). There is also the factor of limited supply.

Jobs per hecatre

In the CAZ+, the City and the East Tower Hamlets and the City of London enjoy the highest employment density rate (based on jobs per hectare of land). In the other two sub-areas, density (also) varies considerably between the different boroughs. For example a density of 25 jobs per hectare in Wandsworth compares to 1,500 in Southwark which is home to the South Bank and taller buildings.

2,000

448

375 96 City of London

41

25

Tower Hamlets

Islington

Hackney

Camden

Kensington Westminster and Chelsea

Lambeth

Wandsworth Southwark

Employment density

by CAZ+ sub-areas per hectare of land CAZ+ employment density 707

Jobs per hecatre

700

602

552

454

500 400 300 200 100 City and the East

CAZ West End

Riparian South

CAZ+

26

Source: Business Register Employment Survey, Arup

600

•

1,063

794

-

Key takeaways

•

1,513

500

800

•

1,960

1,000

Some areas in the CAZ West End have potential for densification of employment – if they were used more productively, they could help to improve the value created by the CAZ+ economy by boosting agglomeration effects.

The City and the East enjoy the highest density of employment per hectare of land at the sub-geographic level.

Th CAZ West End has the lowest employment density but (as we note elsewhere) the highest business rate yields (for offices).

Lower density in the CAZ West End is in part due to physical constraints (open spaces and listed buildings) and the different character of the built environment of the area Some sub-areas in the CAZ West End have potential for densification of employment. Investing in these could be beneficial to the CAZ+ zone economy as it further enhances agglomeration effects.

1,746

1,500

The substantial variation in employment density between the City and the East and the CAZ West End may also reflect the fact that CAZ West End is considerably more residential and that its building mix is generally less dense (lower) when compared to the City of London or Canary Wharf (Tower Hamlets) in the east.

•

Employment density by borough for respective CAZ+ areas per hectare of land CAZ+ share of boroughs | employment density

2,500

Source: Business Register Employment Survey, Arup

Baseline analysis

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Baseline analysis Visualising densities The LSE Cities Urban Age Programme, in collaboration with Arup, has created density diagrams showing the number of people living and working in each square kilometre of a 100km by 100km area for cities around the world (see the figures on this page).

London

New York

Hong Kong

There are both positive and negative effects associated with density. Positive attributes of density include a greater variety and availability of shopping facilities, public transport, parks and open spaces, vibrancy, liveliness and neighbours. Negative attributes may include congestion, crime and vandalism, pollution and smaller living and working spaces per person.

Comparing London to New York and Hong Kong as shown here allows us to compare the urban typologies of these three world cities. Residents in London are arguably more willing than residents in New York and Hong Kong to incur the trade-off of living in less dense areas and commute to the central employment area for work.

Peak density (people/km2): 18,769

Peak density (people/km2): 38,242

Peak density (people/km2): 111,100

In London, there are many different urban ‘tribes’ living parallel lives in areas composed on urbanites, or suburban leavers to live in certain areas for given periods of their lives, depending on their age, income and stage of life (early career, young family, retirement age).

The figures to the right show the densities of London, New York and Hong Kong:

Source: LSE Cities, based on LandScan 2010 High Resolution Global Data Set

Peak density (jobs/km2): 141,600

Peak density (jobs/km2): 151,600

Peak density (jobs/km2): 120,200 27

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Baseline analysis

Agriculture, mining, electricity, gas, water and waste Construction Information and communication Real estate activities Public administration; education; health All industries

The density map for London employment on the previous page showed that economic activity is concentrated in the CAZ+. The area is responsible for a large proportion of London’s output. However, official measures of output for the CAZ+ are not readily available from the Office for National Statistics (ONS). To estimate CAZ+ GVA, we have used Lower Super Output Area (LSOA) and borough level data. Using the percentage of the CAZ+ share of boroughs’ full time equivalent (FTE) employment in ten broad sectors (covering the total sectors of the economy), the results of this analysis are shown in the figure to the right. (It should be noted that these numbers are estimates based on Arup calculations and are not official ONS statistics.)

Appendix 3

Manufacturing Distribution; transport; accommodation and food Financial and insurance activities Business service activities Other services and household activities

99,248

85,296 80,000

60,000

40,000

17,242

20,000

City and the East

CAZ West End

Riparian South

28

Source: ONS; Arup analysis

• • •

According to our estimates, the CAZ+ generates almost half of London’s GVA. The CAZ+ area accounted for just over 11% of the UK’s GVA (2020 est.) – some £211 billion – or 44% of Greater London total output.

The CAZ+ represents just 0.01% of the UK’s land mass.

GVA is more mixed in the CAZ West End and Riparian South.

In City and the East business and financial services dominate.

100,000

GVA (£m2019)

• •

Appendix 2

120,000

Given that in 2020, London’s GVA is standing at £476.3 billion (estimated, in 2019 prices), these estimates would suggest that the CAZ+ accounted for around 44% of London’s GVA. UK GVA stood at £1,991 billion (2020 figures in 2019 prices) implying that the CAZ+ accounts for just under 11% of England’s GVA for a land area of just 0.01% of the UK (the CAZ+ is about 35 km² and UK some 242,495 km²).

Key takeaways

Appendix 1

GVA inGVA the CAZ+ shareshare by borough 2019 in the CAZ+ of boroughs in (estimates) 2019 (Arup estimates)

Economic output - Gross Value Added

In the CAZ West End and Riparian South, GVA is generated by a broad range of economic activity.

Business services activity generate the most GVA for those two sub-areas, but there remains a relatively even spread between other sectors. However, as one would expect, in the City and the East GVA is largely created by financial and insurance activities (around 50% of total GVA for the area), followed by business services activities.

Recommendations

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Baseline analysis

1,000,000

902,232

Jobs (FTE)

800,000 600,000 400,000 221,958 200,000 0 City and the East

Riparian South

City and the East

Index (2015=100)

CAZ West End

Riparian South

CAZ+

115 113 111 109 107 105 103 101 99 97 95 2015

2016

2017

2018 29

Source: Business Register Employment Survey; Arup

• •

CAZ West End

CAZ+ Employment growth | index (2015=100)

Key takeaways The City and the East is more “specialised” than the CAZ West End with 65% of employment in financial and insurance activities and business services.

City and the East has been driving employment growth.

Employment growth rates in Riparian South have been catching up with those for the other areas in the CAZ+.

Manufacturing Distribution; transport; accommodation and food Financial and insurance activities Business service activities Other services and household activities

808,488

Five sectors accounted more than 90% of all employees in the CAZ+ in 2018. Employment growth in CAZ+ is mostly driven by the City and the East. However the growth rate in the Riparian South has gradually been catching up with CAZ West End levels in recent years. The CAZ West End growth rate has been comparatively modest.

•

Appendix 3

Source: Business Register Employment Survey; Arup

Agriculture, mining, electricity, gas, water and waste Construction Information and communication Real estate activities Public administration; education; health

The CAZ+ is home to a very large number of jobs and there was a substantial increase in employees in the period 2015-2018. The number of employees increased at a faster rate in the CAZ+ compared to the increases seen in London as a whole; and in City and the East as compared to other CAZ+ geographies. It should be noted that employee growth in the Northern Isle of Dogs (NIoD) was particularly strong. Employment increased from around 100,000 in 2013 to some 49,000 in 2018; 50% in five years.

The nature of employees in the CAZ+ is, as could be expected, heavily concentrated in a few sectors, with business services activities being particularly important in all three CAZ+ sub-areas. The City and the East shows a high concentration of financial and insurance activities compared to the others accounting - with business services - for around 65% of total employment in the area. Information and communication is equally important in City and the East and West End. Looking in greater detail, job mix in the West End is much more diverse, with a significant amount of employment in “Public Administration, Education and Health” and “Distribution, Transport, Accommodation and Food”.

Appendix 2

Employment in the CAZ+ in 2018

Employment composition

In terms of number of employees in London, the CAZ+ accounts for around 37% of the total. Given the calculation that the CAZ+ account for 46% of London’s output this employee figure would imply that employees in this area are generally more productive in GVA terms than the London average.

Appendix 1

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Large business units in CAZ+ (50+ employees)

CAZ+ | Business structure

Micro business units in CAZ+ (0-9 employees) Business units in CAZ

The Riparian South has a lower proportion of micro businesses compared to other parts of the CAZ+ although it enjoys the highest proportion of small and large enterprises of the three sub-areas. This might suggest that the availability of land, and lower rents might be more attractive to growing companies. As noted elsewhere in the report, there has been a decrease in commercial floorspace since 2016 in the Riparian South possibly due to large scale redevelopment of existing commercial land. Once this new development is released, the picture can be expected to reverse.

500+ employees business units (# and as share of total units in study area)

140,000

121,976

124,833

130,149

140,000 120,000

100,000

Business unit

Business unit

120,000

116,562

80,000 60,000 40,000

116,562

121,976 124,833

130,149

100,000 80,000 60,000 40,000 20,000

20,000

-

2016

2017

2018

2019

2016

2017

2018

2019

Large enterprises in the CAZ+

1000+ employees business units (# and as share of total units in study area)

238

0.51%

110

0.24%

CAZ West End

190

0.26%

90

0.12%

Riparian South

63

0.63%

40

0.40%

CAZ+

491

0.38%

240

0.18%

London

930

0.16%

360

0.06%

Key takeaways The CAZ+ area is dominated by micro and small enterprises in terms of business structure.

Large enterprises tend to be over-represented in the City and the East compared to the CAZ West End. Availability of commercial land in the Riparian South (that is in the process of redevelopment) might reflect the lower proportion of micro-businesses in this sub-area

Source: ONS UK Business Counts; Arup

City and the East

30

Source: ONS UK Business Counts; Arup

Whilst there were more businesses in the West End that in the City and the East, the latter contains more employees, indicating that there are a greater number of large businesses. This could in part be linked to the development constraints in the West End meaning that it is more challenging to find large offices for major employers. The GLA suggests that heritage buildings within the CAZ+ support small offices occupiers and that a growing number of them are accommodated in larger multi-let buildings.

•

Appendix 3

City and the East CAZ West End Riparian South

Small business units in CAZ+ (10-49 employees)

In 2019, around 80% of business sizes in the CAZ+ were micro, 15% were small and 5% were large.

The mix of business size has been relatively stable over time (2016-2019), with large businesses (50 or more employees) remaining broadly constant; small businesses (10 to 49 employees) increasing slightly and micro businesses (up to nine employees) increasing more significantly. Between 2016 and 2019, there was an increase of some 13% in the number of businesses in the West End and double that in the City and the East. However, there was a decline n the number of businesses in the Riparian South. As the table below shows, the CAZ+ is home to a greater concentration of large employers (i.e. business units with more than 500 employees) than for London as a whole.

• •

Appendix 2

Business units in the CAZ+

Baseline analysis

Study area (2019)

Appendix 1

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Baseline analysis Public realm The CAZ+ is a complex interwoven mix commercially, physically and culturally. Streets in the area offer a very diverse mix of uses and they provide an important social context for civic, residential and community life. Whilst there has been investment in the public realm throughout the CAZ+ in recent years, crowding remains an issue in many locations. With the advent of amongst other things Crossrail, further investment is needed to enhance its sense of place and to support its attractiveness for investors in the face international and domestic competition. An increase in pedestrian space may well be required to improve pedestrian comfort and enhance capacity. This can help to ensure the CAZ+ remains an attractive destination for retail, leisure and employment as well as residents.

Location of business improvement districts (BIDs) in the CAZ+

The CAZ+ can play to its strengths if it delivers a programme of coordinated actions to improve its public spaces and routes. This can be achieved by the areas business improvement districts (BIDs) and councils working to provide high quality, ambitious and practical interventions aimed at improving the streetscape that help to deliver: • • • • •

More space for pedestrians and cyclists; Better way finding; Improved landscape quality and tree-planting; New traffic free public spaces; and Space for outdoor events and cultural activities.

Source: GLA

Key takeaways • • • •

The CAZ+ offers a diverse and rich mix of commercial and cultural activities.

Further investment in the public realm can help tackle problems of over crowding – boosting levels of pedestrian activity.

