Why planning policy must change in recognition of the importance of open storage / IOS sites
Open storage / IOS sites can play an important role in providing jobs and economic output, while being a vital component of the modern industrial function. But its importance is arguably not fully recognised in planning policy. David Churchill, Partner, Carter Jonas addresses the issue.
For too long open storage / industrial outdoor storage (IOS) has been viewed as a poor relation in the industrial sector. But land and sites used for storage, distribution, processing, servicing and parking play an integral part in the industrial property market and are significant in supporting broader economic activity.
Advantages are many, with open storage / IOS allowing for greater capacity in the supply chain through the storage of containers and pallets, and space for parking and servicing HGVs, as well as more efficient and environmentally friendly last mile delivery in urban areas through localised van parking and EV charging.
The figures for success speak for themselves. In our sample of open storage occupiers on professionally owned and managed open storage sites, vehicle parking - mainly vans and HGVs, accounted for 35% of the total area occupied in urban locations, rising to 75% around strategic transport nodal points.
Meanwhile, demand for open storage sites surged by 470% from 2019 to 2023, spanning assorted sizes and specifications. Figures from 2023 show there is a clear focus towards smaller sites, with 20% of enquiries for less than 0.5 acres, while just over half, at 56% of are for under two acres. At the other end of the spectrum, 17% of enquiries are for 10 acres or more.
A further boost to the market is the increasing focus on premium Class 1 sites, needed for activities such as HGV parking.
The supply of the open storage space
Against this evolving demand, supply has failed to keep pace – in terms of both quality and quantity. Traditionally, open storage sites have been provided either by individuals or small landlords, or by professional property developers / investors as a temporary use pending redevelopment of a site.
But modern blue-chip occupiers require high quality sites, and long leases of up to 10 years in order to service long-term contracts with suppliers, rather than interim sites.
While there are no official figures on the scale of the open storage sector, which is not surprising, given its status as an emerging asset class within the professional property investment sector, its lack of appropriate definition within the planning system should be addressed.
The Valuation Office Agency (VOA) does define land for storage to assess business rates, under Special Category Code 148. According to its 2023 evaluation of the non-domestic stock of properties, there are 27,470 open storage sites across England and Wales, with a total rateable value of £390 million.
However, not all open storage is under this definition, as some sites are classified under other industrial uses.
A crucial role in jobs and economic output
Although open storage sites do not offer high employment density, they do play a crucial role in aiding jobs and economic output, meaning their economic benefits should not be judged solely by on-site employment density, given much of the economic gain occurs offsite.
In addition to enabling economic activity, open storage has the potential to help deliver broader societal benefits. This includes reducing carbon emissions through facilitating a greater use of electric vehicles and reducing traffic congestion through fewer trips and less total mileage for centrally located sites.
A broad variety of non-supply chain uses also remain important to local economies, including heavy plant hire and storage, and containerised self-storage, as well as ‘traditional’ uses such as scrap metal and builders’ yards.
Built floorspace usually has a higher economic value than storage land, meaning economic activity on urban open storage can get pushed out to areas with greater land availability, which is not efficient or rational from an operational point of view.
The need for a specific Use Class
Open storage / IOS is a vital component of the modern industrial function, and not an optional extra. Because of this, it is essential the planning system enables the delivery of significant additional and upgraded open storage sites.
However, open storage is not adequately defined within the planning system and could benefit from definition as a specific use within the Use Classes Order.
Because of this, it is necessary that local planning authorities consider adopting specific policies to protect and promote open storage sites. There should also be a considered review of broader planning policy, as the current Use Classes no longer reflects the way in which industrial, logistics and parking sites are used.
Our recommendations
To address this issue, we propose the following:
- HGV parking and vehicle charging should ideally be a permitted use on B8 sites. Even though the direct employment benefit may be limited, there are obvious benefits in terms of lower congestion and emissions, as well as the function of enabling broader economic activity to take place. Electric vehicles are another consideration, as the number in the UK is set to rocket over the next 25 years and the switch to EVs is a vital element in meeting the Government’s Net Zero 2050 target.
- A separate Use Class for open storage, as part of a wider review of the Class E commercial and business uses and class B8. This should reflect factors such as the hours of operation and the nature of use.
Analysis of the open storage sector remains relatively opaque due to a lack of reliable stock, availability or take-up figures. However, this is slowly improving and will improve further as the sector matures.
There is no question, however, that open storage / IOS is creating new jobs which are making a valuable contribution to GVA in the UK, and globally, and that its benefit would be greater if the proposed changes are brought about.
