Stimulating the Economy Study

Stimulating the Economy Study London Borough of Bromley Final Report January 2013 Prepared by GL Hearn Limited 20 Soho Square London W1D 3QW T +44 (0)20 7851 4900 F +44 (0)20 7851 4910 glhearn.com

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Contents Section Page 1 KEY FINDINGS 5 2 INTRODUCTION 8 3 ECONOMIC GROWTH POTENTIAL & EMPLOYMENT LAND REQUIREMENTS 13 4 POTENTIAL FOR A PREMIER BUSINESS PARK 19 5 POTENTIAL FOR INTENSIFICATION WITHIN EXISTING MAIN EMPLOYMENT AREAS 31 6 POTENTIAL FOR ECONOMIC GROWTH AROUND BIGGIN HILL AIRPORT 36 GL Hearn Page 3 of 39

Quality Standards Control The signatories below verify that this document has been prepared in accordance with our quality control requirements. These procedures do not affect the content and views expressed by the originator. This document must only be treated as a draft unless it is has been signed by the Originators and approved by a Business or Associate Director. DATE ORIGINATORS APPROVED January 2013 Nick Ireland Graeme Tulley Planning Associate Director Planning Director Limitations This document has been prepared for the stated objective and should not be used for any other purpose without the prior written authority of GL Hearn; we accept no responsibility or liability for the consequences of this document being used for a purpose other than for which it was commissioned. GL Hearn Page 4 of 39

1 KEY FINDINGS 1.1 This report has been prepared to examine the potential to stimulate the economy within the London Borough of Bromley increasing both its business rates base (particularly through new employment development) and its employment base. It has been prepared against the context of the recent economic recession and, moving forward, cuts to the financial resources available to the Council from traditional sources. 1.2 The report was commissioned to examine how the local economy could be stimulated. It initially considers whether a major business park development could be accommodated within the Borough. The report concludes that there are a number of key constraints which would restrict the potential to do so: competition from existing established business park sites at Kings Hill, West Malling and Crossways, Dartford which exhibit further development potential; further development schemes in the pipeline at The Bridge Dartford and Ebbsfleet Valley, the latter which offers exceptional public and private transport accessibility; the lack of an optimum site within the Borough with sufficient physical capacity, a high quality environment and exceptional public and private transport accessibility which could compete with the above, and attract both developer and occupier interest; policy constraints, in particular Green Belt designation, which would increase the complexity and development risk associated with bringing forward a new premier business park within the Borough. 1.3 Thus whilst in physical terms there might be potential to accommodate a major business park development, we do not consider that there is the evident market demand within the M25 SE quadrant to support a further business park scheme based on the information currently available. 1.4 Furthermore we consider that the planning risk would be too great. A major business park would most likely fall within the Green Belt. While there are examples of Green Belt business park developments, such as Surrey Research Park in Guildford or Chester Science Park, these have previously been based on meeting an identified sub-regional or regional need. To bring forward a major business park scheme would require a joint evidence base and support from authorities at a sub-region level in view of the duty to cooperate introduced in the Localism Act or support from the London Plan. We consider that this would be very difficult to achieve. 1.5 Against this context, the report has sought to consider what wider opportunities there might be to support enhanced economic performance and growth in the business rates base within the Borough. The report focused on three opportunity areas: Bromley Town Centre, the Crays Employment Area and Biggin Hill. GL Hearn Page 5 of 39

1.6 There is a clear case in policy terms for promoting further office floorspace provision in Bromley Town Centre, and the Town Centre AAP and the current Local Plan Review provides a policy basis for doing so. The particular challenges are in delivery terms. Demand for new office floorspace from corporate occupiers is focused within a 5 minute walking catchment of Bromley South Station. However within this area there are limited evident cleared sites or land with a low existing use value which would support viable office development in the short-term. 1.7 The density of existing office development at Elmfield Road together with lease arrangements are identified as factors which may limit the potential for refurbishment or redevelopment of existing office floorspace in this area, although we consider that planning policies should support this. 1.8 This does not mean that there is no potential for office development. However it probably does mean that there is a need for a strong and proactive public sector role in bringing forward new office floorspace. 1.9 The report does identify the potential for smaller-scale office floorspace provision within mixed-use scheme in Bromley Town Centre to cater for demand from local SMEs. It also notes the potential for extension of the Docklands Light Railway to Bromley North which could help to support development potential in the Town Centre (but has not at this stage been considered in detail). 1.10 The Cray Avenue Strategic Industrial Location offers potential for the upgrading of commercial floorspace over time. However the demand profile is considered to focus on industrial, warehouse and retail warehousing activities. The nature of existing uses and quality of environment are considered to preclude significant demand from commercial office occupiers in the short-to-medium term. Planning policy should however support the renewal and upgrading of commercial floorspace in this area and protect land for continued employment and associated activities. 1.11 Potential for additional office floorspace outside of the existing town centre foci of Bromley and Orpington is considered to exist around the Crayfield Business Park, a 5.5 hectare site close to the A20 and the nearby Crayfield Industrial Park. There are some opportunities for upgrading and intensification of use of land on these sites and for the extension of the sites onto adjoining land. Adjoining land comprises either open space or falls within the Green Belt. While Green Belt is afforded significant protection by national policy, given identified demand and limited potential within existing employment areas the Council could make a case for selective review of Green Belt boundaries in this area to meet identified local development needs for employment floorspace. This would need to be justified at the Local Plan examination. 1.12 The report has also considered the potential for employment development on land at Biggin Hill Airport. This location does not benefit from strong public transport or road links and the current GL Hearn Page 6 of 39

occupancy of employment land at this location highlights limited demand from general office or industrial occupiers at this location. However there is an opportunity for incremental growth in the employment and business rate base over the period to 2031 if supported by a positive planning policy framework. This would focus on the development of the Airport as a hub for aviation-related activities, with an integrated strategy seeking to deliver supporting infrastructure in hotel and training facilities, local amenities and modest office floorspace to meet demand from local SMEs. The designation of the airport as a Strategic Outer London Development Centre would support this in policy terms. 1.13 We consider that a targeted but multi-pronged strategy which seeks to develop the economy and business base of the Borough over the period to 2031 but avoids over-reliance on development on a single location has the greatest chance of success. This would involve: continued proactive activity to nurture growth of the office market in Bromley Town Centre over the medium-to-long-term; progressive upgrading of employment land at Crays Avenue in line with the SIL status (principally to provide modern industrial premises); upgrading, intensification and potential extend the concentration of employment use along Main Road, Ruxley (to provide office floorspace, with suitable parking provision); supporting the incremental growth of employment activities at Biggin Hill Airport focusing on aviation-related activities, with modest provision of small-office units and investment in associated business infrastructure and amenities. 1.14 There is a clear financial incentive for the Council to support these initiatives. The Government s proposals for business rate retention come into effect from April 2013. The Council will receive 30% of any uplift in business rates in the Borough. 1.15 There is also a clear incentive for it to act proactively to guard against any reduction in business rates yield which could affect the authority financially. This is a particular issue for Bromley in a context in which its locally-collected business rates base declined by -3% in real terms between 1999-2010. 1 1 Larkin, K. & Wilcox, Z. (2011) Capital Gains: What does the Local Government Resource Review mean for London? Centre for Cities, London. GL Hearn Page 7 of 39

