It’s the final few days of the consultation period for the Towards a New London Plan document. This week, we are focusing on Affordable Workspace which links other topics we have covered including repurposing lower grade office stock and inclusive economic growth.

As with housing, the cost of accessing suitable workspace in London is often prohibitively expensive for local, small businesses, and the market alone fails to deliver truly affordable space, leading to a pricing out of those sectors and businesses that help drive inclusive social and economic value for local communities. But, unlike the housing sector, the affordable workspace sector is far more reliant on local interventions rather than central funding programmes, and these are often subject to budgetary and resourcing constraints and differing policy priorities.

A fragmented approach to affordable workspace

The benefits of affordable workspace are well documented, but effective mechanisms for impactful delivery are less well understood. Whilst the current London Plan includes a Policy on Affordable Workspace (Policy E3), the local response and interpretation is hugely varied between London Boroughs.

For example, the Policy aims to support delivery of affordable workspace for a specific social, cultural or economic development purpose.  This includes charities, voluntary and community organisations, sectors that have cultural and creative value, disadvantaged groups starting up and supporting start-up and early-stage businesses. Despite this long list of potential occupiers, local plan policies on affordable workspace tend to focus on delivery of space in traditional employment sectors (former ‘B Use Class’) and sometimes prime locations, and particularly within the office sector, which can lead to a mismatch in both location and type of space compared with genuine need. It means that often important sectors within local communities are excluded from these interventions.

The Towards a New London Plan document recognises that boroughs currently take very different approaches and it questions whether the London Plan could require a more consistent approach to affordable workspace delivery across London as a whole, including consistency on the scale of provision, uniform discount rates and length of lease terms.

We have experience of working with local authorities over the last few years to support the development of local plan policies and we regularly work with developers to inform affordable workspace provision and interpret local policies. As part of this work, we’ve spoken to numerous affordable workspace providers, planning and economic development officers, the GLA, commercial developers and reviewed countless case studies and local policies.

Key takeaways

• Differing approaches should not necessarily be viewed as a negative. When it comes to affordable workspace, one-size definitely does not fit all. Local business communities, priority sectors, rental rates, competing uses and public sector resources differ vastly across London. There is therefore a need for variation between, and importantly within, boroughs to avoid space of the wrong type or in the wrong location.

• What should be more consistent is that all boroughs are required and supported to understand what affordability means to their local business communities through evidence-based research. This will ensure that affordable workspace policies are aligned with inclusive growth priorities. Our research over the years, for example, has highlighted that affordability doesn’t only come down to discounted rental rates, but also includes lease terms, fit out costs and flexibility of space.  Understanding this is key to ensuring genuinely affordable space.

• Some boroughs collate and curate information on suitable workspace providers, and encourage developers to carry out early engagement with these. This helps to inform scheme design where this is a requirement for the provision of affordable space as part of a wider development. Whilst this is beneficial in signposting and providing transparency on expectations, unless it is regularly reviewed and updated it can stifle innovation in operating models and deter developers who are keen to operate the space themselves. Having an approved affordable workspace provider list is certainly helpful, but should not necessarily be imposed as a condition of development.

• Given that affordable space is often provided at ground and lower floors, ensuring the space is activated and generates footfall is crucial to the success and viability of the rest of the development as well as placemaking principles. Some of the most successful affordable workspaces in terms of space activation and footfall have had the flexibility to attract a mix of occupiers including independent retailers and food and beverage outlets, cultural and learning spaces, as well as more traditional office and maker space occupiers. Encouraging rather than stifling this flexibility through policy should be considered.

• Our developer clients more often than not recognise the benefits of supporting small and local businesses through provision of space that delivers a social or cultural value. However, a blanket approach to scale of provision, sector or fit out requirements will not always result in delivery of suitable space and increases the risk of void and inactive spaces, which in turn can be a deterrent to bringing forward any space at all. Greater flexibility to consider schemes on a case-by-case basis and greater engagement between local planning officers and developers should be supported.

• We welcome the recognition in the consultation document that other mechanisms such as off-site provision via financial contributions could be considered.  Indeed, several boroughs are exploring or already accepting this (typically in ‘exceptional circumstances’), but it will need to be recognised that not all boroughs have the expertise or resources to effectively manage and deliver this pot. This shouldn’t be a deterrent and the pooling of resources across authorities or sub-areas could be explored.

Ultimately, it's a complex picture of differing needs out there and any changes to Policy E3 need to reflect this and should encourage London Boroughs to more thoroughly understand the demand in their area. Equally, there are some brilliant success stories of affordable workspace operating models, spaces and delivery mechanisms with valuable lessons to be learnt.

GC Insight has significant experience of supporting local authorities with their affordable workspace strategies and supporting developers to creating space that meets the needs of the community. Get in touch with Zoe Crampton or Margaret Collins if you would like to discuss how we can help.