Knight Frank says it’s found a series of industrial land sites totalling 328 hectares which could offer potential for residential development.
If developed, they could help meet ambitious housing targets outlined by the government and London Mayor Sadiq Khan.
The government has said that London needs 88,000 new homes per year over the next decade to meet forecast housing demand. The next London Plan, due to be published in 2026, will map out the delivery of 10 years’ worth of supply (880,000 homes), a significant scale-up of housing delivery which also necessitates the delivery of new employment space and infrastructure to support London’s economic growth.
The consultation document for the London Plan suggests prioritising road-connected industrial sites while deprioritising those with strong public transport access. Knight Frank has identified 328 hectares of this kind of industrial land which could offer the potential for residential redevelopment.
The London Plan consultation document also suggests the de-designation of poorly performing sites zoned for industrial use, including out-of-town retail parks and land currently operating under other use classes, to unlock residential development sites. Knight Frank has identified 12 retail parks located either wholly or partially on protected industrial land in Greater London.
The consultation document also suggests the potential of the grey belt in accommodating industrial and logistics development. In exploring the potential for industrial intensification within the grey belt, Knight Frank has identified 1,178 hectares of previously developed land which lies within 500 metres of a major road. Of this, 167 hectares is located within a 45-minute drivetime of Central London, meaning opportunities for industrial and logistics development catering to London’s distribution requirements.
Multistorey development has been mooted as a potential solution to London’s constrained industrial land availability, but widespread adoption of this method is hampered by several factors. Multistorey schemes often involve high build and servicing costs, limiting their viability to high value areas focused on light industrial use. Slow take-up rates in recently completed multistorey schemes have also prompted developers to rethink, with high input costs and inconsistent occupier demand stalling development.
Similarly, co-location offers the promise of increasing housing delivery without the loss of industrial land.
Since 2019-20, around 4,500 homes per year have been approved in co-location schemes with an industrial and logistics component, but less than 40% are under construction or completed. Co-location typically requires operational compromises in the form of restricted hours and vehicle movement, as well as expensive design solutions, hindering its appeal for distribution firms in particular.
According to Knight Frank, London currently has 55 sq ft of occupied industrial space per dwelling. Forecasting for a consistent ratio between London households and industrial floorspace uncovers the need for close to 50 million sq ft of new warehousing should the London Plan’s housing delivery targets be met over the next ten years.
However, the 55 sq ft of occupied industrial and logistics space per London dwelling is also the lowest ratio of any region of the UK and almost 50% lower than the national average, which stands at 109 sq ft per dwelling. Further, London has lost 18% of its industrial land since 2001, with industrial and logistics functions increasingly pushed out of the capital.
To adequately fulfil the potential future industrial and logistics requirements of the capital, the next London Plan must also allocate increased resource to identifying opportunities to densify the city’s industrial and logistics supply. This includes exploring innovative options to convert other use classes to accommodate warehousing and making use of available grey belt space to accelerate industrial and logistics development.
A Knight Frank spokesperson says:“While the proposed land swapping and intensification policies present opportunities to provide additional housing while ensuring the industrial and logistics sector is adequately provided for, there are significant implications which need further consideration. Some poorly located or obsolete sites may be suitable for alternative uses, but others, even if sub-optimal, provide a location/cost profile that can’t be replicated elsewhere. Protecting and repositioning the right industrial land in the right places will be key to ensuring the capital remains liveable, productive, and globally competitive.
“As housing pressure intensifies, policy must not ignore the integral role of industrial and logistics functions in supporting London’s economy, infrastructure, and communities. A data-led, site-specific approach, that is guided by occupier demand patterns, alongside infrastructure connectivity and accessibility, is essential to strike the right balance between residential delivery and industrial resilience.
“Nationwide housing delivery has routinely fallen short of government-designated targets, and the goals outlined in the forthcoming London Plan will require a significant ramping-up of housebuilding. While the proposed planning policies around industrial land may offer up new sites for residential development, policy alone will not be enough to bring forward these developments.”
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