2 INTRODUCTION 2.1 The UK Government is firmly committed to supporting sustainable economic growth. This is enshrined in economic 2 and planning policy 3. 2.2 The Government is introducing reforms to the collection and spending of business rates to enhance business rate retention by local authorities in line with its economic growth and localism agendas. These are due to be implemented from April 2013. 2.3 The London Borough of Bromley (LB Bromley) has commissioned GL Hearn to prepare this report to examine the potential of the Council to stimulate its local economy both to create jobs and wealth within the local area, and to enhance the Council s income from business rates at a time of considerable financial pressures. 2.4 The report focuses on considering opportunities for physical investment and development to enhance economic performance and the business rates yield. It focuses on employment uses (rather than retail or leisure development 4 ). Whilst softer interventions including business support, enterprise development, small business finance and skills/training initiatives can help to create and support local employment, these fall beyond the scope of this report. Business Rates Reforms 2.5 During the course of 2011 and 2012 the Government has been consulting on proposals to introduce a business rates retention scheme to incentivise local authorities financially to bolster their economy and business rates base. This forms part of the Government s wider localism agenda. 2.6 The primary legislation required to do this is now in place through the Local Government Finance Act 2012. The Government published a Policy Statement on Business Rates Retention in November 2012 5 setting out how business rates retention will work in practice. 2.7 Currently business rates are collected by local government, pooled centrally by national government, and then redistributed to local authorities as part of formula grant funding. In simple terms, the Government allocates formula grant in accordance with the Local Government Finance Settlement. It takes account of the relative needs and resources of different local authorities using a number of formulae, and allocates residual monies on a per head basis. There are also controls in the system (floor damping blocks) to ensure that a base percentage growth in grant is achieved year-on-year. There are no restrictions on what formula grant can be spent on. 2 HM Treasury & BIS (2011) Plan for Growth 3 CLG (2012) National Planning Policy Framework 4 These are considered separately by other studies 5 CLG (2012) Business Rates Retention: Policy Statement GL Hearn Page 8 of 39

2.8 The formula grant system means that although a high proportion of formula grant funding which Councils receive comes from business rates, currently the levels of funding which council receives is not connected to the level of business rates that the Council is able to collect. The Government is now reforming the system to relate funding more closely to changes in the business rates yield in each local authority with the aim of incentivising local authorities to proactively encourage economic development. 2.9 From April 2013, the system for allocating business rates revenues will change. For the initial year 2013-14 an initial start-up funding assessment will be undertaken with Government calculating a funding level for each local authority using the formula grant funding approach. This will include 50% of the aggregate business rates yield in the area (the local share) and monies from Revenue Support Grant (the central share). Moving forward, if the Council is able to increase its business rates yield, it will receive a share of the growth. 2.10 50% of the growth in business rates yield is intended to be retailed locally. However this will be distributed with 60% going to the Borough Council and 40% to the Greater London Authority. The Borough will therefore receive 30% of any future uplift in the business rates yield. 2.11 There are evidently risks with the new system that should the business rates yield in the Borough fall this could impact on funding. This is a particular issue for Bromley in a context in which its locally-collected business rates base declined by -3% in real terms between 1999-2010. 6 2.12 The Government will however put in place a safety net limiting the exposure to this, with the safety net threshold set at 7.5%. Overall the combination of potential risk and reward provides a strong incentive for the Council to act proactively to grow its business base. Planning Policy Context 2.13 As this report focused on opportunities for physical development, planning policies are relevant. The Borough s current development plan is made up of the London Plan (adopted July 2011), saved policies from the Bromley Unitary Development Plan (adopted July 2006) and the Bromley Town Centre Area Action Plan (adopted October 2010). Planning applications are assessed against these documents and policies in the National Planning Policy Framework 7. 2.14 The Council is however in the process of developing a new Local Plan for the Borough. There is an opportunity for the findings of this report to influence policies within the new Local Plan. 6 Larkin, K. & Wilcox, Z. (2011) Capital Gains: What does the Local Government Resource Review mean for London? Centre for Cities, London. 7 CLG (March 2012) National Planning Policy Framework GL Hearn Page 9 of 39

2.15 For the purposes of this report we have sought to consider primarily opportunities for business rather than retail development. Business development in this context is defined in regard to the B use classes. London Plan Context 2.16 Bromley falls within Outer London and the South London Sub-Region. The Plan seeks polycentric development, encouraging locally sensitive approaches through LDFs to enhance and promote existing and emerging strategic and local economic opportunities (Policy 2.6). 2.17 It encourages economic growth in outer London by enabling existing sources of growth to perform more effectively, sectoral development, improving accessibility to competitive business locations (especially town centres and strategic industrial locations), strategic and local coordination within development corridors. It encourages improvements to business environments, proactive intervention including through mixed use development to support town centres, promotion and development of the culture/leisure offer and joint working (Policy 2.7). 2.18 Bromley is defined in the Plan as a Metropolitan Centre which serves a wide catchment extending across a number of Boroughs, and supports a significant proportion of higher-order comparison goods retailing. It is identified in the plan as having high growth potential, the plan setting out that it could accommodate strategically significant levels of growth with strong demand and/or large scale retail, leisure or office development in the pipeline and with existing or potential public transport capacity to accommodate it. It has a regional/ sub-regional night time economy function. 2.19 In regard to office development, the plan identifies that speculative office development could be promoted on the most efficient and accessible sites; or some office provision could be promoted within mixed-use schemes, but recognises that some long-term net loss of overall office stock through change of provision on less attractive sites might occur. Policies 4.2 and 4.3 provides the basis for this. A need for 1.0 1.15 million sq.m of office floorspace is identified for Outer London between 2011-31. 2.20 The Plan identifies Biggin Hill as a potential Strategic Outer London Development Centre (Policy 2.16). The significance of this reflects its potential strategic economic function of greater than subregional importance. 2.21 The Plan also defines Strategic Industrial Locations (Policy 2.17) which are to be protected for employment and related uses. St Mary Cray is identified as an Industrial Business Park under the SIL policy as is the Foots Cray area which spans the borough boundary with LB Bexley. The Plan indicates that the transfer of industrial land to other uses in the Borough should be restricted. GL Hearn Page 10 of 39

Bromley UDP Policies 2.22 Section 10 of the UDP sets out land use policies relating to business uses. It identifies the Borough s main employment centres as: Bromley Town Centre; the Major Town Centre of Orpington; the District Centres of Beckenham, Penge, Petts Wood and West Wickham; and the Business Areas in St. Mary Cray, Lower Sydenham, Elmers End and at Biggin Hill Airport. 2.23 Bromley Town Centre is the main location for the Borough's office-based businesses. There are approximately 100 hectares of land in industrial or warehousing use, the majority being concentrated within the Business Areas in the Cray Valley, Lower Sydenham (Kangley Bridge Road), Elmers End and Biggin Hill Airport. The Cray Valley is the identified as the largest of these and the area which benefits from the best connections to the M25. It is identified as the Borough s prime location for industrial/warehouse uses. 2.24 The UDP sets out policies relating to employment development. Proposals for large new office development of over 2,000 sq.m are directed by Policy EMP1 to Bromley, Penge and Beckenham Town Centres. This town centres first approach corresponds with national policy and aims to support sustainable travel. 2.25 The identified business areas are protected for uses in the B1, B2 and B8 use classes by Policy EMP4. This policy seeks to restrict retail uses in these areas. The St Mary Cray Business Area is identified as the only location in the Borough suitable for large scale warehousing development of over 1,000 sq.m. 2.26 The UDP includes specific policies related to development at Biggin Hill Airport which limited development within the Major Developed Site (MDS) which covers the Terminal Area, West Camp and East Camp. Development in these areas is intended to be focused on airport-related uses. At South Camp, which is excluded from the Green Belt, wider B1 and B8 uses are considered acceptable where it can be demonstrated that there is a lack of demand for airport-related uses. Green Belt 2.27 Development potential within the Borough is also influenced by Green Belt policies. Green Belts are afforded strong protection from development from the National Planning Policy Framework, London Plan and Bromley UDP. 2.28 Policy 7.16 in the London Plan sets out that the strongest protection should be given to London s Green Belt, and outlines that the Mayor supports the current extent of London s Green Belt and its protection from inappropriate development. GL Hearn Page 11 of 39

2.29 The Bromley UDP outlines in Policy G1 that permission will not be given for inappropriate development in the Green Belt unless very special circumstances can be demonstrated that clearly outweigh the harm by reason of inappropriateness or any other harm. 2.30 These policies largely reiterate national planning policies. The National Planning Policy Framework sets out that Green Belt boundaries should only be altered in exceptional circumstances, through the preparation or review of the Local Plan. When reviewing Green Belt boundaries planning authorities are required to take account of the need to promote sustainable patterns of development. Strategic Development Options Considered 2.31 Set against the above policy context, GLH has sought to define and consider the following strategic options in consultation with LB Bromley officers: Potential for new greenfield business park; Potential for upgrading and intensification of existing employment areas; and Potential for development at Biggin Hill Airport (area designated as SOLDC). 2.32 The second strategic option particularly considers the potential for intensification within Bromley Town Centre and in the Crays Industrial Area. 2.33 The remaining sections address each of the above. GL Hearn Page 12 of 39