This will be important given the advent of Crossrail.

Working in partnership with councils, the CAZ+ business improvement districts can (and are already) deliver public realm improvements.

The CAZ+ area is home to a number of BIDs that can help to secure public realm improvements in the CAZ+ in partnership with the boroughs and GLA

31

Defining Good Growth in the CAZ+

32

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Good growth in the CAZ+ Our definition of good growth for the CAZ+ London Plan targets fulfilled or exceeded – where sustainable – including in economic terms.

The “rich mix” and attractiveness of CAZ+ is enhanced.

CAZ+ maintains and enhance its international positioning for visitors, investment and employers.

CAZ+ is able to generate sustainably the resources to secure the public services required to maintain, invest and enhance the area and London as a whole.

CAZ+ secure maximum advantage and use of public transport and sustainable modes.

Delivers on objectives without administrative boundaries getting in the way.

Green spaces, historical buildings, air quality and other quality of life indicators are maintained and improved.

CAZ+ fulfils its potential as a sustainable, attractive and affordable place for people to live, work and enjoy themselves as well as delivering its regional, national and international roles

The real estate market functions in such as way as to facilitate the good growth factors highlighted above.

33

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Good growth in the CAZ+ Borough-wide historical delivery of commercial floorspace Total percentage change between 2000 and 2018 (borough wide)

As the chart opposite shows, in the period from 2000 to 2018, employment growth in all ten boroughs with areas within the CAZ+ zone outstripped growth in commercial space supply. In Westminster, Wandsworth and Lambeth, commercial floorspace declined as employment grew. As noted earlier in the report, this could be down to a number of factors including the following: •

•

We know that there is widespread development at Lambeth and Wandsworth around the Vauxhall Nine Elms Opportunity Area – a substantial volume of commercial buildings have been demolished to prepare for new development that has not yet come forward, or is not yet subject to business rates; and In Westminster there has been a considerable intensification of use of existing space combined with falling vacancy rates.

From a growth and productivity perspective, it is at best unclear how these working practices will impact on the productivity associated with agglomeration. At the same time, with the advent of Crossrail, there will be additional transport capacity made available in the CAZ+ area – generating potential for tens of thousands more jobs to be located within the zone. Furthermore without an increase in commercial supply, there is a risk is that the CAZ+ will become increasingly unaffordable for many types of businesses and activities which at present help to make the city a broad-based, attractive place for those who live and work in it. This has further implications for the reputation of the CAZ+ in terms of economic balance with some businesses priced out or unable to overcome cost barriers to entry into the CAZ+ area.

Retail floorspace

Jobs

120% 100% 80% Source: Valuation Office Agency, BRES, Arup

As we noted in our report for Westminster and the GLA on the future of the West End, in good growth terms, a continued trend of employment intensification may be difficult to sustain over the long term.

This is because we may be nearing limits as to how low floorspace per worker can fall and remain attractive to the market. Furthermore, vacancy rates are arguably below desired levels for a well functioning property market. Having said this it is true that workstyles continue to evolve with technological and organisational change and innovation. Most notably, we are seeing the continuing spread of ‘agile working’, a term describing a range of workstyles that are technology-enabled, not depending on a single place of work, characterised by a high level of choice and mobility, and usually involving some desk-sharing. Corporate and individual priorities for the workplace are changing, and the traditional employer-employee relationship is evolving as the activity of work increasingly blurs with home, leisure, health and educational needs.

Office floorspace

60%

40% 20% 0% -20% -40% City of London

Camden

Lambeth

Kensington and Chelsea

Tower Hamlets

Islington Wandsworth

Hackney

Southwark Westminster

CAZ+ commercial property - vacancy rates 2009-20 average

Typical range

3.4%

5.1%

6.9% 34

Source: Costar

3.5%

Today’s level

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Defining Good Growth in the CAZ+ Policy context – historical planning

Historical commercial floorspace growth vs. floorspace required to deliver on London Plan targets at borough level Commercial floorspace CAGR - 2000-18 historical performance

On this page we have analysed annualised historic delivery of commercial and residential floorspace compared to targets set in the 2016 London Plan (commercial targets), and the 2019 New London Plan (residential targets).

In terms of residential growth, Lambeth delivered at the annual rate set out in the Intend to Publish London Plan 2019. Westminster, City of London, Islington, and Hackney have performed well historically and if they continue to see homes delivered at a slightly faster rate than has been the case historically might be able to achieve the Intend to Publish 2019 levels.

1.5% 1.0%

CAGR

Apart from the City of London, all the boroughs have not seen commercial space requirements being created at levels set out in the 2016 London Plan. Hackney, Southwark, Islington, Kensington and Chelsea and Camden all saw an increase of office space but saw an overall loss of commercial floorspace over the same period (2000-2018; see opposite) due to lost industrial and sui generis land, or conversion to residential use.

Source: VOA, London Plan, Arup

We have assumed 13.4sqm per job for commercial floorspace (using a weighted average of job density (from the HCA employment density guide and floorspace for each uses), and 65sqm per dwelling for residential property (derived using weighted average size of dwellings; number of rooms in each LSOA and LP dwelling space standards)

Commercial floorspace required CAGR - 2016 London Plan targets

0.5% 0.0% -0.5% -1.0% -1.5% City of London

Camden

Lambeth

Kensington and Chelsea

Tower Hamlets

Islington

Hackney

Southwark

Wandsworth

Westminster

Historical residential floorspace growth vs. floorspace required to meet (Intend to Publish London Plan (2019) levels Residential floorspace CAGR - 2011-18 historical performance Source: GLA, London Plan, Arup

A high-level policy review has been conducted across a number of geographies to determine the different priorities, key challenges, planning drivers, and propensity for growth (in both housing and commercial development) within the CAZ+. Policies from the GLA, as well as the ten local authorities with CAZ+ geographies have been reviewed. Due to differing timelines, a mixture of adopted and draft plans were reviewed, the summary of which is found on the following pages.

Residential floorspace required CAGR - 2019 ITP London Plan targets

3.0% 2.5%

CAGR

2.0% 1.5% 1.0% 0.5% 0.0% -0.5% City of London

Camden

Lambeth

Kensington Tower and Chelsea Hamlets Wandsworth

Islington

Hackney

Southwark Westminster

35

Executive summary

The study area

Good growth in the CAZ

Baseline analysis

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Good growth in the CAZ

CITY OF LONDON

CAMDEN

LONDON

Policy review The CAZ+

Homes

Commercial Space

Retail, Hotels, F&B, Culture

Response to the London Plan

Rich mix of strategic functions and local uses, should be promoted and enhanced; Development Plans should set out the appropriate balance between the various CAZ strategic functions in different parts of the CAZ having regard to local circumstances

Office and strategic function development given greater weight than residential development in most areas of the CAZ, which is not appropriate in certain parts of the City and the East; residential and mixeduse proposals must not lead to a net loss of office floorspace; Vauxhall Nine Elms Battersea and Elephant & Castle have potential to deliver greater levels of housing alongside employment

Support nationally and internationally significant office functions, including the intensification and provision of sufficient space to meet demand for a range of types and sizes of occupier and rental values

The distinct environment and heritage, and concentration and diversity of cultural, arts, entertainment, night-time economy and tourism functions should be sustained and enhanced; support locally-oriented retail as well as international shopping destinations

n/a

Vision for ‘good growth’; recognises its strong relationship with Westminster, adhering to the wider vision for the West End and identifies the challenges in balancing economic, social and cultural roles to promote the area as a successful and vibrant part of the capital;

Ensure that all available sites deliver as much additional housing as possible; support residential communities by protecting amenity, promoting improved community safety and supporting community facilities;

Encourage the provision of employment premises and sites in the borough; support the strategic functions of the CAZ; seek to ensure that development contributes to London’s economic, social and cultural role while meeting the needs of local residents and respecting their quality of life; use Article 4 directions to protect office space suitable to small and medium sized businesses

Work with partners to deliver the West End Project, which will boost business and create new public spaces for the community and visitors to enjoy; preserve and enhance the area’s historic environment; manage the location and concentration of food, drink and entertainment uses and their impact

Prioritise new office development over new residential development in the West End and the clusters of specialist CAZ strategic function. Seek to secure half of additional floorspace as housing – giving equal weight to new residential development and new development for CAZ strategic functions including offices.

n/a

Not a significant focus but the corporation will protect existing housing and amenity and provide additional housing, concentrated in or near identified residential areas; provide a minimum of 35% affordable housing on-site

Protect existing office stock; provide new office space and be open to new ideas and new ways of working, reflected in office floorspace that is flexible and adaptable to meet the demands of different types of business occupiers; encourage provision of affordable office workspace

Support a significant increase in the number of visitors; protecting existing cultural facilities; conserve and enhance heritage assets; support development of creative enterprises; allow hotel development where it supports the primary business or cultural role of the City; improve the quantity and quality of retailing, retain specialist retail uses and premises that are historically and culturally significant, and encourage ground floor activity; permit night-time entertainment providing it is effectively managed; maintain and develop open spaces and streetscape to accommodate cultural events and activities

Welcomes the acknowledgement and strong policy support for the internationally significant office cluster in the CAZ and the need to plan for sufficient office space to meet demand. The recognition of the need for public realm enhancement, infrastructure improvements (including the need for consolidation for freight and servicing), digital connectivity and the need to promote safety, security and resilience are all supported. Greater emphasis could be given to ensuring the CAZ contributes to broader inclusivity, so that its offer and amenities benefit all sections of society.

36

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Good growth in the CAZ

KENSINGTON AND CHELSEA

ISLINGTON

HACKNEY

Policy review The CAZ+

Homes

Commercial Space

Retail, Hotels, F&B, Culture

Response to the London Plan

Predominant overlap with CAZ is in Shoreditch; creative industries and arts have been attracted by the historic character and affordability of the area, and its proximity to central London; international importance of this area for night time activity; opportunities for offices, retail and residential development along with supporting community infrastructure

Encouraging development on small sites and through allocating sites for residential use; maximise opportunities to supply genuinely affordable housing on-site

New employment floorspace will be supported in the CAZ, and should maximise employment floorspace; should incorporate other priority uses such as conventional affordable housing and have active frontages at ground floor level; development involving the net loss of B1a office floorspace will not be permitted; new major employment and mixed used development should provide affordable or low cost workspace, equating to a minimum of 10% of gross new employment floorspace; recognised internationally for Tech City

Improve public realm, and create multi-functional inclusive public space; ongoing protection of the special historic character; deliver new retail and leisure floorspace; new major development of arts, culture and entertainment facilities must be located within the CAZ, and major and district centre locations; development involving the loss of arts, culture and entertainment facilities will be resisted, unless re-provided; hotels over 50 rooms will only be permitted in the CAZ and major town centres

Hackney welcomes that Shoreditch is identified as Specialist Cluster for arts, culture and entertainment, and a cultural and creative specialist cluster of activity.

Hackney support the identification of Shoreditch as a CAZ retail cluster. This aligns with the local retail evidence produced for the new Local Plan (LP33).

The emerging Area Action Plan for Shoreditch will define the form, location and extent of the CAZ retail areas.

The CAZ is the location with the most demand for office space and this will be the priority land use; making the most of its location in the CAZ, and suggests development of CAZ fringe as well as ‘satellite’ locations outside the CAZ for additional business uses – these areas are crucial in providing a pipeline of office land capable of meeting the projected floorspace demand

Residential uses are not a key priority in the CAZ (and Bunhill/Clerkenwell AAP area); the borough as a whole supports high density housing development and aim to exceed the housing target; housing must make the most efficient use of land to ensure that the optimal amount of housing is delivered; target over the plan period is for 50% of all new housing to be genuinely affordable

Business use is a priority land use in the CAZ/CAZ fringe; existing B1 use will be protected and proposals for new business floorspace must maximise the provision of business floorspace; maintaining and enhancing office uses; a range of workspace typologies are supported, including Grade A offices, serviced offices, co-working spaces, hybrid workspace and other types of flexible workspace and lower specification office space suitable for SMEs and business services; providing new business floorspace in CAZ fringe is a priority.

