Brighton & Hove Employment Land Study 2024

The National Planning Policy Framework (NPPF) requires local planning authorities to produce an up-to-date employment land evidence base to inform the development of local plan policies. The study will be an important evidence document for the City Plan Review. 

Consultants AECOM were appointed July 2023 to undertake an Employment Land Study to look at employment land needs in Brighton & Hove over the period 2022 to 2041. Employment land means land used for commercial and industrial purposes, including warehouses. (Use Classes: E(g) (i to iii), B2 and B8).

The Study provides:

• insights into the socio-economic baseline of the city 
• an assessment of current property market conditions and future trends
• an assessment of the need for affordable workspace to inform policy development
• an assessment of employment land supply in the city
• a range of forecasts of employment land requirements over the plan period  
• potential options to deliver employment land requirements. 

The final report was delivered in early April 2024  

The Office for National Statistics (ONS) population projections anticipate a population growth in Brighton & Hove of 2% between 2020 and 2040, with a notable proportion attributed to the working age population.

A large proportion of the population is highly skilled. 68.3% of Brighton & Hove residents work in managerial, professional and technical occupations. In March 2023, the economic activity rate was recorded at 78.7% which is marginally lower than the rate for the wider South East (80.7%). 

The city is an important hub for employment in the professional, scientific and technical services sector.

Median residence-based weekly earnings in Brighton & Hove (£641) are lower than the median weekly earnings expected across the South East (£685) but similar to those recorded in the city’s Functional Economic Market Area (the geographical level at which local economies and markets operate).

In 2023 the total business stock was recorded at 14,410 businesses. 90.2% of these businesses employ fewer than 10 people. The average turnover for around a third of businesses in the city is between £100,000 and £199,000. 

The study assessed the current supply of employment land in the city. 48 sites were assessed, focusing on the city’s safeguarded industrial estates and business parks, strategic and mixed-use site allocations in the City Plan. For each site a summary of the function, quality and potential for expansion or more intensive employment use is set out. 

Industrial floorspace is largely located within industrial estates and business parks across the city. Overall, these sites were found to be well-functioning and well located with the majority in average to good or very good condition. 

An assessment of the supply of office space found that central Brighton contains 224 office properties providing 161,641 square metres of office floorspace. Offices are primarily concentrated along Western Road, in the North Laines and The Lanes and a cluster from West Street north along Queens Road up to Brighton station. 

There is a strong demand for new and refurbished ‘Grade A’ office space due to occupier interest in high quality environments for staff, as well as the increased importance on sustainability credentials of leased stock. There is a lack of high-quality office accommodation within Central Brighton, although brand-new high quality office premises have come forward in the nearby Edward Street quarter, Circus Street and New England Quarter. 

Most of the office floorspace was built pre-1950s. Second-hand stock which has not been refurbished is increasingly unpopular and difficult to lease.  

Offices

There are around 800 office properties in Brighton & Hove with around 52% of being less than 250 square metres in size. They total around 560,00 square metres of floorspace. This represents 41.7% of the office space in the wider functional economic market area and highlights the importance of the city’s office market to the wider region.

The vacancy rates of offices are typically lower in the city compared to regional levels. However, since 2021 vacancy rates have reached a 10-year high as tenants reassess space requirements as lease term ends, the adoption of hybrid working models, co-working or flexible space as well as new office stock coming to the market.  

Due to the constrained supply of suitable stock the market rental value of the office stock of is, on average, higher than recorded across the neighbouring area and South East region.

Industrial 

There are around 70 light industrial properties in Brighton & Hove, comprising around 76,000 square meters of floorspace. The vacancy rate of light industrial floorspace in Brighton & Hove (4.2%) is marginally lower than is typical for the Functional Economic Market Area (FEMA) (4.7%) and is broadly in line with the regional rate (4.0%). This represents a very small amount of vacant light industrial floorspace (around 3,100 square metres). 

There are 124 general industrial buildings in Brighton & Hove, comprising around 49,000m2 of floorspace, or approximately 12.1% of the general industrial floorspace in the FEMA. Over the period between 2013 and 2023, the vacancy rate of general industrial floorspace in Brighton & Hove has remained lower than 5.0%, and mostly below 2.0%. This reflects a similar trend across the South East region and England. 

There are 63 storage and distribution properties identified in Brighton & Hove, amounting to around 130,000m2 of floorspace. This represents around 10% of the storage and distribution floorspace within the FEMA. 

The vacancy rate of storage and distribution floorspace in Brighton & Hove (2.7%) is lower than recorded in the FEMA (3.6%) and South East region (5.4%). Prospective tenants are faced with high rents for very few premises of sufficient scale to meet most current requirements Between 2013 and 2023 vacancy has been broadly decreasing, suggesting persistent strong demand for storage and distribution space. There was notably high demand in for storage and distribution floorspace between 2020 and 2022, driven in part by the rapid growth of e-commerce businesses. 

The average market rental value and demand for industrial properties remained consistently higher than regional and national comparators between 2013- 2023. Consultation with commercial property agents confirmed that demand for light and general industrial space is for the smaller units. 

There is a lack of workspace for creative industries, resulting in unmet need that pushes occupiers outside Brighton & Hove.  