3 ECONOMIC GROWTH POTENTIAL & EMPLOYMENT LAND REQUIREMENTS 3.1 National planning policy emphasises that Local Plans should be developed on the basis of meeting objectively-assessed development needs. The Council has undertaken a number of studies over recent years to identify requirements for employment land and floorspace. In this section we review these existing studies; and assess them against more recent economic forecasts. 2009 Economic Development and Employment Land Study 3.2 The 2009 Economic Development and Employment Land Study was undertaken by GVA Grimley and published in January 2010. 3.3 This Study highlighted a number of key issues with the local economy, including out-commuting of higher-paid residents, the quality and age of the office stock in Bromley Town Centre, and challenges in finding quality small and medium-sized industrial premises in the Borough. It identified opportunities for town centre investment, economic growth associated with Biggin Hill Airport, and development of the visitor economy amongst others; but also risks linked to the dependence on a number of key employers and competition from Croydon and other locations. On this basis a strategy of seeking to develop the knowledge economy, diversify the business base, deliver town centre renewal in Bromley and Orpington and harness the potential of the borough as a green and sustainable place to both live and work was recommended. 3.4 The Study drew on employment projections prepared for GLA Economics by Experian which forecast growth in total employment of 12,000 (9.9%) between 2006-26. It identified the main growth sectors as: business services, construction, banking & finance, and education and health. Manufacturing and property-related services were expected to shed jobs. Two alternative scenarios were presented a high aspiration scenario whereby employment would increase by 38,600 (37%) with an associated significant reduction in net out-commuting; and a realistic improved performance scenario whereby employment would increase by 27,600 (26%) resulting in a more moderate drop in net commuting. 3.5 These scenarios were converted into forecasts of floorspace requirements, which ranged from between 31,000 149,000 sq.m for office floorspace, between 2.000 168,000 sq.m for other business (largely industrial) floorspace, and for between 8,500 sq.m growth to a net reduction in 61,000 sq.m of warehouse floorspace. 3.6 Overall the Study recommended strong policies for protection of existing employment land. Based on the forecast need for office floorspace it encouraged office development within key town centres Bromley and Orpington - and locations proximate to the M25 including Ruxley and the Crays. It GL Hearn Page 13 of 39

indicated that commercial office provision should be maximised within the Bromley Town Centre AAP and Orpington Masterplan. 3.7 It identified an opportunity to promote high-value manufacturing at Biggin Hill Airport (particularly at South Camp) and the potential to promote some small-scale office development such as a business/ innovation centre. It concluded that the scope of employment development feasible at and around Biggin Hill Airport goes beyond that associated directly with high-value aviation related activities and the site holds potential for other sectors including small scale businesses (office occupying) activities including FBS sector occupiers. 3.8 Similarly it identified the potential for a business centre/ small business park in the East Bromley area (the Crays employment area). It also identified opportunities for infill/ redevelopment at a number of existing employment sites and recommended policies protecting employment land in the Borough. 3.9 A number of additional sites were considered to assess their potential for future employment development. These included GSK, LEB Depot adjacent Churchfields, Homesdale Road, Green Street Green and land around Knockholt Station. It recommended that the protection of employment at Homesdale Road but was largely dismissive of the potential at the other locations considered. 3.10 A number of sites within the Borough were identified as having potential for infill/ redevelopment, comprising: Maybrey Business Park, Worsley Bridge Road; Oakfield Road, Penge North; Homesdale Road Gas Works; Kangley Bridge Road; Sevenoaks Road, Cray Avenue South; Cricket Lane; and Klingers, Edgington Way. 2010 Market Demand and Feasibility Report 3.11 As a follow on to the above Study, the Council commissioned GVA Grimley to prepare a Market Demand and Feasibility Report examining potential (in commercial terms) for office development at: West Camp, Biggin Hill; Cray Valley; and Orpington Town Centre. 3.12 This Study considered that there was potential demand for small office units at West Camp, Biggin Hill from businesses associated with the airport, others which might benefit from international business travel links, and local start-up companies. It considered that poor public transport links would inhibit demand for larger office units. 3.13 Within the Cray Valley, the assessment identified the potential for development of land along the eastern side of A224 Cray Avenue both to the north and south of the Nugent Shopping Park; and for further land allocation and intensification of land use around Main Road / Sandy Lane in the GL Hearn Page 14 of 39

Ruxley area around the Crayfields Business Park and close to the A20 Crittalls Corner Junction. Combined it identified the potential to accommodate 89,000 sq.m of office floorspace although we would consider this a high-level estimate with further work required to confirm development potential. Indeed the Study recommended further viability and feasibility work to inform drafting of a Development Brief. 3.14 The third area considered was Orpington Town Centre. The Study recognised the more localised market and scale of office floorspace in Orpington relative to Bromley; with office floorspace focused in 1970s/80s 4/5 storey blocks on Knoll Rise and in smaller units above retail premises. GVA considered that Orpington remains a relatively good location for local occupier activity, certainly given public transport connectivity and low rental levels and concluded that the Council should allocate sites to accommodate significant new office floorspace in the centre, and encourage investment and redevelopment of existing premises; as well as consider the potential for a use on demand meeting/ resource facility for small businesses. 2012 Retail, Office, Industry and Leisure Study 3.15 This more recent study prepared by DTZ has update forecasts of employment land requirements; and considered further the potential for office floorspace development in Bromley and Orpington Town Centres. Its conclusions differ somewhat from the previous GVA studies particularly in regard to office development potential within the key town centres, and in our view are grounded more strongly in market realities. 3.16 This Study provides updated forecasts of employment floorspace requirements covering the 2006-31 period, indicating in particular a requirement for 121,000 sq.m of office floorspace to 2031 driven by forecast growth in the business services and financial services sectors. A falling requirement for industrial/ other business space (-9,200 sq.m) and warehousing (-7,700 sq.m) is forecast which is expected to be partially offset by a small forecast growth in non B-class uses requiring employment land (with demand for 2,300 sq.m forecast to 2031). With the inclusion of a modest allowance for choice and flexibility, a total floorspace requirement across uses of 120,500 sq.m is forecast primarily for office floorspace. 3.17 It is important to interpret the forecasts in context. They are based on 2009 GLA forecasts with the sector distribution of employment growth aligned to that of the forecasts used in the Experian forecasts used in the 2009 Economic Development and Employment Land Study. 3.18 Taking into account current supply (e.g. through vacant premises) a shortage of 100,000 sq.m of office (B1) supply is identified; with a surplus for other B-class uses. This points to the potential to encourage office development in town centres, and redevelopment of industrial land for office GL Hearn Page 15 of 39

floorspace. On this basis the Study recommends the strong protection of existing sites/premises with office development potential in town centres and on other employment sites (with specific reference made to land at Biggin Hill and the Cray Valley). 3.19 This Study points to stronger office development potential in Bromley (than Orpington) focused within a 5 minute walk of Bromley South Station recognising that the train service from Bromley South to central London is Bromley s primary strength in promoting/ developing the office market. We concur with this. It encourages more intensive development of office space in the Town Centre particularly in the southern part of the centre. It identifies the potential of the centre to attract further major employers with substantial back-office functions. 3.20 The identified potential of the Bromley office market reflects its accessibility and occupier base, and the wider quality of the centre. The occupier base includes a mix of small and medium-sized firms, including a cluster of holiday operators (e.g. Cosmos Holidays), small/medium-sized solicitors / accountants (e.g. Baker Tilly, MTA Solicitors) and insurance (RBS). However it is notable that annual take-up has been just c. 2,500 sq.m over the past five years with rental values rarely exceeding 20 per square foot. 3.21 It recommends that future additional office provision should be focused around the core cluster on Elmfield Road and on sites close to Bromley South Station, and promotes a strategy seeking to enhance critical mass in this area. This is focused towards the opportunity sites G, J and L in the AAP and the Elmfield Road Business Improvement Area. 3.22 Away from this area, the report recommends development of smaller office premises in secondary locations such as Bromley North, which will appeal to smaller businesses and start-ups. 3.23 In Orpington, the Study concludes that office space has been difficult to market with very local demand and the peripheral location of the town centre from the train station. Rental values peak at 12.50 psf. It does not anticipate that significant additional office space will be required, but encourages retention of existing office properties (such as on Knoll Rise) that are of sufficient quality to meet future demand. New Econometric Forecasts 3.24 The studies considered above are largely based on 2009 econometric forecasts with various assumptions used to estimate employment floorspace requirements based on these. 3.25 We consider that 2009 forecasts should be treated with some caution, linked particularly to changes in economic circumstances (a double-dip UK recession but stronger performance of London relative to other parts of the UK particularly in terms of the office market) and employment trends (whereby GL Hearn Page 16 of 39