Rich variety of cultural, entertainment and leisure uses which support the predominant office-led employment function of the area; cultural and night-time economy activities, must be located in the CAZ or Town Centres - loss and/or change of use of cultural facilities in the borough will be strongly resisted; CAZ function is primarily linked to business floorspace, but retail uses may be appropriate where it would not undermine the overarching business function of the CAZ; visitor accommodation will only be permitted on sites with existing visitor accommodation in the CAZ and Town Centres

Islington welcomes the increased significance that is placed on the nationally and internationally important office functions of the CAZ; missed opportunity to firmly and explicitly prioritise office as the highest priority CAZ strategic function; for Islington, ensuring an adequate supply of office accommodation in this location is a key priority for the growth of the economy; ensuring that a range of space is provided is also welcomed.

Knightsbridge is part CAZ, reflecting how the world class shops and hotels contribute to London’s role as a world city, as is the museums complex at South Kensington; no sites allocated inside the CAZ;

No significant housing inside the CAZ; locations for significant new housing not located in the CAZ

Protect office floorspace, unless being replaced by retail floorspace, by a social and community use which predominantly serves, or which provides significant benefits to, borough residents; support and protect the mix of uses such as shops, businesses, arts and cultural facilities which have benefited from the borough’s high residential density and from visitors to the borough; promote and protect the workspaces needed to support the creative and cultural industries across the borough.

Protecting the high quality historic environment and ensuring new developments are of equivalent quality; Knightsbridge is an international shopping destination and located within the CAZ; residential function in nearby streets (outside CAZ boundary) conflict with international role of the centre, particularly in relation to the night time economy; museums quarter is located inside the CAZ; improvement to public realm in and around the CAZ areas; high concentration of hotels in the CAZ area, and new hotels will be encouraged; no significant additional comparison retail space is required in the borough.

The Council welcomes the Draft London Plan’s explicit support for the use of Article 4 Directions in and around the CAZ, to ensure the safeguarding of nationallysignificant concentrations of offices.

37

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Good growth in the CAZ

TOWER HAMLETS

SOUTHWARK

LAMBETH

Policy review The CAZ+

Homes

Commercial Space

Retail, Hotels, F&B, Culture

Response to the London Plan

Significant site allocations within the CAZ retail clusters around Waterloo station, Vauxhall station, as well as at Black Prince Road; recognises the integral role the borough plays in the continued success of the CAZ

At Waterloo and South Bank, there is potential for incremental residential growth, particularly on small sites and through extension/redevelopment of existing housing stock, as well as new build residential and mixed-use development; affordable housing is a priority in Waterloo; high residential growth potential at Vauxhall, through small sites, mixed use development and new build residential at five identified sites.

Waterloo and South Bank have medium commercial growth potential; particularly in health, MedTech and life sciences and cultural, leisure and visitor economy sectors; requires broad range of commercial space including affordable and flexible SME workspace; Vauxhall has high commercial growth potential, especially for major new creative and digital industries

Promoting expansion of creative, arts and cultural activities throughout Waterloo and enhancing the South Bank in its role as an international cultural and leisure centre and a London tourist destination through supporting the development of arts and cultural facilities; strategically important hotels should be located in the parts of the Vauxhall OA within the CAZ, provided they do not result in the loss of office space or other strategic functions of the CAZ; no additional visitor accommodation will be permitted in Waterloo; promoting cultural uses in Leake Street and under Waterloo Station; manage and mitigate the impact of an increasing number of visitor numbers whilst also enhancing the visitor experience

Lambeth notes the change of emphasis on the mix of land uses in the CAZ, with a greater emphasis on offices in Waterloo and equal weight for housing and CAZ strategic functions in VNEB. Lambeth supports this in principle for Waterloo.

However, Lambeth considers that a different approach is needed for the Vauxhall part of the VNEB OA. For Vauxhall, development of offices and other CAZ strategic functions should be given greater weight over residential in future developments.

Significant site allocation within the CAZ; large development sites in Bermondsey, Bankside and The Borough will provide new homes and employment spaces.

There are also many smaller development sites that could accommodate a substantial number of new homes and new employment space; Blackfriars will provide many new homes, commercial spaces and other uses on major development sites as well as on smaller sites

In many Site Allocations in the CAZ, housing is a ‘should’ which strongly encourages mixed use development where the reprovision or uplift of employment floorspace can be achieved; in Bermondsey provide as many homes as possible while respecting the local character - there may be opportunities for taller buildings on key development sites; A minimum of 20% of homes with three or more bedrooms in the Central Activities Zone

Employment floorspace (B use class) in the CAZ ‘must’ be retained or increased; promote the successful integration of homes and employment space in physical layout and servicing in areas that will accommodate mixed use development

40% of CAZ shopping frontages in Borough and Bankside and London Bridge opportunity areas should be A1 retail; provide new hotels around Blackfriars Road, as well as new cultural, leisure, arts, entertainment and community facilities; development must retain or re-provide existing leisure, arts and cultural uses

The CAZ offers the opportunity for high quality office floorspace to be delivered to accommodate anticipated need and demand. The identification of South Bank, Bankside and London Bridge as a specialist cluster for arts, culture and entertainment is welcomed; recommend that the designation of cluster for arts, culture and entertainment extends to include Elephant and Castle

In Tower Hamlets, economic growth will be concentrated in the CAZ; Tower Hamlets will embrace its role as a key focus for London’s growth, which will be primarily delivered in the City Fringe, the Lower Lea Valley and Isle of Dogs and the benefits will be shared throughout Tower Hamlets.

Majority of the housing growth within the borough will be provided in, amongst others, parts of Canary Wharf and IoD, and City Fringe including Aldgate; acknowledge shortfall in housing delivery but committed to maximise housing supply

New or intensified employment floorspace will be supported within designated employment locations, net loss will not be supported; CAZ and NIoD subdivided into three distinct areas: Commercial core area (Canary Wharf) deemed unsuitable locations for housing; in Secondary Preferred Office Locations (POL) (parts of City Fringe and Canary Wharf fringe) employment and defined strategic functions/uses must be given greater weight than residential; in tertiary POL (the rest of City Fringe) equal weight is given to residential use

At Canary Wharf, provide a high proportion of comparison retail compared to convenience along with leisure and civic uses whilst continuing to support its role as a key global employment centre; steer visitor accommodation towards the CAZ

“Northern Isle of Dogs” – has caused local confusion as it is not recognised as a place as such. “Isle of Dogs (North)” is preferred.

The town centre network should also refer to Metropolitan Centres (such as Canary Wharf). Whitechapel is not a CAZ fringe area as such, given that it lies outside the CAZ. The plan needs to be clear on what is meant by ‘CAZ fringe’.

38

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Good growth in the CAZ

WESTMINSTER

WANDSWORTH

Policy review The CAZ+

Homes

Commercial Space

Retail, Hotels, F&B, Culture

Response to the London Plan

Much of the Vauxhall Nine Elms Battersea Opportunity Area is within the borough and contains 227 hectares of land designated for major high density housing and employment growth; this development area has the potential to transform Wandsworth's economic future

Substantial numbers of new homes will be delivered in the Vauxhall Nine Elms Battersea Opportunity Area; high density mixed use development will be promoted around Vauxhall and tall buildings may be appropriate in this area; in Nine Elms new residential led mixed use development can be developed around a permeable framework of streets with the provision of a new linear park linking Vauxhall to Battersea Power Station

Encourage new office floorspace in the emerging town centre at Battersea Power station, and within the Nine Elms Central Activities Zone; consolidation and intensification of the wholesale market within the New Covent Garden Market site and mixed-use development will be supported

Potential new CAZ Frontage (town centre) at Battersea Power Station in Nine Elms, will be the focus for shopping and complementary activities, including cultural, leisure and entertainment uses; potential for other leisure uses at new development sites including cinemas, F&B and evening economy facilities; provision of a linear park between Vauxhall and Battersea Power Station; provision of new shops and services and improvements to the Nine Elms Lane and Wandsworth Road frontages

Support the recognition that office role is of national and international significance; large, high spec offices will continue to be encouraged in Nine Elms to meet the demand for the central London Office market and to achieve a critical mass of economic uses around Battersea Power Station; the reference to the competing policy requirements of office and housing being given equal weight in decision making is welcomed. Welcome the air quality references to address issues related to climate change.

Much of Westminster is within the CAZ; balancing the competing functions of the CAZ as a retail and leisure destination, visitor attraction, global office centre, and home to residential neighbourhoods; growth will be delivered through the intensification of the CAZ and West End; supporting intensification and optimising densities

Increase the stock of high quality housing and provide variety, with a focus on affordability and family-sized homes; optimising site densities; delivering a higher number of homes on small sites; planning positively for tall buildings in certain locations; existing residential uses, floorspace and land will be protected

Enable job growth across a range of sectors; halt the loss, and support growth, of a variety of business space; additional floorspace that meets the needs of modern working practices, including the provision of co-working space, is supported in principle in the CAZ; enable the continued growth and clustering of the creative, knowledge, and research-based sectors; loss of office floorspace from the CAZ will only be acceptable in exceptional circumstances including if the proposal is in a predominantly residential area and would reinstate an original residential use

Unique historic environment and an exceptional concentration of heritage assets; with such a special historic environment this is a critical factor in managing development and change in the city; broaden the city’s cultural offer, while managing the impacts of clusters of uses, and of the evening and night time economies on existing residential communities; enhance the West End as London’s primary retail, leisure, and visitor destination; growth and diversification in retail and leisure activity that respects residential amenity

The Mayor should not try to instruct boroughs about the circumstances in which it is appropriate to designate special policy areas. Policy should also continue to reflect the importance of protection and enhancement of predominantly residential areas of the CAZ; as part of our local plan preparation we are likely to propose some further minor changes to the CAZ boundary in Westminster (in the area north of Baker Street and along the railway lands west of Paddington Station to the borough boundary).

39

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Defining Good Growth in the CAZ+ Striking a balance between residential and commercial growth When considering areas within CAZ+ that are appropriate for residential or mixed use development (including residential), the GLA and boroughs often aim to try and ensure that business clusters and agglomerations in CAZ+ are not undermined and that new residential units continue to be provided – often to meet the needs of a range of affordability and tenure requirements. Commercial (and indeed some residential development) can impact on neighbouring sites and uses because of impacts on daylight, sunlight, overshadowing, overlooking and rights to peaceful enjoyment. This can place constraints on new development.

The table below provides an extract of GLA guidance on the appropriate balance between offices and residential in different parts of the CAZ+.

Balancing the priorities attached to housing relative to offices and other strategic functions in CAZ+ Priority / balance

A: Residential development not appropriate

functions should be given greater weight relative to new residential

• •

Commercial core areas of the City of London Commercial core of the NIoD

• •

Other parts of City of London and NIoD Core commercial areas in the City of Westminster including the West End/Soho/Covent Garden , Opportunity Areas and commercial parts of Marylebone and Fitzrovia Commercial core areas identified in the City Fringe/Tech City OAPF All other CAZ OAs and IAs (except VNEB, Elephant and Castle, and Old Kent Road) Identified clusters of specialist CAZ strategic activities All other parts of CAZ except those stated in C below

• • • •

C: Offices and other CAZ strategic functions may be given equal weight relative to new residential

Other parts of CAZ not covered in A or B above including • VNEB OA • Elephant and Castle OA • Old Kent Road OA • Predominantly residential neighbourhoods, areas or wholly residential streets (with exceptions in appropriate circumstances – for example clusters of specialist CAZ strategic activities)

Source: GLA CAZ Supplementary Planning Guidance

B: Offices and other CAZ strategic

Locations

40

Model methodology

41

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Model methodology

Appendix 1

Appendix 2

Appendix 3

Approach to economic modelling

Economic impact model Geography Our approach to the development of the economic impact model is shown in the figure to the right.

This is the same as the approach we adopted for our work in the future of the West End for the GLA and Westminster and also for the Heart of London business improvement district (HOLBA).

Define the baseline sectoral use in each sub-geography

Baseline sectoral land use and economic performance

These have been determined by sourcing land use data from Costar, the London Development Database, the Valuation Office Agency, and the 2011 Census.