The study provides insights into the space or land requirements of the following sectors of the local economy:

• Creative businesses make up 19% of businesses in the city and are clustered in the city centre. Constrained land supply means these industries are under pressure. There is a huge variety in the nature and size of space requirements for the creative industries depending on types of creative production or consumption activities undertaken. 
• For digital industries, particularly gaming and software development businesses, the attractiveness and character of buildings or studio workspaces as well as appropriately digitally connected and adaptable spaces is important. Clustered in the New England Quarter area (New England House) and in central Brighton the demand for space is very high amongst prospective occupiers.
• The knowledge economy in Brighton & Hove is growing and requires appropriate space, preferably close to existing clusters. The two Universities are significant employers and incubators for the city’s knowledge economy.  
• For the green, circular and construction trades, the scale of investment and job creation associated with net zero and decarbonisation across the UK economy has the potential to open opportunities for growth and inward investment in Brighton & Hove, particularly in collaboration with neighbouring authorities. However, this potential will be dependent on appropriate available adaptable space to accommodate emerging technologies.
• For logistics operations, Brighton & Hove is strategically located to the A23 and A27, Gatwick Airport, Newhaven Port and Shoreham Harbour which support logistics operations. However, these activities require large floorspace premises. An acute lack of supply of suitable premises in the city has led to occupiers seeking available premises in Mid Sussex, Newhaven and Crawley. 

The affordability of workspace in the city has become an area of concern in recent years, reflecting constraints in the availability of employment land, rising rents and evolution of the type and spatial demand across the city. Market rental values for commercial property in the city are typically higher than across the neighbouring area and the South East region. 

Small businesses (employing 10 to 49 people) and micro businesses (employing 0 to 9 people) make up 98.6% of Brighton & Hove’s businesses, however many face budget constraints that limit the accessibility of suitable workspace. Affordable workspace is necessary to support prosperity of these businesses, as well as start-ups, creative industries, and voluntary, charity and social enterprise organisations.  

The planning system could be used to promote provision, for example by requiring new commercial development of a certain size to contribute an amount of on-site affordable workspace or off-site developer contributions. The impact of a requirement such as this on development viability would need to be considered further.  

The energy performance of buildings in the UK is monitored through the Energy Performance Certificate (EPC) system. Non-domestic buildings must comply with Minimum Energy Efficiency Standards (MEES) to be lawfully leased. Currently, MEES regulations apply to those non-domestic buildings which have been awarded an EPC rating of F or G, whereby these properties cannot be leased until improvements have been made, with certain exemptions.

In Brighton & Hove in 2023, around 14% of office property EPC certificates and 9% of the office floorspace associated with an EPC certificate are not compliant with current minimum energy efficiency standards (MEES), meaning that they have received a rating of F or G. 

For industrial properties, approximately 8% of building certificates, and 10% of floorspace associated with an EPC certificate, indicate non-compliance with current MEES. 

There is a concentration of poor rating EPC ratings within central Brighton.

It is anticipated that the minimum standard will be sequentially increased in line with Government ambitions to deliver against net zero commitments, with the minimum EPC rating for non-domestic properties to be leased raised to C by 1st April 2027, and to B by April 2030. Landlords need to be encouraged to review opportunities to improve these assets before they become non-compliant with EPC standards. 

Between 2023 and 2041 jobs in office and industrial sectors of the city’s economy are forecast to grow by 8%. 

The Employment Land Study looked at three scenarios to assess the need for employment land over the plan period following government planning policy and guidance. These looked at labour demand, labour supply and the take up rate of employment land over the last 10 years. 

Offices

The Study indicates that we will need approximately 87,000 square metres of new office space over the period to 2041.

The floorspace need was then compared against the currently available supply of office space which is made up of those sites with extant planning permissions for new office space and City Plan site allocations for new office floorspace that have not yet come forward. The Study considered that the identified pipeline of sites was mostly sufficient to meet forecast need if it is all realised over the plan period. 

The Study recommends that the focus of future policy should be to:

• continue to protect existing and new space as far as possible particularly within highly accessible locations (such as Central Brighton, New England Quarter, Edward Street Quarter and Hove Station area). 
• maximise the amount of floorspace to be delivered on strategic site allocations yet to come forward. 
• resist the loss of high quality office sites or well-located second-hand office space 
• encourage the delivery of high quality space on existing sites with second-hand office accommodation. 
• require the need to demonstrate non-viability and or unsuitability for refurbishment for continued office use through the change of use policy. 

Industrial

The Study indicates that we will need approximately 56,386 square metres of new industrial space over the period to 2041. This forecast need significantly exceeds the potential supply of 3,491 square metres identified to come forward as part of unimplemented permissions or through the remaining allocated sites. 

Additional floorspace will be required to meet the needs of industrial businesses should be identified as part of the city plan review.  

The recommended approach to meet identified levels of need is to continue to protect existing industrial space from redevelopment to other uses, with refurbishment, intensification and re-provision of industrial space on existing sites to be encouraged. The study recommends the maximum appropriate industrial space should be brought forward on remaining allocated sites for industrial use. Potential sources of additional sources of supply were suggested.