employment levels have typically held up more strongly than economic forecasts were envisaging early on in the recession, with higher reductions in productivity than previously forecast). 3.26 To inform this study we have therefore sought to consider more recent forecasts of economic performance using econometric forecasts from Experian dated November 2012. The headline forecasts of employment growth are shown below. Figure 3.1: 2012 Forecasts Total Employment (Index, 2011=1) Source: Experian, Nov 2012 3.27 Experian s latest forecasts indicate growth in total employment of 35,000 over the 2011-31 period. This represents employment growth of 28% compared to forecast growth of 22% across London and 15% across the UK. It represents an annual growth rate (GVA) of 3.1% per annum over the 2011-31 period compared to 2.7% pa forecast for London. 3.28 These forecasts should be treated with some caution as they do not take account of land supply or policy factors (for either housing or employment). The forecasts are however notably more optimistic than the forecasts used in previous studies. 3.29 Over the period to 2031 the forecasts indicate that employment growth will be driven by professional and other private services (c. 15,000 additional jobs) and public services (c. 5000 jobs, with growth in health and education offset by declining employment in public administration). Employment is also forecast to grow in finance and insurance (2,300 jobs) and information and GL Hearn Page 17 of 39

communications (2,300 jobs) which together with professional services can be expected to drive growth in demand for office floorspace. 3.30 The Experian forecasts indicate a modest decline in manufacturing employment (-600 jobs), but a growth in employment in utilities, wholesale and retail (3,100 jobs) and transport/storage (1,500 jobs). Figure 2.3: Employment Forecasts by Broad Sector, 2011-31 Source: Experian 3.31 Overall we consider that the Experian figures would result in a net requirement for industrial/warehouse land (given the expected growth in sectors which occupy warehousing space) and a substantial requirement for office floorspace (potentially of over 250,000 sq.m). 3.32 The scale of employment growth envisaged is stronger than forecast in previous studies. However taking account of commercial property market dynamics particularly in regard to the office market we consider that the forecasts represent an overly optimistic view of economic growth potential in the Borough. We consider that forecasts set out in existing studies particularly the DTZ Retail, Office, Industry and Leisure Study seem more realistic. GL Hearn Page 18 of 39

4 POTENTIAL FOR A PREMIER BUSINESS PARK 4.1 This section considers the potential to deliver a major business park (of c. 80+ hectares in scale) within LB Bromley to simulate the local economy. It responds to the interpretation of the project brief which we considered required the following tasks to be undertaken: Market demand for employment development, particularly for a business park of up to 300 acres in the M25 South Market; Identification and a comparative assessment of the potential accessible locations for a new business park in the M25 Market, should a need exist; Assessment of whether the demand could instead be met through the intensification or extension of existing employment areas in preference to development of a greenfield (and potentially green belt) site. 4.2 This section addresses the first two points above; whist the third is considered in the subsequent sections (Section 5 and 6). Defining a Premier Business Park 4.3 It is first useful to define what a large business park might look using the following hierarchy of employment sites: Figure 2.1: Hierarchy of Employment Sites Site Typology Characteristics Premier Business Park Large sites with a regional or national profile and appeal to international occupiers. These sites often relate to established office markets, are close to existing centres, motorway networks and airports, and benefit from strong public transport infrastructure, landscaping and on-site amenities. The sites must be of a sufficient scale to support these, and typically accommodate over 100,000 sq.m commercial floorspace. Large Business Park These are often more modest in scale with a more sub-regional and local profile and occupiers. The nature of uses can be more varied, and include industrial and distribution uses. These sites are landscaped and branded, and provide a high quality of environment. Strategic Mixed Use Site These sites are often of a substantial scale, of over 30 ha, and offer good local and strategic road access. They accommodate a range of local occupiers and GL Hearn Page 19 of 39

multi-nationals often across B use classes. They can be important focal points for employment at a sub-regional level. Major Town Centre Office Quarter These locations have an established local office market and demonstrate a critical mass of floorspace and accommodate larger floorspace units. They can accommodate and are attractive to businesses with a national or international presence. Local Town Centre Offices These typically serve a more local market and often comprise smaller units serving SMEs. Office floorspace in these centres in typically more dispersed and varies in terms of the quality and age of stock. Local Industrial Estate This is typically smaller in size and serves a local market and occupiers. The performance of estates can vary considerable in terms of scale, quality and value proposition. Single User or Sector Sites This can comprise single user sites for businesses of a range of sizes. It can include larger employers, but also employment uses which exist at a location for business-specific or historical reasons. It can include important local employers. In some circumstances we see employment sites which are focused at specific uses but which can accommodate multiple businesses. 4.4 In assessing the potential for a new business park of 80-120 hectares we have sought to consider the potential for a premier business park, using the above typology. 4.5 Examples of premier business parks in London and the South East would include Chiswick Park; Green Park, Reading; Kings Hill, West Malling or IQ Farnborough. 4.6 We have sought to identify the typical characteristics of this sort of site to provide an assessment framework against which to consider alternative potential locations. The key characteristics of successful premier business parks are: Appropriate scale accommodating sub-regionally strategic development which isn t capable of being accommodated on existing sites (for instance units of over 1,500 sq.m); Quality attractive to national and international investors & occupiers, serving sub-regional occupiers and labour markets. Capable of attracting inward investment; Clear identity site with a clear identity and focus, for instance on office, research, manufacturing or distribution/ logistics. Provision of supporting infrastructure, environment & amenities; GL Hearn Page 20 of 39

Policy fit supports leading or target economic sectors, sub-regional competitiveness and is situated at a sustainable location accessible by public transport. 4.7 For the purposes of this section, we are largely considering whether a prime location exists which affords strong road and rail access and has is of a sufficient scale to support a critical mass of employment development. M25 Office Market 4.8 The office market in London can be subdivided into Central London (including the West End, Midtown, City, Southbank, East London and Docklands), and the four quadrants of the M25 (NE, NW, SW, SE). The M25 market includes towns/ boroughs within Outer London and adjoining counties. 4.9 Across the M25 market, office take-up has averaged 2.55 million sq.ft per annum over the last 10 years. The office market has however been more severely affected by the recession than that for industrial space, with take-up on average 20% below the long-term trends over the last few years (c. 2.1 million sq.ft pa). 4.10 Availability in Q3 2012 stands at 10.3 million sq.ft across the M25 market in Q3 2012 equating to a vacancy rate of 7.9% 8. 62% of this is Grade A space (either new or second hand). The vacancy rate has fallen consistently over previous last four quarters. The trend in supply continues to be downwards, particularly reflecting limited speculative development since 2008. 4.11 Within the M25 market, take-up is biased more towards the western quadrants (NW and SW). These markets are more established. They relate more strongly to Heathrow, which was an initial driver for growth and supported investment particularly from American technology companies requiring fast international connections. These markets have now matured and have a critical mass of corporate occupiers and a sizeable existing office stock. This supports further investment. 4.12 In Q3 2012 office take-up in the south-east quadrant totalled 62,795 sq.ft compared to 107,360 sq.ft in the south west quadrant, 326,540 sq.ft in the north west quadrant and 649,788 sq.ft in the M4 market. 4.13 Knight Frank forecast total take-up of 2.1 million across the M25 market in 2012 which is consistent with that for 2010 and only around 15% below the 10-year annual average. Overall the market is out-performing many markets elsewhere across the UK, in part influenced by the strength of the Central London Office Market. It remains well positioned to capture investment from companies in growing sectors of a global economy including technology-focused firms. 8 Knight Frank Research (Q3 2012) M25 Offices GL Hearn Page 21 of 39