2.

Identify historical trends

The baseline land use mix in each geography has been projected based on historical time series (2000-18) from the Valuation Office Agency and the London Development Database.

3.

Baseline sectoral land use

Good growth

Planned growth

Decline of sorts

Establish scenarios

Incremental impact on sectoral use

The purpose of building scenarios is to identify plausible descriptions of the future which can be used to assess future economic outcomes. Three scenarios (good growth, planned growth, decline of sorts) have been created based on different combinations of possible outcomes across the four categories of trends.

5.

Trends

Determine the land use impact of sectoral trends for each investment scenario

The trends analysis have informed our view of trends which may have the most potential impact on land use in the CAZ+, the direction of their impacts (negative or positive) and their importance relative to each other. Four main categories of trends have emerged. For each category, we have developed three possible future outcomes. Our understanding of scale, relative divergence and timing of impact is further detailed in the ‘Scenario’ section of this report.

4.

Targets

Consider the economic impact

The approach is based on widely accepted methodology used in socio-economic assessments. The analysis has considered four main types of economic output, namely, jobs, GVA, business rates and residential development. A more detailed explanation of the quantitative economic assessment is provided in this section of the report.

Gross GVA

Gross jobs and homes

Business rates

42

Source: Arup

1.

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Model methodology

Scenario results

Recommendations

Appendix 1

Appendix 3

21,650 postcodes in the CAZ+

Accuracy of LSOA best fitting

Economic impact model

Appendix 2

Source: Google maps; Arup analysis

As we noted earlier, the CAZ+ areas examined in this report are non-standard geographies and as such no official statistics are produced on their populations or economic characteristics. Data must therefore be created for the areas by aggregating from smaller geographies. We have used the smallest available geographical areas (either postcodes – of which there are 21,650 in the CAZ+ or LSOAs of which there are 246 throughout the CAZ+).

Source: GLA

Property floorspace Property floorspace in the CAZ+ has been estimated using land use data from Costar, the Valuation Office Agency, the London Development Database and the 2011 Census.

For residential property floorspace, the analysis considered the number of dwellings in LSOAs that intersect the CAZ+, using census data from 2011. The analysis has then considered the net additional dwellings added to each sub-geographies between 2011 and 2020, relying on information sourced from the London Development Database.

Commercial property vacancy rates

Commercial floorspace has been estimated with postcode level data from the Costar database of real estate throughout the CAZ+. We have triangulated this data with postcode level data from the Valuation Office Agency as some properties may not have been included in the Costar database.

12.5%

Employment composition

10.5%

The three sub-geographies in the CAZ+ are distributed across boundaries of statistical areas for which socio-economic data are available (the most detailed spatial division being Lower Super Output Areas LSOA or postcodes). In order to estimate employment values specifically for the study areas (CAZ+ share of boroughs and the three sub-geographies) we needed to apportion LSOA or postcode level data to the specific sub-geography boundaries. There are a few apportionment methods widely used (e.g. based on the geographical area, based on LSOA centroids, or based on proportion of postcodes). In this study, we used an apportionment approach based on geographical area as follows:

Step 2: Overlaying of LSOA boundaries with map of all sub-geographies

6.5% Source: Costar, Arup analysis

Step 1: Identification of LSOAs covering the total CAZ+ area as defined for this study

8.5%

4.5%

2.5%

Step 3: Calculation of the surface of each LSOAs, and how much of its surface falls within a given subgeography Step 4: Employment in each LSOA was apportioned to all sub-geographies based on the proportions established in step 3

City and the East

CAZ West End

Riparian South

CAZ+

43

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Model methodology Economic impact model Local economic impact – Gross Value Added The calculation for estimating the level of GVA contribution from scenario-based growth in the CAZ+ is based on the GVA per worker in each of the SIC 2-digit sectors making up the economy of each subgeographies, multiplied by the gross amount of jobs created in each scenario.

The GVA per worker in each geography was determined by apportioning the SIC 2-digit GVA per worker in each CAZ+ boroughs to the specific location and composition of employment in each geographies as outlined below: Step 1: Sourcing GVA per SIC 2-digit at borough level using data from the ONS Step 2: Sourcing employment figures from the Business Register Employment Survey at borough level and re-allocating figures to SIC 2-digit level. Computing GVA per worker at borough level. It is worth noting that for some of the ONS NUTS3 level geographies, London boroughs have been packaged together; e.g. Camden and the City of London. In those cases, we have used the share of employment in each boroughs to apportion GVA per worker to each individual boroughs.

Step3: Allocating SIC 2-digit to land use sectors used in this analysis (retail, office, hotel, F&B and Entertainment). Using employment for each geography as weight to allocate GVA per worker by sector to each sub geography in the study area.

Business rates generated Our projected baseline rateable values per sqm are based on 2018 values drawn from the Valuation Office Agency and are then presented in 2019 prices. The baseline increases at each reset point are based on the average annual growth rate over the period from 2000 to 2018 for the period from 2019 onwards.

Based on latest government policy we assume a rateable values reset in 2021 and then every three years. We assume that the business rate multiplier that is used to calculate business rates payable remains consistent with historical precedent (ÂŁ0.504 in the year of the reset and growing 2% per year until the following reset). We have also assumed that the overall level of government taxation of business does not significantly change.

44

Scenarios

45

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Scenarios Descriptors for our three scenarios

Good growth

In the Good Growth scenario, positive planning policies across the CAZ+ have unlocked growth potential throughout the area. Commercial and residential floorspace is maximised, providing ample space for jobs growth.

• •

•

Significant net additional floorspace and some intensification of existing floorspace across all uses.

The CAZ+ enhances its rich mix of uses, and continues to be an attractive global destination for visitors, employers and investors. Office and hotel floorspace increases.

With fiscal devolution, public realm, cultural assets and green spaces see substantial and sustained investment, creating dynamic streets and spaces for residents, workers and visitors to enjoy and spend time in. Retail and ACE (arts, culture and entertainment) floorspace is increased.

Planned growth

The Planned Growth scenario assumes no major change in current economic conditions and somewhat limited change to planning policy; targets laid out in the 2016 and draft 2019 London Plan are met but not exceeded.

•

• • •

Due to supply-side constraints, investment activity in the CAZ+ is primarily focused on redevelopment of existing buildings. The amount of commercial space rises marginally as set out in existing site allocations.

Strong housing targets within the London Plan are met, reducing scope for other uses.

In the short term, some growth in employment occurs in spite of a decline in floorspace Due to supply-side constraints, rents rise in real terms materially (especially office) which provides an incentive for intensification of use in the short to medium term, and a shift to more higher value added activities (and loss of some lower value added business) in the longer term.

Decline of sorts

In this scenario, the CAZ+ has failed to adapt and respond to market change. Growth has been restricted and policies and attitudes don’t allow the private sector to innovate or invest successfully.

•

Ignores the strategic functions of the CAZ+ with a long term decrease in commercial space but some increase in high end residential.

•

Constrained or limited delivery of transport and infrastructure improvements.

•

Boroughs and governing organisations cannot or fail to invest in improving the urban landscape through public realm improvements and servicing of streets, leading to worsening environments.

46

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Scenarios Good growth scenario | implication for uses across the CAZ+

Retail

Office • • • •

•

Expansion in office space takes full advantage of the additional capacity of Crossrail 1 (and 2) with appropriate height and massing by location Some intensification in the use of existing space ‘Gently’ rising office rents over the long term “Good neighbours” to residential and other uses

Residential

•

Hotel •

• •

Increase in number of residential units A mix of tenure and type to contribute to meeting needs of Londoners including affordability albeit at a modest level compared to overall demand

ACE

• •

F&B • • •

Planning policy allows retail to respond quickly to underlying changes in the sector Sector continues to thrive and provide employment. Modest increase in floor space over the long term as sector addresses the “experience” market

Mix of ACE venues (size, public, not for profit and private sector) stay in the area thanks to stable rents and benign planning policy ACE complements offer from other sectors Floor space grows modestly

• • • •

Hotel supply grows to meet more of growing demand Offer is diverse catering for various income levels attractive to mid and upper market Sector complements restaurants, bars and entertainment

Food and beverage offer continues to grow and change Planning policies enable retail, F&B and culture to “converge” into the same spaces to provide a diverse, attractive experience for visitors “Rough edges” managed so as not to impinge on residential quality of life Floor space grows modestly over the long term 47

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Scenarios Planned growth scenario | implication for uses across the CAZ+

Retail

Office • •

•

Fixed supply and continued high demand sees some further rent rises and reduces vacancy rates Over the short-term, higher rents lead to higher intensity of use but in the longer term, shift to higher value added activities leads to employment growth lower than the Good Growth scenario Redevelopment continues at a substantial level

Residential

• • •

•

• •

CAZ+ maintain its position as a leading retail centre, though with continued competition from Westfields and online retail Slight decrease in retail floorspace as mid-range priced out In the long term, higher rents leads to decreasing employment due loss of retail

Hotel •

Loss of some higher density (more affordable) housing growth High-end, lower occupancy levels with more space per person grows Risk residential areas become less busy/due to higher day to day vacancy rate of properties

ACE

• • •

Slight fall in the value of the pound attracts more leisure tourists Hotels become more attractive (price competitive) relative to short term (Airbnb type) rents Luxury hotels become more attractive Marginal loss in hotel floor space over longer term

F&B

• • •

Focus on redevelopment creates price pressures on smaller cultural venues Entertainment offer caters to the high end market Some reduction in space as shift to the east continues

• • •

Focus on redevelopment creates price pressure on smaller mid-market restaurants, pubs and bars Customer base shifts towards high-end; offer is less mixed Benefits of night time economy may not be fully realised

48

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Scenarios Decline of sorts scenario | implication for uses across the CAZ+

Retail

Office •

• •

Job intensity (employment to space ratio) not enough to compensate for loss space Demand for office space to residential conversion.

Higher office asset values resulting from high demand and constraints on and loss of supply

Residential

• • • •

• •

High end retail remains stable but mid-range suffers decline Loss of diversity in smaller and independent offer – priced out by increasing rents Increase in chains Overall, retail space falls

• • •

Reduction/stagnation in overall stock and mix of hotel rooms Some increase in very high-end/boutique hotel rooms Redevelopment continues/grows

•

Decrease in a number of small restaurants and bars, sector becoming more high-end and mass market Some loss of floor space over the long term

• •

Hotel

Increase in demand for more expensive residential property Decline in long-term residential population compared to historical trend Properties treated as capital assets - high level of vacancy Adverse impact on other housing tenures?

ACE

F&B

• •

Leisure activities shift further towards the high-end plus mass market leading to some (very modest) growth in floor space Continued shift to the east - but pace picks up

•

49

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Scenarios Scenario development Three scenarios to 2041, each describing a plausible but divergent future for the CAZ+ have been created.

We have used a ‘morphological’ method of scenario development to translate assumptions across the four categories of trends (planning policy, international trade and labour; infrastructure and urban environment) into different land use outcomes.

For example, the method begins by identifying and defining a trend, such as planning policy and assigning it a range of relevant parameters e.g. “embraces” (or ignores) CAZ+ strategic functions”, or “mostly allowing growth through intensification” rather than densification. Each scenario can then be viewed as a combination of parameters across each trend. Each potential configuration contains one parameter from each of the trend and thus marks out a particular state.

Good growth

Planned growth

The three scenarios that we have created consider the internal relationships between the parameters with all mutually contradictory configurations “weeded out.”

As each possible configuration was examined, a judgement has been made as to whether – or to what extent – each configuration fitted our definitions of scenarios and could coexist in a consistent relationship.

Note that there assertions are not being made as to causality only to internal consistency.

