Appendix D
Flexibility Factor/Margin of
Choice Desktop Research
Contents
Final | October 2012 Page D2
D1
Flexibility Factor/Margin of Choice Desktop Research
This appendix presents the findings from a desktop research exercise undertaken to identify different flexibility factors adopted by
local authorities in England. Please note the research represents a snapshot only and is not exhaustive.
Document Authority / Area Flexibility
Factor Comments
Greater Manchester Employment Land
Position Statement North West 20%
There exists a degree of uncertainty in establishing employment land requirements and there may be a need to provide additional land to take account of special circumstances such as the expansion requirements of a particular business. It is for that reason that policy W3 incorporates a flexibility factor of 20%, potentially adding to the sub-region’s requirement.
There was concern that particularly strong growth in B1 uses may not be met by the allocations and together with the strength of the economy of Greater Manchester a 20% flexibility factor was considered sufficient to support future economic growth.
Bolton 20% Used to ensure consistency with the regional levels and other ELRs produced by Arup North West.
Bury 0%
The ELR identifies an additional 7.44ha on top of the demand requirement of 76.9ha. However, the potential addition of 7.25ha that have been identified in the consultation draft ‘Bury but Better’ study would effectively represent an allowance for an additional 20%.
Manchester 20% Used as strong growth projections, although considerable evidence of landless growth in recent years, a trend expected to continue.
Oldham 0%
No flexibility factor has been applied. The preferred methodology is based on past take up rates that have then been moderated by factoring in the proportional change in B-use employment from the Greater Manchester Forecasting Model.
Rochdale 20% Based on previous studies and Data Transformation Service’s (DTS) market knowledge. Salford 0% No flexibility factor applied although ELR consultants did acknowledge the need for it in the
analysis of Greater Manchester Forecasting Model forecasts.
Stockport 0% No flexibility factor applied as limited supply of available sites; may require landless growth, high density office development in the town centre.
Document Authority / Area Flexibility
Factor Comments
Tameside 20% Used in accordance with North West RSS.
Trafford 0%
No flexibility factor applied based on discussions and agreement with Trafford Council. It was viewed that a 20% margin of choice was too high as most criteria for location by sector are the same. In addition, it was considered that at 20% other uses such as leisure development (which is an aspiration for the Council) could potentially be restricted from developing.
East Midlands Employment Land Assessment: Audit of Employment Land Studies, East Midlands Development Agency, December 2010 East Midlands Various; in % terms and in past year take up terms)
This relates to the additional margin or allowance that is often added to the initial estimate of future requirements for employment space in order to provide some flexibility to allow for forecasting error, developer choice, frictional vacancy, delays in sites coming forward etc. Again, the approach taken to this factor varied considerably. Whilst all but four of the 36 districts with ELRs made some allowance for this (exceptions being certain districts in Leicestershire and Northamptonshire), they used a wide range of figures and approaches:
• 10 ELRs added a margin equivalent to five years of past take-up; • 6 ELRs used two years of past take-up;
• 5 ELRs used a “frictional” margin equivalent to 10% of the current floorspace stock for offices and 5% of the industrial stock (in the Nottingham City Region ELR); and • 3 applied a 50% uplift on top of demand; 5 used 25%, 2 used 30%/33% and 1 used 15%. There was clearly quite a wide variation here in the level of flexibility applied to the original estimates of future requirements. This could have the effect of exaggerating differences in requirements between different studies and clearly does not indicate a consistent basis for estimating requirements at regional level. While there may be arguments for different factors to reflect different local circumstances, reasons for using different margins were not always evident and a more consistent approach to applying any safety margin would be desirable.
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Document Authority / Area Flexibility
Factor Comments Northumberland ELR Northumberland Two years past take up figure of 20.87ha apportioned across the B-use classes on the basis of econometric floorspace growth projections by sector
It is standard practice to allow for a degree of flexibility, or ‘margin of choice’, in the allocations by applying a stated factor in the demand calculations. This reflects the need for a fairly generous additional allowance on top of the initial estimate of employment space needs for a number of reasons, including:
• As a margin for error given the uncertainties in the forecasting process; • To allow developers and occupiers a reasonable choice of sites;
• To give some flexibility and decanting space while older premises are redeveloped and new premises are coming forward; and
• To cope with factors such as some allocated sites not coming forward and some redundant industrial sites not being suited for new employment uses.
The SEEPB guidance suggests that an appropriate margin for each use class should be based purely on how long it takes a site to move from being a commitment to completion, but gives no guidance on what these timescales typically are or how the floorspace allowance to reflect this margin should be estimated. Typically, however, an amount equivalent to 1-2 years of past completions rates has been used, depending on local market conditions. Given the weak commercial market at present and the increasing time lag between the grant of planning permission and the implementation of the scheme, a conservative margin of choice equal to 2 years worth of past take up is recommended. This is considered to be an appropriate and relatively modest margin of choice on the basis that this allows for flexibility for developers whilst reducing the risk of oversupply of employment land in the County.
Consequently, by adding on an allowance for replacement of losses and factoring in two years of take up (based on long term trends) to allow a margin for choice, this results in a gross total requirement of 506.09ha between 2010 and 2030.
Preston, South Ribble and Chorley Employment Land Requirements. December 2010
Preston, South
Ribble and Chorley 20%
Supplementary to this the RSS proposes that a further factor could also be applied to calculating the total need for employment development in cases where, exceptionally, it may be appropriate to provide additional land to take account of special circumstances. This is a Flexibility Factor uplift of 20%. The Central Lancashire authorities have decided to apply this factor because of the regional importance of the area for economic development and the high number of regionally significant employment sites locally. The potential for economic growth (post recession) remains high in Central Lancashire a fact not reflected in the low (4.25%) increase in past take-up rates applied across the whole of Lancashire.