4.14 Current prime rents for office floorspace stand at 20.50 per square foot (psf) at Kings Hill in West Malling, Kent. This compares to 22.50 psf at Gatwick (City Place) and 24.50 psf in Croydon. Rental levels are more modest than those in key locations in the western sectors contrasting for instance with 30.00 psf in Uxbridge and Staines, and 46 psf at Chiswick Park. This is a reflection of the relative demand profile. Incentives within the SE quadrant to entice occupiers vary from 27 months at Kings Hill to 33 months in Croydon. 4.15 It is expected that the level of Grade A space available will fall over time and this will feed through to place upward pressure on rents with tight supply conditions beginning to emerge in a number of markets. In time this may provide a spur to new speculative development. Potential Demand Profile 4.16 We would expect new business park development within LB Bromley or more widely within the M25 South East quadrant to be attractive to: Relocations of back office functions from Central London; Local and sub-regional demand from existing corporate occupiers. 4.17 There is a clear history of firms relocating back office functions from Central London to lower cost locations within the M25 market. This is typically driven by cost considerations. 4.18 However property costs are just one of a number of factors which influence the locational decisions of office occupiers. Other factors include Availability of skilled labour Accessibility Lease flexibility/ ability to expand Quality environment Rental levels Proximity to clients/ competitors 4.19 We would expect a rental tone of at least 20 psf for new business park development to be necessary to make development viable. This would offer a significant rental discount to Central London but would be comparable to a number of other decentralised office locations in the M25 Market. 4.20 Access to a skilled workforce is also a key factor in affecting business investment decisions. A location within Bromley would benefit from being able to draw on a London-based labour pool (as well as from Kent). The critical issue in terms of access to labour within an outer London context is public transport access by rail. GL Hearn Page 22 of 39

4.21 A key issue in seeking to capture new investment at a new business park development would be the level of remaining capacity at existing, established competitor sites. Established sites such as Kings Hill, West Malling or Crossways, Dartford provide have an existing critical mass of occupiers as well as associated facilities and infrastructure which would likely be more attractive to companies relative to a new greenfield development site. 4.22 To consider the potential for additional business park development it is therefore necessary to assess completing supply. Competing Sites 4.23 We have sought to consider competitor locations in the first instance in regard to established employment locations. A review of business park and town centre proposals in the M25 SE quadrant points to the following competing locations: Croydon Town Centre Crossways, Dartford Kings Hill, West Malling Ebbsfleet Valley 4.24 We consider each of these in turn. Croydon Town Centre 4.25 Croydon has the largest office stock of the South London Metropolitan Centres as defined in the London Plan, totalling 7.9 million sq.ft. It lies 7 miles to the north of the M25 and 10 miles south of central London. 4.26 Croydon saw significant expansion as an office market between the 1950s-1970s as firms, particularly the Home Office, relocated from Central London. It witnessed continued investment from Government relocations in the late 1990s and 2000s. There is a significant overhang of dated office space in the centre, which has seen little recent new office development. The vacancy rate is over 20%. 4.27 The current rental tone for offices in Croydon is 24.50 psf for prime space, with incentives of c. 33 months. 4.28 The Croydon market has also lost a number of key occupiers, including Nestle to Gatwick (City Place) and Bank of America (which has consolidated to offices in Canary Wharf, the City and Bromley). GL Hearn Page 23 of 39

4.29 There are however a number of new office schemes which now look more likely to come forward. Terrace Hill s Chroma scheme, a 258,500 sq.ft office block opposite East Croydon Station, has planning consent; as does Ruskin Square, a mixed use scheme including 900,000 sq.ft of office accommodation on a 13 acre site being developed by a JV partnership of Schroders, Stanhope, LB Croydon and John Laing. In total borough-wide there is 1.4 million sq.ft of office space consented. There is one new-build office block under construction. 4.30 While there is to some degree an issue of perception in Croydon, the town does support a substantial office stock and major occupiers, and is well connected. It benefits from a frequent train service to both Victoria and London Bridge (15 mins) and to Gatwick Airport (15 mins). Accessibility has also been enhanced by the Tramlink and East London Line Extension providing access to a significant workforce catchment. Crossways, Dartford 4.31 Crossways is one of the biggest mixed-use development schemes on the M25, located adjacent to Bluewater Shopping Centre. It includes both office and warehouse development. The site benefits from its location on the M25, adjacent to Junction 1a, and offers a range of amenities which includes food and beverage, a health club, an Asda supermarket and three hotels including Hilton International. 4.32 This site is now in multiple ownership and has planning consent for approximately 3 million sq ft and is 85% built. Development took place between 1990 and 2009 and included a mix of B1 (a), (b) and (c) ranging in size from 1,000 sq ft to 100,000 sq ft. Existing occupiers include RBS, Asda, Gefco, Barclays, the Cooperative, Honeywell and Regus. 4.33 Shepherd development have up to 80,000 sq ft remaining including buildings of 12,000 and 25,000 sq ft as part of their Crossways Point development. Frogmore have approximately 25,000 sq ft remaining as part of a single phase development (now completed) which included a smaller 18,000 sq ft unit and a number of small units from 1,000 sq ft. 4.34 Arguably the availability on existing plots at this site could potentially be exhausted before a new greenfield business park came on stream. However further land is being promoted at the Bridge, Dartford. 4.35 The Bridge, Dartford is situated adjacent to Junction 1a of the M25. It is being promoted by Prologis, in conjunction with Darford Borough Council. The site is being marketed as a mixed use business and innovation park for up to 1.8 million sq ft on a 264 acres site. Sainsbury s occupy a large distribution unit but the offices are being offered on a pre-let build to suit basis, with no occupiers secured, despite marketing the sites for over 5 years. GL Hearn Page 24 of 39

Kings Hill, West Malling 4.36 Kings Hill Business Park has been developed as part of a mixed use development of the former West Malling Airfield by Liberty Rouse over the past 21 years. It is located two miles from M20 Junction 4, so is not a motorway location but accessible from the M20. A bus service links the site to West Malling Station. The nearest major town is Maidstone (11 miles). The business park is being delivered as part of a wider, substantial mixed use development; and the site therefore includes a district centre and a range of amenities; together with residential development. 4.37 The business park has approximately 600,000 sq ft of existing offices with consent for an additional 1.4 million sq ft gross. Amenities include Liberty Square which provides retail and restaurants, David Lloyd Fitness and a golf course. There is a fully integrated transport system linking West Malling station and road links to the M20. 4.38 The development provides a range of B1 units, from serviced offices to small starter units, regional offices and national corporates along with disaster recovery, back office, R & D and call centres. Key occupiers include ADT, Kimberley Clark, Marsh, Kent and Medway NHS, Cabot Financial, Amlin Underwriting, Genzyme, Rail Europe, Barclays, Sterling Insurance and Viridor Waste Management. There are 3 styles of buildings from fully specified air conditioned pavilion style offices to lower specification centrally heated buildings to cover/satisfy a wide range of occupier requirements. Ebbsfleet Valley 4.39 Land Securities have a significant land holding between Ebbsfleet International Station and Bluewater. They have planning consent for 9,250 homes and development of up to 6 million sq.ft of offices around the international station. 4.40 The location benefits from excellent international connectivity, with Southeastern highspeed trains linking to St Pancras in 17 minutes, and to Brussels in 1 hour 41 minutes and Paris in 2 hours 5 minutes. 4.41 While little office development has taken place to date, the intention is to market the offices on a pre-let build to suit basis to encourage large corporate occupiers to take advantage of the excellent communications to central London and Paris via Eurostar. GL Hearn Page 25 of 39