Decline of sorts

International trade and labour

Infrastructure

Urban environment

Embraces CAZ+ strategic functions

Softer open for business deal – lower skill requirement

Fit for the future good growth

Attractor

Allows growth through intensification

Softer open for business deal – higher skills requirement

Scoped down

Maintainer

Ignores CAZ+ strategic functions

WTO

Constrained

Managed decline

Embraces CAZ+ strategic functions

Softer open for business deal – lower skills requirement

Fit for the future good growth

Attractor

Allows growth through intensification

Softer open for business deal – higher skills requirement

Scoped down

Maintainer

Ignores CAZ+ strategic functions

WTO

Constrained

Managed decline

Embraces CAZ+ strategic functions

Softer open for business deal - lower skills requirement

Fit for the future good growth

Attractor

Allows growth through intensification

Softer open for business deal – higher skills requirement

Scoped down

Maintainer

Ignores CAZ+ strategic functions

WTO

Constrained

Managed decline

50

https://www.sciencedirect.com/science/article/pii/S004016251730656X

Morphological analysis is a method for rigorously structuring the total set of relationships in inherently non-quantifiable socio-technical problems. The method is carried out by developing parameters of the problems to be investigated, here defined as the four categories of trends, and defining relationships between the parameters on the basis of internal consistency.

Planning policy

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Scenarios

Recommendations

Appendix 1

Appendix 2

Appendix 3

Scenario cumulative growth rates | floorspace

Scenario description

Once values across each of the categories of trends have been configured into scenarios, the overall land use outcomes across each sector (retail, office, residential, hotel, F&B and entertainment) is computed by factoring the impact of each individual value acting on a specific sector.

Good growth

Planned growth

Source: Arup analysis

The extent to which values within each parameter can fluctuate and influence land use outcomes has been informed top-down by looking at factors we reviewed in earlier sections of the report. These included historical growth rates, GLA economics projections, growth targets set in other statutory planning documents, transport impacts emerging from the arrival of Crossrail and potential arrival of other transport infrastructure such as Crossrail 2, HS2 and the Tube expansion programme. We have also taken into account other benchmarks consistent with our assessment of good growth e.g. levels of housing density; intensification of use of property space; reliance on sustainable modes of travel and what made sense in terms of the relative impact between different parameters.

Decline of sorts

The profile of impact across each value has been determined by taking a view on how alternative courses of trends could individually account for divergence from historical growth rates in a given sector, accounting for the respective mutual influences of each trends.

Historical growth rate 2000-18 (CAGR) | floorspace Sector

City and the East CAZ West End

Riparian South

CAZ+

We appreciate that any definition of the sets of future possible values is always subjective. The probabilities and impacts of these values always remain estimates. The method has been used to form an estimate of the relative influence of different parameters on the paths taken by trends.

Retail

0.0%

-0.3%

-0.1%

51 0.0%

Office

0.8%

0.1%

0.6%

0.8%

Residential

0.9%

0.7%

1.1%

0.9%

Hotel

0.6%

-0.2%

1.7%

0.6%

By way of illustration, the figures opposite display the cumulative profile of impact of individual values of trends across each sector.

F&B

0.8%

0.0%

1.8%

0.8%

Entertainment

0.6%

-0.3%

1.8%

0.6%

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Scenarios The two tables to the right show the amount of commercial and residential floorspace growth which could be achieved in the CAZ+ if the levels set in relevant planning guidance were to be delivered: Employment growth •

Borough level employment growth aspirations have been sourced from the London Plan 2016 (we were unable to find the equivalent figures in the 2019 draft London Plan). Each individual borough plan may not exactly reflect the projections set in the London Plan, both in terms of the absolute growth forecasted over the London Plan timeframe and the floorspace standard requirements to deliver this employment growth.

Housing supply •

Borough level housing completions have been sourced from the Draft New London Plan 2019 (Policy H1). Boroughs must include these targets in their development plan documents.

Based on a series of assumptions detailed in this report (e.g. vacancy rates forecasts and sectoral employment densities profiles) we estimate the total annual floorspace requirement that would need to be delivered in the CAZ+ to achieve targets set in planning guidance: •

Area City and the East Islington City of London Hackney Tower Hamlets CAZ West End Camden Kensington and Chelsea Westminster Riparian South Lambeth Southwark Wandsworth CAZ+ total

Share of borough employment in CAZ+

Borough level growth target (jobs)

Timeframe

CAZ+ annual Indicative annual equivalent floorspace (jobs) equivalent (sqm)

59% 100% 17% 38%

53,000 57,000 13,000 35,000

2011-36 2011-36 2011-36 2011-36

1,246 2,280 89 535

16,702 30,552 1,195 7,175

63% 6% 82%

71,000 24,000 94,000

2011-36 2011-36 2011-36

1,783 58 3,099

23,888 771 41,532

28% 48% 3%

23,000 62,000 33,000

2011-36 2011-36 2011-36

261 1,200 46

3,502 16,084 618

Residential floorspace Area

City and the East Islington City of London Hackney Tower Hamlets • Jobs delivery across CAZ+ boroughs outstripped commercial floorspace delivery by a CAZ West End three to one ratio. If past trends continue (in a planned growth scenario), the Camden commercial floorspace that would need to be delivered for the CAZ+ to achieve employment growth aspirations set in the London Plan would be about 45,000 sqm Kensington and Chelsea per year Westminster Riparian South • CAZ+ Residential floorspace required delivery: 150,000 sqm per year Lambeth Southwark These benchmark measures set the overall quantum of growth achieved under a planned growth scenario.

Wandsworth CAZ+ total It is important to note that this floorspace provision assumes a constant space requirement of 13.4sqm per job. The quantity of floorspace required to deliver growth targets could of course change to some extent if we consider changing workstyles and associated reducing floorspace requirement for workers.

Appendix 3

Commercial floorspace

Share of borough dwellings in CAZ+

CAZ+ Commercial floorspace required delivery: 140,000 sqm per year •

Appendix 2

Borough level growth target (homes)

Timeframe

CAZ+ annual Indicative annual equivalent floorspace (homes) equivalent (sqm)

16% 100% 2% 10%

7,750 1,460 13,300 35,110

2019-29 2019-29 2019-29 2019-29

121 146 30 336

7,874 9,490 1,958 21,850

19% 4% 47%

10,850 4,880 10,100

2019-29 2019-29 2019-29

207 18 478

13,472 1,176 31,046

6% 17% 1%

15,890 25,540 23,100

2019-29 2019-29 2019-29

89 442 27

5,794 28,703 1,724

52

Source: GLA Draft New London Plan 2019, ONS, Arup analysis

The borough-wide targets set in the London Plan have been indicatively apportioned based on the proportion of existing borough-wide employment and dwellings found in the CAZ+.

Appendix 1

Source: GLA London Plan 2017, BRES, Arup analysis

CAZ+ Planned Growth Levels

Recommendations

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Scenarios Employment potential with densification

11% 62k

30%

44%

These comparisons need to be seen as largely illustrative. They represent to some extent the different building typologies that shape each area in question – and indeed the width of roads and amount of greenspace that characterises different parts of the CAZ+. As will be seen in the latter part of our report, for our ‘good growth’ scenario we project only around 20% of the 2.2 million jobs that could in theory could be accommodated with these “maximum” density levels.

24k

500k

81% 640k

95%

98%

95%

490k

310k

180k

London building heights (data collected 2014/15)

Tower Hamlets

Islington

Hackney

City of London

Source: Emu Analytics

The job density in the CAZ+ share of Islington, Hackney and City of London is respectively 81%, 95% and 11% lower than in Tower Hamlets. If the entire City in the East area reached the density of the CAZ+ share Tower Hamlets, then an additional 1.2m jobs could be accommodated.

Camden

Kensington Westminster and Chelsea

The job density in the CAZ+ share of Kensington and Chelsea and Westminster is respectively 95% and 44% lower than in Camden. If the entire CAZ West End area reached the density of the CAZ+ share of Camden, then an additional 680,000 jobs could be accommodated.

Southwark

Lambeth

Wandsworth

The job density in the CAZ+ share of Lambeth and Wandsworth is respectively 30% and 98% lower than in Southwark. If the entire Riparian South reached the density of the CAZ+ share of Southwark, then an additional 330,000 jobs could be accommodated.

53

Source: Business Register Employment Survey, Arup

CAZ+ potential scale for densification

The figure to the right shows potential employment levels across the CAZ+ study areas if they achieved the employment density rate of its most dense sub-area as measured in terms of employment to land ratios. Densification up to these levels would in theory provide for an additional 2.2 million jobs across the whole CAZ+.

Executive summary

The study area

Good growth in the CAZ

Baseline analysis

Model methodology

Scenarios

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Example of parcels of commercial land in the CAZ+ understood to be available for development

Employment potential with developable commercial land Based on CoStar data relating to available sites across the CAZ+ area, and an assumption that 50% of that land is developable (with taller buildings in City and the East), a potential for 3.5 million sqm of commercial floorspace has been identified. This equates to an estimated 260,000 new jobs.

This analysis would indicate that contrary to the assertion that the CAZ+ is ‘full’, there are some substantial tracts of land which are still available for development. In addition, Battersea Power Station and Euston are development sites which are still partly in the pipeline (and excluded from this part of our analysis). Camden’s Euston Area Plan, based around a redeveloped station might deliver: • Up to 14,100 new jobs; • Up to 3,800 new homes; and • Up to 280,000 sqm new commercial floor space.

Source: Costar

Battersea Power Station, a 17 hectare site, is expected to deliver around 10,000 permanent direct jobs and 7,000 indirect jobs across 116,000 sqm of office space, as well as 4,239 homes.

There are also a number of significant development sites beyond the CAZ+, which, in the context of potentially re-drawing the CAZ+ boundary, are worth noting. For example, British Land and Southwark are developing a significant 21 hectare site at Canada Water. Currently, plans have been approved for: • Around 200,000 sqm of workspace to accommodate around 20,000 jobs; • Around 100,000 sqm of retail, leisure, entertainment, education and community space; and • Around 3,000 new homes, of which 35% will be affordable.

City and the East CAZ West End

CAZ+

321,899

160,949

39,864

19,932

451,307

225,654

Associated Potential property Indicative average potential job floorspace from FAR delivery from new available land development 10 5 8

1,609,493

120,111

99,660

7,437

1,805,228

134,719

3,514,381

262,267

Source: Costar

Riparian South

Conservative buildable area (50% of land area)

Source: Costar, Arup analysis

Area

Land area GEA (sqm)

Location of “vacant” parcels of commercial land in the CAZ+

54

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Scenarios Business rate retention for good growth | scenarios BR retention assumption 1 In July 2018, the government launched a competitive bidding round, inviting pools of authorities to bid to pilot 75% business rates retention in 2019-20.

London will be piloting 75% business rate retention in 2019-20. In London, the boroughs, the City of London, and the Greater London Authority will forego MHCLG’s Revenue Support Grant (RSG). The GLA will also forego the GLA transport grant from the Department for Transport (DfT).

The pilot was confirmed in the final local government finance settlement and a memorandum of understanding has been signed between MHCLG, London Councils and GLA officials to this effect. Under the pilot, the 32 London boroughs, the Corporation of the City of London and the GLA will operate a voluntary business rates retention pool. The Mayor approved the GLA’s participation in MD2407 which was signed on 14 January 2019.

Under the 2019-20 pilot the central share payment to MHCLG will be installed at a rate of 25% as this is the mechanism by which the 75% retention share is delivered with the GLA’s share being 27%. Funding baselines for the 33 local authorities will continue to be increased by an amount equivalent to the agreed allocations for revenue support grant, which will not be paid by central government.

The London pool will retain 75% of any growth in business rate income above the agreed baselines and will pay no collective levy on that growth. This is a significant benefit to the GLA, as it paid over 25% of its growth against its baseline to the Government in 2016-17 and 2017-18. Some London boroughs with high tax bases were required to pay up to 50% of their growth through the levy prior to 2018-19. So the removal of the levy is a significant benefit of the pilot.

Planned business rates resets may remove most if not all the growth local authorities have retained locally since 2013-14. Uncertainty remains about how business rates baselines will be set beyond 2020. Depending on the methodology used and the frequency of resets, this could mean that an authority could be in an effective surplus or deficit before FY 2020-21 even commences.

In addition to the three growth scenarios for the CAZ+ we have considered four potential scenarios of business rates retention for London.

The share of net business rates (above a baseline level) being retained is assumed to remain constant at 1/3 for the GLA and 2/3 for London boroughs

Retention scenario 1 | 75% business rates retention above a baseline level, without baseline resets until 2041

Retention scenario 3 | 75% business rates retention above a baseline level, with baseline resets every 5 years

BR retention assumption 2 Business rates baseline resets occur every five years.

The baseline is set on the confirmed end-of-year collection amount (not forecast) and does not result in any growth payable via an adjustment to tariffs/top-ups in the funding settlement.

Retention scenario 2 | 100% business rates retention above a baseline level, without baseline resets until 2041

Retention scenario 4 | 100% business rates retention above a baseline level, with baseline resets every 5 years

These four scenarios have been applied to the overall amount of business rates that is generated across each of the sub-geographies in the CAZ+, across each growth scenarios.

Source: Arup

The pool will continue to pay an aggregate tariff to Government, which is estimated to be around £1.1billion of the total estimated £8.5billion of net business rates revenues expected to be collected in London in 2019-20 (£2.2bn of which will be generated in Westminster). Business rates now

fund all former general government revenue grant funding for Transport for London (TfL), the GLA and London Fire Brigade, TfL’s former capital investment grant and prior year council tax freeze grant funding for the police (MOPAC). Business rate income is now the GLA group’s second largest source of revenue after transport fares.

55

Scenario results

56

Executive summary

The study area

Good growth in the CAZ

Baseline analysis

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Scenario results Good Growth | CAZ+

To CAZ+ Boroughs

To GLA

To HMT

365

183

4,821

487

243

4,638

37

19

5,313

50

25

5,294

Source:; Arup

Business rate retention – cumulative to 2041 - £m2019 Retention scenario 1 – 75% above 2020 baseline Retention scenario 2 – 100% above 2020 baseline Retention scenario 3 – 75% above 2020 baseline with 5 year resets Retention scenario 4 - 100% above 2020 baseline with 5 year resets

All monetary results are expressed in £2019 prices Gross figures refer to outputs without considerations to additionality assumptions

57

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Scenario results Good Growth – results by CAZ+ boroughs – 2020 to 2041

Growth to 2041 (rank)

Commercial floorspace (sqm)

Jobs (FTE)

GVA (£m)

1

Westminster

2

City of London

863,000

City of London

3

Camden

429,600

Camden

45,300

4

Tower Hamlets

344,500

Tower Hamlets

5

Southwark

286,400

6

Islington

7

1,123,700 Westminster

City of London

Homes

Business rates (£m)

32,410 Westminster

33,200

Southwark

13,960

Southwark

6,500

Camden

120

Tower Hamlets

14,500

Camden

12,130

Camden

5,680

City of London

110

39,000

Camden

12,100

Islington

9,090

Islington

4,500

Southwark

70

Southwark

30,100

Islington

5,800

Tower Hamlets

7,600

Tower Hamlets

3,310

Islington

40

262,700

Islington

29,500

Southwark

4,700

Lambeth

5,030

Lambeth

2,470

Tower Hamlets

30

Lambeth

128,000

Lambeth

11,000

Lambeth

1,800

City of London

2,970

City of London

1,780

Lambeth

20

8

Hackney

91,400

Hackney

9,800

Hackney

1,600

Kensington and Chelsea

1,700

Kensington and Chelsea

890

Hackney

10

9

Kensington and Chelsea

30,100

Kensington and Chelsea

2,100

Kensington and Chelsea

Hackney

1,440

Hackney

710

Kensington and Chelsea

10

10

Wandsworth

430 Wandsworth

1

103,800 Westminster

500 Wandsworth

300

100 Wandsworth

870 Wandsworth

16,880 Westminster

410

Source:; Arup

38,700 Westminster

6,100 Wandsworth

120,000

Residents (people)

All monetary results are expressed in £2019 prices unless noted otherwise Figures for GVA and employment do not take into account potential transfers from other parts of London.

58

Executive summary

The study area

Good growth in the CAZ

Baseline analysis

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Scenario results Planned growth | CAZ+

To CAZ+ Boroughs

To GLA

To HMT

103

52

4,690

137

69

4,638

10

5

4,830

13

6

4,825

Source:; Arup

Business rate retention – cumulative to 2041 - £m2019 Retention scenario 1 – 75% above 2020 baseline Retention scenario 2 – 100% above 2020 baseline Retention scenario 3 – 75% above 2020 baseline with 5 year resets Retention scenario 4 - 100% above 2020 baseline with 5 year resets

All monetary results are expressed in £2019 prices Gross figures refer to outputs without considerations to additionality assumptions

59

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Scenario results Planned Growth – results by CAZ+ boroughs – 2020 to 2041

Growth to 2041 (rank)

Commercial floorspace (sqm)

Jobs (FTE)

GVA (£m)

City of London

Westminster

2

City of London

244,900

City of London

60,612 Westminster

3

Camden

119,400

Camden

26,589

Tower Hamlets

4

Tower Hamlets

97,100

Tower Hamlets

23,085

5

Southwark

78,500

Southwark

6

Islington

73,700

7

Lambeth

8

Hackney

9

Kensington and Chelsea

8,900

10

Wandsworth

1,900 Wandsworth

314,000 Westminster

72,385

Homes

Business rates (£m)

22,206 Westminster

32,410 Westminster

19,187

Southwark

13,960

Southwark

6,500

Camden

32

8,388

Camden

12,130

Camden

5,680

City of London

30

Camden

6,996

Islington

9,090

Islington

4,500

Southwark

20

17,675

Islington

3,334

Tower Hamlets

7,600

Tower Hamlets

3,310

Islington

10

Islington

17,436

Southwark

2,679

Lambeth

5,030

Lambeth

2,470

Tower Hamlets

9

34,300

Lambeth

6,549

Lambeth

1,036

City of London

2,970

City of London

1,780

Lambeth

4

25,300

Hackney

5,807

Hackney

902

Kensington and Chelsea

1,700

Kensington and Chelsea

890

Hackney

3

Kensington and Chelsea

1,552

Kensington and Chelsea

232

Hackney

1,440

Hackney

710

Kensington and Chelsea

2

430 Wandsworth

0.2

423 Wandsworth

50 Wandsworth

870 Wandsworth

16,880 Westminster

117

Source:; Arup

1

Residents (people)

All monetary results are expressed in £2019 prices unless noted otherwise

Gross figures refer to outputs without considerations to additionality assumptions

60

Executive summary

The study area

Good growth in the CAZ

Baseline analysis

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Scenario results Decline of sorts | CAZ+

To CAZ+ Boroughs

To GLA

To HMT

-175

-87

4,551

-233

-116

4,638

-16

-8

4,314

-22

-11

4,322

Source:; Arup

Business rate retention – cumulative to 2041 - £m2019 Retention scenario 1 – 75% above 2020 baseline Retention scenario 2 – 100% above 2020 baseline Retention scenario 3 – 75% above 2020 baseline with 5 year resets Retention scenario 4 - 100% above 2020 baseline with 5 year resets

All monetary results are expressed in £2019 prices Gross figures refer to outputs without considerations to additionality assumptions

61

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Scenario results Decline of sorts – results by CAZ+ boroughs – 2020 to 2041

Growth to 2041 (rank)

Commercial floorspace (sqm)

1

Wandsworth -

2

Kensington and Chelsea

Jobs (FTE)

5,400 Wandsworth 20,600

Kensington and Chelsea

GVA (£m) 339 Wandsworth 1,232

Kensington and Chelsea

Residents (people) 32 Westminster

Homes

4,440 Westminster

Business rates (£m) 2,310 Wandsworth -

161

Southwark

1,910

Southwark

890

Hackney

1

-

5

Kensington and Chelsea

5

Hackney

-

40,400

Hackney

-

2,931

Hackney

-

454

Camden

1,660

Camden

780

4

Lambeth

-

51,700

Lambeth

-

3,433

Lambeth

-

532

Islington

1,250

Islington

620

Lambeth

-

7

5

Islington

-

121,300

Southwark

-

8,993

Southwark

-

1,353

Tower Hamlets

1,040

Tower Hamlets

450

Tower Hamlets

-

16

6

Southwark

-

121,400

Islington

-

9,041

Islington

-

1,693

Lambeth

690

Lambeth

340

Islington

-

17

7

Tower Hamlets

-

161,000

Tower Hamlets

-

11,984

Camden

-

3,574

City of London

410

City of London

240

Southwark

-

32

8

Camden

-

189,800

Camden

-

13,864

Tower Hamlets

-

4,257

Kensington and Chelsea

230

Kensington and Chelsea

120

Camden

-

52

9

City of London

-

401,900

City of London

-

31,123 Westminster -

9,797

Hackney

200

Hackney

100

City of London

-

53

60 Westminster -

197.7

10

Westminster -

531,300 Westminster -

38,595

City of London

-

11,194 Wandsworth

120 Wandsworth

Source:; Arup

3

All monetary results are expressed in £2019 prices unless noted otherwise

Gross figures refer to outputs without considerations to additionality assumptions

62

Recommendations

63

Executive summary

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Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Recommendations Good growth The recommendations below are not aimed at tackling every aspect of the CAZ+ area’s needs. Many of these have been covered in other reports on central and indeed Greater London. The small number of ideas presented here are focused on thinking about those things that could help to deliver good growth as outlined and analysed in this report focusing on access to resources for upkeep and investment, better co-ordination, a collective voice, flexibility of approach and resourcing and enforcement to enhance the quality of life for the area’s residents, workers and visitors.

Governance and leadership

Finance and incentives

1.

Ensure that the case for good growth for the CAZ+ is understood in the context of the rest of the UK’s economy and that the case for a thriving CAZ+ area is made to and supported by Central Government.

5.

Encourage key stakeholders to lobby Central Government with a single voice for greater devolution (including over fiscal powers and specifically business rate retention) for the CAZ+ area as part of the wider London and UK cities’ empowerment agenda.

2.

Improve collaboration between a range of CAZ+ stakeholders, including the GLA, Boroughs, business improvement districts (BIDs), investors, the construction industry and neighbourhood forums, to respond quickly to emerging disruptive factors

6.

3.

Ensure that London government adopts a more flexible good growth planning approach – for example in relation to retail and “experiential” uses and allowing floorspace growth close to major transport nodes. This would allow the CAZ+ to fulfil more of its economic potential.

Consider whether new and/or existing revenue streams could be used more effectively to help resource activities tackle the externalities of success. The aim of this recommendation and recommendation 4 would be to secure long-term sustainable funding of city management services for the CAZ+ area. (See also recommendation 7 below).

7.

Improve transparency around Section 106/CIL payments so that there is better understanding of the contribution the private sector is making through these financial mechanisms.

4.

Regularly review how the CAZ+ area is performing against a set of Good Growth objectives and targets and highlight successes and opportunities for further improvement

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Baseline analysis

Good growth in the CAZ

Model methodology

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Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Recommendations Good growth Transport, infrastructure and housing 8.

Make the best use of new transport capacity that will benefit the CAZ+ to facilitate growth in employment and where practicable, housing for the benefit of those who wish to work or live in the CAZ+.

9.

Support policies that are aimed at providing a range of housing tenures to meet various needs and affordability criteria.

Quality of life 10. Strengthening the enforcement and management of construction sites, utility activities, road works and anti-social behaviour to mitigate the negative impacts of built environment activities on local neighbourhoods.

65

Appendices

66

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Appendix 1 Policy context | Statutory documents

The current London Plan, with further alterations, was adopted in 2016 and sets out the spatial development strategy for Greater London, providing a framework for the development and use of land to 2036. It provides a strategic, London-wide policy context within which boroughs should set their local planning policies.

The London Office Policy Review (LOPR) shows how the relationship between the number of jobs and occupation of office floorspace has been changing in recent years and develops a series of scenarios for the future demand for office floorspace in London.

This document provides guidance on London Plan policies to realise development capacity and improve infrastructure, movement and services in the CAZ whilst securing a quality environment that makes it the iconic core of the city.

The revised National Planning Policy Framework sets out government's planning policies for England and how these are expected to be applied.

The Healthy Streets Approach is the system of policies and strategies to help Londoners use cars less and walk, cycle and use public transport more. It aims to improve air quality, reduce congestion and help make London's diverse communities greener, healthier and more attractive places to live, work, play and do business.