Potential Locational Opportunities for Premier Business Park 4.42 We consider that to support a premier business park (in the context of sub-regional competition) would require a top quality site to be identified. We consider that the site would need to be at least 35 hectares in size and situated at a location which offered strong, fast access to the trunk road network; as well as a public transport journey time of less than 30 minutes into Central London. 4.43 There are few evident development opportunities which meet these criteria. We have undertaken a high-level assessment of the potential around key M25 motorway junctions. Our conclusions are as follows: Junctions 1a: The existing, successful Crossways Business Park is located to the east of and accessed from this junctions. Further development land is available and being marketed to the west at the Bridge, although we consider this to be more attractive for industrial/ distribution uses; Junction 1b: A local industrial estate exists close to the junction at Orbital One. This includes a mix of now primarily dated office and industrial floorspace. There is little further development opportunity at this location; Junction 2: A major highway intersection between the A2 and M25. We consider that topography and impact on the strategic road network would likely preclude major employment development at this location; Junction 3: A major highway intersection between the M20 and M25. Employment development could feasibly be located on land to the north or south of the M20 and west of the M25 subject to provision of improved access. Land to the north is currently occupied by a golf club. Access would however be a key constraint given that development would impact on a major motorway intersection. Other potential sites located to the south of the M20 (west of the M25) would require substantial highways works to provide access. Swanley Rail Station is located relatively closeby; Junction 4: A relatively less busy junction which (subject to detailed assessment) might be more able to support new employment development. The junction links the A21 to the M25. Land close to the junction is heavily wooded, however new development could feasibly be located the west of the A244 Court Road which falls within LB Bromley. Knockholt Station is located relatively closeby; Junction 5: This junction purely provides an intersection between the M25 and M26. Chisptead lies to the south but there appear to be few sites which benefit from strong road and rail access; 4.44 Besides existing consented development around Junction 1a (and the other development schemes considered above), our initial assessment would suggest greater potential exists around Junction 4 than at a number of other competing locations. 4.45 Key constraints to development of a premier business park across a number of these locations relate to the infrastructure investment required to support delivery (which can impact on development viability) and in regard to Green Belt policy and environmental impact (influencing planning risk). GL Hearn Page 26 of 39

4.46 To be successful, a new business park would need: Excellent road and rail connectivity with a journey time of 30 mins or less to Central London; Sufficient scale of 0.5 million sq.ft+; Supporting amenities, such as convenience retail, gym, creche etc; Supportive planning policy providing certainty to attract market interest. 4.47 A business park within the M25 SE quadrant would need to provide a range of unit sizes, from small/ starter units (< 3,000 sq.ft), medium-sized units (7,000 15,000 sq.ft) and larger units (15,000 40,000 sq.ft). Depending on the size of site, it might provide B1 and B2 space however the site would need masterplanning to ensure that the uses are not inter-mixed. 4.48 An initial phase would need to provide sufficient critical mass to get the scheme off the ground (30,000 50,000 sq.ft) and including speculative development. The initial phase might include a hotel and amenity uses, and most 3 rd generation business parks provide a range of on-site amenities. Typically a scheme would take 10+ years to achieve a critical mass of floorspace this is a key issue in regard to considering positioning of a new greenfield scheme relative to existing, established sites. 4.49 In viability terms a scheme would not be able to support significant infrastructure investment. The typical delivery model would be through a joint venture between landowner and development with the developer drawing down and building-out plots over time subject to market demand. 4.50 A green belt location introduced, from a commercial perspective, significant time and cost implications in regard to planning; and increases the planning risk associated with development. A sizeable scheme would also potentially require sub-regional level support in view of the duty to cooperate introduced in the Localism Act. There would need to be a demonstrable identified need to support a major business park proposal within the Green Belt. 4.51 We understand that land at Hewitts Farm is owned by a local landowner. It comprises farmland and woods. However the land falls within the Metropolitan Green Belt. Planning consent for a regional shopping centre at this location was refused in 1989. A further key issue is the strength of public transport links. The site lies close to Knockholt Station. Rail services however are relatively slow, with a typical direct journey time of 39 minutes to London Bridge and 44 minutes to Charing Cross. 4.52 We consider that whilst the Hewitts Farm site could potentially support development of a business park in physical terms, the combination of planning risk, lengthy public transport links to Central GL Hearn Page 27 of 39

London and competition from other sites within the M25 SE market would deter potential credible development interest. Feasibility of Major Business Park Development 4.53 The feasibility of a new major business park serving the M25 SE quadrant needs to be considered in regard to: How it might be positioned relative to competing sites/ proposals; The market attractiveness of potential locations for such a proposal; The feasibility of attracting development interest; and The deliverability of the development scheme. 4.54 Crossways and Kings Hill both represent established business parks in the SE M25 market and form the closest comparables to the potential scheme being considered. 4.55 Both schemes are mature and provide a range of unit sizes to accommodate small businesses through to larger regional and national occupiers together with on site amenities. Rents are typically around 20.00-22.00 psf with incentives of up to 2 years for a 5 year term certain. Both parks have taken over 20 years to mature and now account for the majority of medium to large take up in the market area. A rental level of at least 20 psf would be necessary to support viable development with build costs of c. 100-150 psf. 4.56 During the period up to 2007/2008 there were relatively consistent take up levels of 50,000 sq ft plus for Crossways and 50,000-100,000 sq ft for Kings Hill comprising small start-up companies, companies looking for a regional office in the SE M25 and corporate occupiers, often looking to relocate staff from central London or provide support/back office facilities. However, demand has fallen away significantly in the last 5 years with average take up for each park in the region of 10,000-20,000 sq ft for Crossways and 25,000-50,000 sq ft for Kings Hill. Interestingly Liberty are in the process of submitting a planning application on 1 million sq ft of the remaining consented land for change of use to residential. 4.57 We consider that the SE M25 quadrant is thus already well serviced by two mature business parks with further long term competition from The Bridge, Dartford and Ebbsfleet in the pipeline. Both benefit from excellent transport links. 4.58 In addition, take up has fallen away significantly since 2007/2008 and there is currently a modest amount of regional demand catering for deals between 10-20,000 sq ft but no real demand for larger corporate acquisitions. GL Hearn Page 28 of 39

4.59 Kings Hill has the critical mass of an established business park but even here the developer is now looking at the potential for alternative uses on the majority of the remaining development land. In the current stage in the property cycle the lack of funding and lack of appetite for speculative development, coupled with poor demand from occupiers are likely to deter developers from taking forward another business park in the SE M25 quadrant. 4.60 Notwithstanding these commercial issues, there are significant planning constraints to development in regard to Green Belt policy which would heighten development risk. 4.61 We consider in this context that the developer appetite for a further major business park to serve this market would be a notable risk to the deliverability of a further scheme, even should a suitable site be identified. GL Hearn Page 29 of 39

GL Hearn Page 30 of 39

5 POTENTIAL FOR INTENSIFICATION WITHIN EXISTING MAIN EMPLOYMENT AREAS 5.1 Taking account of the conclusions set out in the previous section regarding the potential and risks associated with seeking to deliver a major business park, not least in planning terms, this section moves on to consider alternative options looking particularly at the potential for intensification within key employment areas in the Borough. 5.2 Drawing on the findings of the Council s 2009 Employment Land Review, the associated Market Demand and Feasibility Report and the 2012 Retail, Office, Industry and Leisure Study, and discussions with LB Bromley Officers, our analysis focuses on the opportunities which exist in Bromley Town Centre for additional office development; and for the regeneration of the Crays Employment Area. Potential for economic growth at Biggin Hill is considered in Section 6. Office Floorspace Provision in Bromley Town Centre 5.3 DTZ s recent Retail, Office, Industry and Leisure Study provides, in our view, a robust assessment of demand and development potential for office floorspace in Bromley Town Centre. 5.4 Bromley Town Centre is identified as a back office location with modest take-up focused particularly over the last three years towards demand from local-based SMEs, but exhibiting potential to capture investment from the relocation of back-office functions from banking, insurance and professional services occupiers from Central London on cost grounds. 5.5 Existing corporate occupiers include Direct Line Group, Bank of America, Baker Tilly Accountants and Cosmos Holidays. There is a cluster of holiday operators and small/ medium-sized solicitors. The occupier mix contrasts for instance with Croydon (focused on Government back-office functions and engineering firms) and the M4/ Thames Valley (focused on technology-based firms, particularly US based). 5.6 The rail links to Central London, particularly the fast 16 minute service to London Victoria, is identified as a key market driver for corporate investment/ relocations, with demand from this market segment likely to be focused within a 5 minute walk of Bromley South Station. Take-up is however constrained by a lack of Grade A stock. 5.7 Take up in the town averages around 56,000 sq. ft. per annum. However, this does not take account of variations between some of the years, caused as a result of economic conditions at the time. Not surprisingly, the best years were from 2005 through to 2009 when the average annual take up was nearer 75,000 sq. ft. Whilst some 63,000 sq. ft. of space was let/sold in 2011, take up GL Hearn Page 31 of 39