The Mayor's Transport Strategy sets out plans to transform London's streets, improve public transport and create opportunities for new homes and jobs. To achieve this, the Mayor wants to encourage more people to walk, cycle and use public transport.

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Appendix 1

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Appendix 3

Appendix 1 Policy context | Greater London Authority | documents review

Provides guidance on the implementation of policies in the 2016 London Plan related to London’s Central Activities Zone and, where relevant, the North of the Isle of Dogs.

It was drawn up in the context of the National planning Policy Framework (NPPF).

Advocates a 'missionorientated' approach to the development of 'adaptive' strategies for high street renewal. Such strategies are comprised of the actions to be taken by purposefully formed partnerships in response to specific placebased environmental, social or economic challenges.

The report focuses on the functions of London’s CBD that make it a unique area within Central London rather than the totality of Central London, including its role as a residential area. By considering the various interactions between different functions (CBD) the report aims to understand what underpins its uniqueness and economic dynamism.

Issued every six months to assist those preparing planning projections for London in the medium term.

It provides an overview of recent economic conditions in London, the UK and the world economies with analysis of important events, trends and risks to short and medium-term growth.

Provides data and analysis of London’s economy to inform strategy development including the 2016 London Plan, Economic Development Strategy and Transport Strategy. Concludes that whilst London is strong across many economic measures, there are risks ahead, and issues around equitable distribution of benefits.

Summarises the evidence on the economic impacts of Brexit on the London and UK economies.

It looks both at the impacts that have been already observed since the EU Referendum (e.g. impacts on investment and GDP) and at potential future impacts, both in the short and longer term.

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Baseline analysis

Good growth in the CAZ

Model methodology

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Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Appendix 1 Policy context | Greater London Authority | documents review

Aims to provide an update on retail in London and its prospects for the future.

Through analysing emerging trends affecting the retail industry and the implications these may have, this report should contribute to a renewed understanding of the role of retail in London and how policy might support this.

The 'Productivity trends in London' report looks at the reasons for the capital’s high overall level of productivity and the factors behind the sharp slowdown in productivity growth in the post-financial crisis period.

This release was the first publication of GVA estimates by the ONS following a balanced methodology and included estimates of GVA at the local authority level in the UK. This report summarises and analyses the ONS data of these publications.

This paper sets out the rationale for investing in infrastructure and the current levels of investment in London, specifically in reference to transport. It takes a more holistic approach to transport expenditure.

This report presents updated employment projections for London by sector and borough to 2041. The borough site projections take into consideration trends in jobs growth, and expected employment site developments.

This report sets out an integrated programme of work that seeks to enhance the design of buildings and neighbourhoods for all Londoners.

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Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Appendix 1 Policy context | Other non-statutory documents review

The Office Occupancy report examines recent trends in workplace density and utilisation and will inform the BCO Guide to Specification.

Recognising the growing importance of agile working, the study has supplemented the density data with an analysis of space utilisation

This study examines London’s Central Activities Zone (CAZ) in terms of the supply of, and demand for, small offices and mixed use development, specifically the balance between office and residential development.

This report provides a plan for the Central London boroughs to address future challenges and drive change through collaboration.

Increasing the capacity and reach of public transport, developing cleaner modes of transport and connecting more Londoners to digital networks will be key.

This report looks at the current challenges and possible futures of the capital's central district, making recommendations to ensure it can thrive as a place to live, work and visit.

The LESD is a database that records recently completed employment developments and those in the pipeline in London. The LESD brings together information from numerous sources into one comprehensive database in a standardised and user friendly format.

Cities Outlook 2019 explores how local government cuts since 2010 have impacted UK cities. With the end of austerity in sight, this year’s Cities Outlook looks at how cities have responded to cuts in their spending, and what new avenues for revenue they have been able to explore.

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Appendix 1

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Appendix 3

Appendix 1 Policy context | Other non-statutory documents review

The main objective of this study was to establish an updated baseline position of the supply of industrial land and industrial floorspace in London.

This paper reviews the office employment forecasts that were used to inform the 2012 London Office Policy Review (LOPR 2012) in the light of more recent data. The purpose is to provide an updated view on the forecast demand for office employment space by borough in order to inform the Further Alterations to the London Plan (FALP).

London’s Poverty Profile looks at the extent and depth of poverty in London. It is an independent report that presents evidence from official government data sources. The scope of this report is not limited to low income; it looks at the role of inequality, housing, the labour market, education and health.

The LBS answers questions from businesses about how to optimise their potential in the capital by highlighting to policymakers the challenges that businesses are facing; and outlining how government and industry can collaborate to solve them.

This first-ever National Infrastructure Assessment for the United Kingdom makes recommendations for how the identified infrastructure needs and priorities of the country should be addressed. Government will be required to formally respond to the recommendations made.

The report was commissioned by CLF to provide an analytical base to inform the development of an economic strategy which will outline policy measures, deliverable by constituent boroughs.

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Appendix 1

Appendix 2

Appendix 3

Appendix 2 Borough wide statistics

Area

Office floorspace (‘000 sqm)

Retail floorspace (‘000 sqm)

Employment density (jobs/ha)

Jobs

2018

2000

2018

2000

2018

2000

2018

Islington

1,120

1,342

388

366

173,000

255,000

234

345

City of London

4,616

5,663

178

220

361,000

640,000

866

1,535

438

619

301

306

102,000

152,000

197

293

Tower Hamlets

1,541

2,460

392

386

152,000

333,000

1,247

2,733

Camden

1,967

2,281

564

527

291,000

403,000

510

707

450

472

655

664

147,000

164,000

317

353

5,585

5,448

1,744

1,652

616,000

775,000

318

400

635

513

382

377

140,000

180,000

1,369

1,760

1,059

1,325

397

385

182,000

329,000

935

1,691

337

299

450

456

127,000

147,000

311

360

Hackney

Kensington and Chelsea Westminster Lambeth

Southwark Wandsworth

These jobs estimates may differ from BRES estimates and have been sourced from GLA Economics; the Annual Business Enquiry; the Annual Population Survey, DfES, DWP and MoD The number of jobs in an area is composed of jobs done by residents and jobs done by workers who commute into the area

Source: Valuation Office Agency, GLA; Arup

2000

Executive summary

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Appendix 1

Appendix 2

Appendix 3

Appendix 2 Borough wide statistics Borough wide employment growth | index (2000=100) City of London Islington Southwark Westminster

Camden Kensington and Chelsea Tower Hamlets

Borough wide employment density (jobs/ha)

Hackney Lambeth Wandsworth

City of London Islington Southwark Westminster

Camden Kensington and Chelsea Tower Hamlets

Hackney Lambeth Wandsworth

215 2,575

195

2,075

155

Jobs/hectare

Index (2000=100)

175

135

95 75 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

1,075 Source: GLA; Arup

Source: GLA; Arup

115

1,575

575

75 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

These jobs estimates may differ from BRES estimates and have been sourced from GLA Economics; the Annual Business Enquiry; the Annual Population Survey, DfES, DWP and MoD The number of jobs in an area is composed of jobs done by residents and jobs done by workers who commute into the area

Executive summary

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Good growth in the CAZ

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Appendix 1

Appendix 2

Appendix 3

Appendix 2 Borough wide statistics Borough wide commercial floorspace growth | index (2000=100) Westminster

Camden

City of London

Hackney

Islington

Kensington and Chelsea

Lambeth

Southwark

Tower Hamlets

Wandsworth

London

Index

125 120 115

105 Source: Valuation Office Agency; Arup

Index (2000=100)

110

100

95 90 85 80 75 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Executive summary

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Appendix 1

Appendix 2

Appendix 3

Appendix 2 Borough wide historical planning | Commercial floorspace Difference between historical commercial floorspace change (2011/12 to 2018/19) and additional floorspace required (2011 to 2036) at borough level

53,375

50,384

Commercial floorspace (sqm)

50,000 40,000

38,056 33,232

30,552

28,408

30,000

18,760

20,000

11,000

10,750 6,968

10,000

12,864

17,688 13,250

12,328

5,250

3,625

-5,375

-10,000

-8,375 -14,750

-20,000

Camden

City of London

Hackney

Islington

Kensington and Chelsea

Indicative annual commercial floorspace required 2011 to 2036 Assuming an average of 13.4 sqm per job

Lambeth

-15,375

Southwark

Tower Hamlets Wandsworth

Achieved annual change in commerical floorspace 2011 to 2018

Westminster

Source: London Plan – indicative space that “should” be delivered; actuals - VOA)

60,000

Executive summary

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Model methodology

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Recommendations

Appendix 1

Appendix 2

Appendix 3

Appendix 2 Borough wide historical planning | Residential floorspace Difference between historical residential floorspace change (2011/12 to 2018/19) and additional floorspace required (2011 to 2036) at borough level 250,000

166,010 150,150

150,000 118,919 103,285 100,000

86,450 70,590

50,000

93,787 78,853

65,650

65,609

61,982 50,37548,360

40,162

31,720 22,856 9,490 7,621

-

Camden City ofBRES London Islington andEnquiry;Lambeth Jobs estimates may differ from estimates andHackney have been sourced from GLA Economics;Kensington the Annual Business the Annual PopulationSouthwark Survey, DfES, DWPTower and MoD Hamlets The number of jobs in an area is composed of jobs done by residents and jobs done by workers whoChelsea commute into the area Indicative annual residential floorspace required 2011 to 2036

Assuming an average dwelling size of 65sqm

Source: Valuation Office Agency, GLA; Arup

Residential floorspace (sqm)

200,000

Wandsworth

Achieved annual change in residential floorspace 2011 to 2018

50,302

Westminster

Source: London Plan – indicative space that “should” be delivered; actuals - VOA)

228,215

Executive summary

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Baseline analysis

Good growth in the CAZ

Model methodology

Appendix 2

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Healthy Streets Indicators

Air quality and heathy streets Major road arteries of the CAZ+ experience high levels of NO2, especially in the City and the East sub-area. There are many efforts to try and combat this. For example Westminster City Council launched their Air Quality Manifesto to pro-actively reduce the dominance of vehicle traffic in the West End by introducing a parking surcharge for diesel cars, expanding the provision of EV charging facilities and improving conditions for pedestrians.

These factors should perhaps be applied ambitiously in the CAZ+ given the particular importance of its public realm for both ‘movement’ and ‘place’ functions set out in the Mayor’s Roads Task Force (RTF) Report. Greater walkability and cyclability within the CAZ+, and enhanced streetscapes, will improve the experience of visitors, residents and workers alike.

Source: TfL

The Healthy Streets agenda seeks to tackle air quality issues. The mayor of London is placing significant attention on addressing air pollution and health inequalities in the city through large scale investment in active travel routes, improved public realm and open spaces, funded by initiatives such as the ultra low emission zone. Healthy Streets identifies ten indicators that should be considered in any new development (see the figures opposite and overleaf).

Performance of streets against the Healthy Streets indicators

TfL studies indicate that some eight million trips are made each day in the capital which could be cycled; 13% of which are based to/from or within the CAZ. Investments to make cycling safer in the centre of London have resulted in a doubling of uptake in some parts.

Key takeaways • • •

For the CAZ+ to be able to grow and thrive, there is a need to address air quality issues.

Measures are being taken to ensure that this issue is addressed.

Increasing access to high quality active travel infrastructure can help to encourage increased footfall throughout the CAZ+.

Source: TfL

Executive summary

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Baseline analysis

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Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Appendix 2 Cycle flows, morning peak hour (2014)

Active travel and healthy streets

Density of pedestrian activity in London (2015)

Mode share of trips by origin and destination, 2015

Source: TfL

Source: TfL

Source: TfL

Baseline (without interventions proposed in MTS) PM2.5 concentrations, 2030 compared to WHO limits

Estimate of future cycle trips by location, 2036 Source: TfL

Source: TfL

Source: TfL

Yellow: >10 and <15 micro gram per cubic metre; Red: >15 micro gram per cubic metre

Executive summary

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Baseline analysis

Good growth in the CAZ

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Appendix 2

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Appendix 1

Appendix 2

Appendix 3

Public Transport Accessibility Levels in the CAZ+

Public transport The central location of the CAZ+ and the density and variety of transport modes servicing the area means it is probably the most accessible areas of employment in the country. It achieves the highest Public Transport Accessibility Level (PTAL) score. This means Underground and rail stations are a short walking distance from any point in the CAZ+ area.