in 2010 (30,000 sq. ft.) and 2012 (28,500 sq. ft.) were disappointingly low but hardly an indication that the market is in any way failing. In total 16% of office floorspace is vacant. 5.8 There is a local market from SMEs which the DTZ Study indicates could be met both in the existing office core around Elmfield Road/ Bromley South and around Bromley North. However the Study identifies that it is around Bromley South that the potential exists for net growth in office floorspace (building on and enhancing critical mass in this area), with the likelihood that values/ deliverability and the nature of the market would more likely support maintenance (with upgrading) of stock at Bromley North rather than significant net growth in the quantum of stock. Car parking is identified as a key constraint to the office market in this area. 5.9 The Town Centre Area Action Plan (adopted in 2010) identifies the key development opportunities which exist in Bromley Town Centre and sets out policies to guide development in these areas. We have sought to review (at a high level) the key sites identified as having office development potential, taking account of policies in the AAP and the conclusions of the DTZ Study. 5.10 The following opportunities are identified as having potential for office floorspace development: A. Bromley North Station 9 ; C. Former Town Halls and South Street Car Park; F. Bromley Civic Centre; L. DHSS Building. 5.11 Table 4.2 in the AAP identifies the potential for 7,000 sq.m of office floorspace comprising 2,000 sq.m at Bromley North Station 10 ; 5,000 sq.m on the former Town Hall and South Street Car Park sites; and replacement floorspace on the site of the former DHSS building and Bromley Christian Centre. The AAP also identifies the opportunity for the Council to increase the efficiency of land on the Civic Centre site, with potential rationalisation of council office accommodation to allow provision of floorspace for other occupiers. 5.12 The Council is considering a new policy for Bromley North Station as part of the current Local Plan Review. It is anticipated that any further office allocation could be combined with a replacement provision for Northside House. However, a key constraint is the lack of a direct rail link to Central London 11. However there is potential that the Docklands Light Railway could be extended (through a two phased scheme) from Lewisham to Catford and then Bromley 12. The potential extension of the DLR could provide a boost to the office development potential around Bromley North; albeit that 9 This allocation has been quashed following a legal challenge to the policy 10 In addition to potential replacement of Northside House 11 Currently typical journey times are 35-45 minutes to Victoria with a change at Bromley South 12 We understand that Transport for London are currently considering the feasibility of extension of the DLR to Bromley North GL Hearn Page 32 of 39

Bromley South will retain a stronger rail link to Central London. An assessment of the scale of the potential has yet to be undertaken. 5.13 The AAP also identifies potential for up to 5,000 sq.m of office floorspace on the former Town Halls and South Street Car Park site. However, following a competitive marketing of the site, the Council have entered into an exclusivity agreement with the Cathedral Group to develop a high quality hotel and conference centre on the site. This will support the business rates base. The distance of the site from Bromley South Station we consider would act to limit market demand for office floorspace in the short-term. 5.14 The Civic Centre site provides office accommodation in buildings of varying ages / quality in a campus environment. The site and buildings we understand are primarily in the Council s ownership. Any redevelopment of this site would need to respect the setting and legibility of the Palace, which is listed. 5.15 Following a review of the Council s current and future accommodation needs in 2011, it was decided that the Council would remain on the campus site in the short term. However we consider that the site does offer the potential through redevelopment to create an office campus. We consider that a pre-let would be necessary to underpin the scheme but that it could be attractive to occupiers in offering an in/edge-of-town campus or business park environment. It would need to be supported by adequate parking provision to attract private sector occupiers. We would recommend detailed feasibility testing should the Council want to consider this opportunity further. 5.16 The Council is currently seeking a development partner to take forward retail-led development of Site G. Whilst the planning framework for the site does not currently explicitly support office accommodation, this should be reviewed further as the development scheme progresses. 5.17 It is likely that the scale of office floorspace provision (and particularly any net increase in provision) on sites J and L would be relatively modest. However there may be potential for over-station development at Bromley South, which could add substantially to the office offer. 5.18 There is potential for the delivery of new-build and refurbished office space in Bromley Town Centre and it will be important that sites with potential to support office floorspace are identified in planning policy terms and protected from inappropriate development. 5.19 However it should be recognised that delivering new office floorspace is unlikely to be easy: where there is an existing use value, office-led development in many circumstances is unlikely to generate a sufficient uplift in value to make development viable. This can be demonstrated for instance by considering the potential for redevelopment or intensification of land within the existing office core at Elmfield Road. Elmfield Road provides primarily 1970s and 1980s stock and some of the older GL Hearn Page 33 of 39

buildings do not meet Grade A requirements in terms of floorplates, flexibility, specification, ceiling heights etc. The area is quite densely developed and occupied with office floorspace provided over 4 or more storeys in many circumstances with undercroft parking. However, the Council is currently examining options for encouraging the redevelopment and intensification of some of the lower density units. 5.20 The viability of refurbishment of office floorspace of individual units is likely to be linked to current occupancy levels and rental income; with an uplift in the rental yield and capital value through redevelopment necessary to justify the capital outlay. For existing well occupied units this may be challenging. However over time, refurbishment may become a viable option. There are also options, through the Local Plan Review, to define a primary office zone centred around Bromley South Station and allocated additional office sites such as Bromley South Station, the HG Wells Centre and Bristol Street Motors sites. 5.21 The potential for redevelopment is also likely to be influenced by the nature of ownership and lease structures. Where for instance a head leasee is paying a ground rent on rents receivable there may be no incentive for the freeholder to consider bringing forward redevelopment and the existing lease structure provides security of income. 5.22 Should the Council wish to consider the potential for redevelopment to provide Grade A floorspace, detailed feasibility work would be necessary including analysis of ownership and lease structures. However we would caution that in many instances the rental uplift which could be achieved through redevelopment may not be sufficient to support redevelopment; and that there are few comparable centres where redevelopment schemes have been successfully achieved in recent years. We consider that the Council would likely need to take a proactive role in land assembly to bring forward a redevelopment scheme for office floorspace in this area in the short-to-medium term. Intensification of Use at Crays Employment Area 5.23 Next we consider the potential for regeneration of the Crays Employment Area. In doing so, we have drawn on the findings of the Market Demand and Feasibility Report prepared by GVA in 2009 and a site visit undertaken in November 2012. 5.24 The Cray Valley is a corridor of varied land use which includes traditional employment uses, retail park and retail warehouse development, and adjoining residential uses. There are two concentrations of activity the first clustered around St Mary Cray station to the north and south of the rail line; and the second to the north of Main Road in the Ruxley area. GL Hearn Page 34 of 39

5.25 The former area is dominated by larger shed developments on the A224 frontage with some smaller industrial/ light industrial activities on sites to the rear such as off Cray Valley Road and Leesons Hill. This area is designated as a Strategic Industrial Location in the London Plan. 5.26 Public transport accessibility is reasonable (although less strong than Bromley South) with St Mary Cray Station providing train services to Victoria in 23-28 minutes. It is also served by Thameslink services. However we would consider that environmental quality along Cray Road is average-topoor (particularly in regard to providing an attractive environment for office development). 5.27 The perception and demand profile for new development along Cray Avenue/ Sevenoaks Way would likely be more biased towards light industrial, trade counter and retail warehousing uses; as opposed to office floorspace. The GVA study identified that agents and developers alike noted that Cray Valley has traditionally been recognised as an industrial, storage and distribution area it was agreed that it was not an aesthetically attractive location for office occupiers and it might provide difficult to change the warehouse image of the area into a recognised office location. Any aspirations for the promotion of the Cray Valley as an office location should therefore be a longterm objective. We concur with this. 5.28 Industrial land around St Mary Cray station is currently well occupied and intensively used. There has been some recent light industrial development and is an evident local market for this and an opportunity to see progressive upgrading of industrial premises over time. However we consider that the potential for commercial office development is limited, unless a sizeable existing development site became vacant (such as for instance the Allied Bakeries site) providing an opportunity to deliver a critical mass of new provision and change perceptions of the area. 5.29 The second area worth consideration is the employment land located on the northern side of Main Road. This area includes the Crayfields Business Park generally higher quality employment sites. GVA s 2009 report identifies that two sites adjacent to the Crayfields Business Park could be considered for potential allocation to provide further employment land however the site to the west is protected public space, whilst the site to the east is Green Belt. 5.30 This area offers greater potential for attraction of B1 employment, subject to detailed feasibility testing, taking account of its environmental setting, and accessibility to the A20 at Crittalls Corner. However viable development would need to be supported by adequate parking provision given the site s distance from rail links. However the policy barriers in regard to development particularly in terms of Green Belt policy together with the impact of office development on local highway infrastructure, represent a clear risk to the deliverability of additional development in this area. GL Hearn Page 35 of 39

6 POTENTIAL FOR ECONOMIC GROWTH AROUND BIGGIN HILL AIRPORT 6.1 In this section we consider the potential for employment development on land around Biggin Hill Airport. 6.2 To assess the potential for further development at Biggin Hill, we have reviewed previous studies produced for the Council by GVA; and for the Airport itself by Nathaniel Lichfield and Partners (NLP). We have also visited the location, discussed development potential and the Airport s growth aspirations with NLP and drawn on our own experience as planning consultants to TAG Farnborough and Luton Airport. 6.3 Biggin Hill is located in the south of the Borough accessed from the A233. It is 13 miles to Central London compared to 30 miles for Stanstead and Luton and 32 miles for Farnborough. It is 7.5 miles and 8 miles respectively from M25 Junctions 5 and 6. The airport is focused on business and private aviation rather than commercial flights. We understand that the Council owns the freehold of the airport. 6.4 The 2009 Employment Land Review identified the potential to promote growth in high-value manufacturing at Biggin Hill, whist recognising the location s poor strategic connectivity (both by road and public transport) identifying that these go beyond that associated directly with high-value aviation related activities and pointing to the potential for small-scale business activities (office occupying) including Financial and Business Service (FBS) occupiers which could be attracted. The potential for a business/ innovation sector was particularly identified. GVA s Market Demand and Feasibility Report suggests that this can particularly be associated with interest from Capital Enterprise Centres (CEC) in delivering small scale office accommodation with units of 75 1400 sq.ft at this point (and identified transport accessibility as a factor limiting demand from larger office occupiers). 6.5 Since this point the Airport through the Locate@Biggin Hill initiative has sought to draw together existing stakeholders and more proactively promote the Airport as a hub for growth and investment. This has included analysis of the economic benefits and commercial development potential and preparation of a Prospectus with the intention particularly of influencing the future development of planning policy. 6.6 NLP s emerging findings indicate that the Airport and adjoining area currently supports 62 businesses and 980 jobs. The emerging draft Prospectus sets out the Airport s aspiration to promote local economic growth, with development proposals seeking to: GL Hearn Page 36 of 39

Achieve clear roles for the different airport locations East Camp, South Camp, West Camp and Terminal Area in terms of services and users of the airports as well as wider operations including leisure; Establish areas for future development including small extensions to East Camp, South Camp and the Terminal areas to accommodate future business needs; and unlock the potential for the development of West Camp as a gateway business hub, including a new hotel, food and beverage and business conferencing facilities. 6.7 The strategic rationale is that the airport is not performing to its potential, reflecting for instance in the fact that West Camp remains largely vacant; whilst the industrial estates on the south side of the Airport have remained significantly under-occupied. Our site visit confirms this. Given expected growth in the business aviation market and the performance of other comparator airports which focus on business aviation, there is the potential for the Airport to perform better. 6.8 GLH has sought to consider the airports proposals drawing on our experience at Farnborough and Luton and discussion with NLP. 6.9 First, it is worth pointing out that the Airport is operating in competition with other airports which serve the London Market. This includes Farnborough, Luton and London City. Each of these has or is likely to soon have capacity for expansion: Farnborough now has planning consent to double air movements to 50,000 pa, and has recently doubled hangar capacity. It has also delivered new office space and supports a cluster of existing aerospace and defence industries including BAe. Luton Airport is due to submit a planning application shortly facilitating expansion of aircraft movements by 40% and an increase in passenger numbers from 10.5 to 18 million. The increase in capacity will facilitate some growth in business aviation from the airport. London City Airport was granted planning consent in 2009 for expansion of flight movements from 70,000 to 120,000 per annum. As with Luton a proportion of this will be business aviation. It should however be recognised that weekend opening hours are restricted. 6.10 In should therefore be recognised that Biggin Hill is competing in a competitive sector. However business aviation is a growing market (linked to the globalisation of the economy on an international level and London s strength as an international commercial centre). 6.11 Farnborough is perhaps the most direct competitor for Biggin Hill, however there are complementarities between them; with Farnborough serving more of the M4/West London economy and Biggin Hill having closer links to South East London, the City and Canary Wharf. 6.12 A key influence on business aviation however is the connection time between the airport and the business destination, and this is a key area in which Biggin Hill falls down. Despite its proximity to London, journey times by car (based on data on the airport s website) are 60-70 minutes to the West End, City or Docklands. This transfer time is an influence on executives decision-making as to whether to travel on private jets rather than on scheduled commercial flights. GL Hearn Page 37 of 39

6.13 The airport accommodates three fixed based operators Executive Handling, Rizon Jet and Jet Aviation. Jet Aviation established its UK maintenance and Fixed-base Operator (FBO) centre at Biggin Hill in 2002 and offers maintenance and refurbishment, avionics, hangarage and aircraft cleaning services. Its main base is however in Switzerland. Rizon Jet operate from modern buildings at South Camp and from Doha in the Middle East. 6.14 The business model being promoted by the airport is to build on its existing strengths. It accommodates aircraft operators, air taxi firms, flight training schools, and firms within the aviation sector and supply chain, including aircraft management, maintenance and refurbishment firms. In addition there are international firms who benefit from the airport location including Formula One. The airport is keen to attract additional FBOs. This seems a reasonable and logical strategy. 6.15 We understand that there is market interest from hotel operators in this location. The market for this relates to throughput through the airport as well as, as we understand it, wider aviation-related activities such as business flight crew training. Hotels are often located close to airports and thus provision of hotel accommodation at/ near the airport seems reasonable. 6.16 More widely the emerging LoCATE proposals draw on a market demand assessment undertaken by Jones Lang LaSalle. This identifies that the airport is not an established business location and there is a need to build on the existing business base those who serve or use the airport rather than seeking to attract the types of investment which would consider wider locations. It suggests that the fundamentals necessary to attract substantial, non-aviation, high technology activity are not really there; and thus the strongest potential lies in seeking to develop engineering and component assembly activities linked to the aviation sector. A business aviation academy is also proposed which would support this. 6.17 There may be opportunities to attract a further single large user (such as Formula One) but these opportunities are rare. There could be further opportunities linked to the F1 presence. Wider opportunities might include businesses where the decision-maker is locally-based; or users requiring high security and are not keen to be visible. This is an area where further investigation would be beneficial. 6.18 JLL also recommended that the destination needs to be developed to potential include hotel with conference/meeting space, food, drink and leisure offer, and the potential for serviced office accommodation for local-based SMEs. This forms part of the overall package to increase the attractiveness of the site as a business location. We understand that one hotel has planning consent and there is evident market interest in hotel development at this location. GL Hearn Page 38 of 39

6.19 Overall we consider that there is a strong rationale and coherence to the LoCATE strategy albeit that it make take some time to come forward. The existing availability totalling 14,780 sq.m at the airport, 9,754 sqm of vacant former MOD buildings, and 15,793 sq.m at the Concorde Industrial Estate according to the LoCATE website highlight limited demand from general business activities or latent demand from additional space from existing occupiers. We understand that NLP s forecasts of an increase in employment by 930 jobs (95%) over the next 5 years would require limited additional development (and thus limited uplift in business rates). 6.20 Development at the airport moving forward is likely to be focused on niche opportunities, as the JLL report identifies. The success of the overall integrated strategy for the airport in the longer-term relies on the development of the Airport as a hub for aviation-related activities. Given growth in the business aviation market we consider that this is realistic; and that it could support wider investment from local SMEs and in associated hotel and training facilities. This provides an opportunity for incremental growth in employment and the business rates base over the period to 2031 if supported by a positive planning policy framework. GL Hearn Page 39 of 39