During morning peak travel, around 90% of journeys made into the CAZ+ are by bus, rail or Underground; it is indisputably the most connected area of the UK. But with increasing residential and employment levels, there is pressure on the public transport network. Across the city, public transport use is expected to increase from 9.5 million trips per day (2014) to 12.3 million by 2041. Some stations are forced to shut down for short periods during peak times to prevent overcrowding. TfL have indicated that 17 stations across the city will face regular closure or the use of “one-way” systems by the early 2030s without further investment; ten of these are inside the CAZ+ area.

Source: TfL

Investment in public transport will therefore be needed to retain and increase accessibility to major areas of employment agglomeration in the CAZ+ and to ensure that outer parts of London can overcome poor transport connections that currently limit access to jobs, education and training.

Crowding on London Underground A way of measuring changes in crowding over time on the London Underground network is through the “Journey Time Metric” that is used for performance reporting; from which an implicit measure of crowding can be derived and shown in the figure opposite

Trend in London Underground crowding, 13-period moving average 2003-20

Tube improvements led to a significant reduction in crowding up to 2016, however since then, aggregate levels of crowding have shown a generally increasing trend. The Elizabeth line will provide some relief on some corridors but the impact on crowding relief may be only temporary. Depending on growth in demand on the system, some crowding is expected to return to, and then exceed today’s levels.

Key takeaways • •

Source: TfL

•

The CAZ+ enjoys the highest level of accessibility by public transport in the UK. Non-car modes of transport dominate with some 90% of journeys into the CAZ+ made by bus, rail, or Underground.

Despite recent improvements in crowding levels and the advent of the Elizabeth line (Crossrail), pressures on the system remain and further investment will be required to tackle overcrowding particularly on the Underground.

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Appendix 3

Appendix 2 Road accessibility

Average vehicular speeds on road network (weekday AM peak)

Data collected by Uber suggests that in Q4 2019, the highest density of traffic in London on a weekday can be found along the A40, A401 and A5201 (New Oxford Street, Bloomsbury Way, Theobalds Road, Clerkenwell Road and Old Street, and Rosebery Avenue). There are pinch points, with data showing lower average speeds around main junctions at Tottenham Court Road station, Farringdon Road/Clerkenwell Road, and Old Street roundabout. Until 2017/18, bus speeds in the city had been falling consistently as a result of congestion on the network. According to TfL, whilst the decline has started to reverse, speeds in Q3 2019 were still lower than they were in 2014.

Van traffic has been growing in London – and the country more generally. To tackle this trend in the West End, the Crown Estate has established a freight consolidation centre to combine deliveries, reduce congestion (and indirectly air pollution). The system has reduced vehicle movements to the 35 participating stores on Regent Street by up to 85%. Increased online retail and expectations for faster delivery may continue to put pressure on the road network. Consolidation centres can help to ensure the road network in the city remains free-flowing.

The ultra-low emission zone (ULEZ), introduced in April 2019, charges the most polluting vehicles when entering the city centre. Most of the CAZ (as opposed to the CAZ+) falls within the charging zone. The ULEZ is likely to result in fewer journeys being made by private vehicles into the city centre.

Average travel times on road network (weekday AM peak) Key takeaways • • •

Source: Uber movement

Road speeds and congestion in the CAZ+ area remain a challenge.

Until 2017/18 bus speeds had been falling with those in Q3 2019 lower than they were for the corresponding period in 2014.

Light Goods Vehicle (van) traffic has been growing in the CAZ+ area. Programmes such as the Crown Estate’s development of freight consolidation centres has helped to reduce delivery traffic.

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Appendix 2 Road accessibility

2015

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Junctions operating at over 80 percent capacity, flow weighted 2041, baseline forecast without MTS interventions

Forecast changes in road network capacity, baseline without interventions proposed in MTS, 2015 to 2041

Source: TfL

Source: TfL

Forecast changes in traffic speeds by region, baseline without interventions proposed in MTS, 2015 to 2041

Forecast changes in distance travelled and time spent travelling by road, baseline without interventions proposed in MTS, 2015 to 2041

Source: TfL

Red indicates reduced capacity, green increased capacity

Source: TfL

Source: TfL

Executive summary

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Appendix 1

Appendix 2

Appendix 3

Appendix 2 Managing the impacts of Brexit Leaving the European Union without a negotiated deal arguably remains one the most significant economic risks to the CAZ+’s economy. The potential impacts on trade in goods and services (from changing tariffs), business investment (through uncertainty, higher production costs and delayed capital spending) and the availability of labour and skills (through restrictive migration policy) could reduce the size of the CAZ+’s economy and slow its long-term growth trajectory.

A report on the impact of Brexit by the GLA (GLA October 2019) shows London has so far fared comparatively well when compared to the rest of the UK, although also the analysis highlighted some potential risk factors to London that may manifest themselves as problematic in the future: •

In London, “business births” have fallen, business closures have risen, and there has been a marked decline in the net start-up rate, from 6.1% in 2017 to 1.0% in 2018.

•

14% of jobs in London are held by European Economic Area (EEA) workers, compared with 6% for the rest of the UK

•

Migration controls will reduce labour supply, and output growth, and could make the city less attractive to international head-quarters by reducing the pool of skilled workers

•

60% of jobs held by EEA workers in London would not meet the proposed skills and salary criteria of the Government proposals as of 2019. These have since been revised by the Government. The numbers may have changed.

Key takeaways •

•

Firms who reported being well prepared said they had reviewed their market and supply chains, with 29% saying their have considered restructuring or relocating from the UK

Expected impact on business activities Decisions on investment, employment and exports are expected to be especially adversely affected.

Businesses surveyed are concerned that Brexit will have an adverse effect on exports to the EU, sourcing supplies and materials, demand for products and services, investment decisions and hiring staff (34% high-skilled and 29% low-skilled staff)

Source: London First

•

The UK’s departure from the EU means that the next few years may well be marked by continued uncertainty for the London economy.

A report on the impact of Brexit on London by the GLA last year suggested that whilst London has so far fared comparatively well in the UK context, there are risk factors that might materialise and lead to lower economic growth and employment levels.

Migration controls proposed by the UK government are likely to disproportionately affect London given its historical dependence on EEA labour

51% of large businesses surveyed by London First (which are predominant in the CAZ+) consider themselves well prepared to Brexit, while only 38% of small businesses do.

Source: London First

The economic effects of Brexit on London are hard to disentangle from other factors (the most recent example being the Covid 19 virus).

How businesses rate their Brexit preparedness

82

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Appendix 2 Employment densities

Scenarios

Scenario results

Appendix 1

Appendix 2

Appendix 3

17.5

30.0

17.5

30.0

17.5

30.0

Average space per employee based on existing stock of property ratios in 2020

12.5

17.5

12.5

17.5

12.5

12.5

(sqm/FTE)

n/a

100

n/a

100

n/a

100

Employment has been derived for the extent of floorspace in each scenario. This comprised a calculation of FTE operational employment based on floorspace and recognised employment densities as set out on the HCA employment density guide, the occupier density study from the British Council for Offices, and professional judgement based on a number of other publications. Profiles of job densities for existing and new commercial stock have been built up to 2041, specific to the CAZ+ and specific to each growth scenario.

Good growth In the good growth scenario, trends of increasing job densities are maintained up to a point where they stabilise. The average space required for workers within the commercial property stock in 2041 falls slightly as it accommodates for changing workstyles whilst also providing the required amenity space within offices to retain the appeal of flexible working

As noted earlier in the report, there are likely to be limits to how much floorspace per worker can decrease. Evidence suggest that densities have risen over recent years as economic pressure and technology enablement have combined to encourage changes in work styles. However, it is to be expected that this increase in densities should level at some point. Data suggest that this might be happening now, and, if true, this has important implications for the amount of future employment growth that can be accommodated. Our assumptions of average job densities across all sector uses for each scenario are shown in the figure opposite.

Source of survey

Recommendations

Sector

Date

Unit

NIA

BCO

Office

2013

Sqm/FTE

10.9

NAO

Office

2012

Sqm/FTE

13.2

HCA

Office

2015

Sqm/FTE

10-13

HCA

Retail

2015

Sqm/FTE

17.5

HCA

F&B

2015

Sqm/FTE

17.5

Average space per employee in 2041

HCA

Ent.

2015

Sqm/FTE

30-300

(sqm/FTE)

HCA

Hotel

2015

FTE/bed

0.5

LESD

Office

2012

Sqm/FTE

12.4

LESD

Retail

2012

Sqm/FTE

21

Average space per employee modelled for new property stock built after 2020 (sqm/FTE)

Planned growth In the planned growth scenario, employment growth is mostly delivered through intensification of property assets rather than new developments. This is, to a large extent, delivered through refurbishments that reduce building services design standard and provides more flexible, yet dense spaces.

Decline of sorts In the decline of sorts scenario, slower employment growth reduces job densities in the existing property stock. There is less pressure to intensify use of property and fewer new developments.

15.3

29.0

15.2

29.0

15.3

29.0

11.4

17.0

11.0

16.8

11.5

17.0

n/a

96.0

n/a

96.0

n/a

96.0

14.0

29.0

13.5

25.0

15.0

29.0

10.5

15.0

9.7

14.0

11.5

17.0

n/a

95.0

n/a

90.0

n/a 83

96.0

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Appendix 2 The role of public transport in unlocking land for housing and jobs Transport brings about investment in housing both by improving the viability of developments and creating new markets. Homes in the best connected areas are attractive to the market. Over the last decade or so, a disproportionate amount of development has taken place in very well connected areas. Since 2005 over half of residential development In Greater London has come forward in areas of PTAL 4 and above (a measure of public transport accessibility) as shown in the figure to the right.

Housing completions in London by public transport access of local area (2005 to 2016)

TfL City Planning estimates that an additional 1,000 new homes is associated with 250 new jobs.

Access to central London and good rail services are a key determinant of this.

Source: TfL

A lack of transport provision can impact on the viability of sites for development. Opportunity Areas are London’s largest reservoir of brownfield land, but many of the areas with the greatest capacity for development at present have poor transport connectivity and this can limit private sector investment in housing. As the figure to the right shows, investing in new public transport capacity is therefore important to unlock the delivery of thousands of homes that may not otherwise come forward for development

Key takeaways • • •

Transport has a key role in unlocking housing development and jobs (see figure, right) Housing with high levels of public transport accessibility are more attractive in the market and command higher prices.

Areas with greatest capacity for development in London often have poor transport connectivity, this can limit private sector investment in housing.

Crossrail 2 will support 200,000 new homes and 200,000 new jobs along its route

The Bakerloo Line Extension will enable 25,000 new homes and 5,000 new jobs

The DLR to Thamesmead Extension could enable up to 17,000 new homes and 3,000 new jobs

The London Overground Extension to Barking Riverside will support 11,000 new homes

A Tram Extension to Sutton could support the delivery of 10,000 new homes 84

Executive summary

The study area

Baseline analysis

Good growth in the CAZ

Model methodology

Scenarios

Scenario results

Recommendations

Appendix 1

Appendix 2

Appendix 3

Appendix 3 Further ideas to tackle air quality and other environmental challenges Local

• • • • • •

•

Better management of road and public space to make CAZ+ more attractive to shoppers and visitors (e.g. targeted pedestrian priorities, greening etc.)

Micro-mobility operation zones Ride sharing incentives Cargo bikes Further investment in green spaces (e.g. Wild West End) Building retrofit (perhaps paid by carbon offset payments collected through the planning system; or borough backed insurance programmes that guarantee payback through energy bill savings for retrofits with preferred suppliers).

Parking levies and higher residents parking fees for diesel and high emissions vehicles

Regional

• • • • • •

Retail consolidation centres EV charge points rollout Advertising campaigns Freight consolidation centres to reduce LGV movements Planning for density and mixed-use development Low emission fleets / electrification

85

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