For the first time, explicit reference is made to the importance of market signals in planning for employment land and floorspace (draft Policy E2). This policy shift is timely and essential, reflecting the realities of today – especially for strong growing markets such as industrial and logistics (I&L) – and acknowledging the long-term supply constraints that have suppressed demand across England.

This positive change is equally applicable to other forms of employment on sites that relate to existing settlements which address an evidenced unmet need.

The limitations of historic trend approaches

For more than a decade, assessments of employment land needs for Local Plan preparation have been dominated by historic trend-based approaches – past take-up, labour demand forecasts and labour supply modelling. While these methods are longstanding staples of the Planning Practice Guidance (PPG), they are inherently backward looking.

In markets where supply has been restricted for years, these approaches inevitably understate actual demand and simply project the UK’s low growth trajectory into the future. This risks locking national and local planning into a cycle of underprovision, suppressing productivity and missing opportunities for economic growth.

Savills has long called for a change in the way demand for employment land is assessed and has highlighted the need for a more modernised, market-responsive methodology – one capable of capturing the pressures and opportunities that historic trends overlook, particularly in the context of the government’s economic growth ambitions.

A market signals-based solution

In response to these issues, Savills has developed the Suppressed Demand Method in conjunction with Indurent, a leading developer and manager of industrial and logistics spaces. It is the leading methodology taking a market signals-based approach in the UK and which, importantly, has been formally tested through the planning system.

The method identifies periods when supply shortages prevented occupiers from taking the space they needed. By analysing market equilibrium levels of availability and quantifying the ‘lost demand’ that would have occurred had adequate supply been available, the approach provides a more accurate and forward-looking assessment of need. At a national level, true future requirements are estimated to be around 30% higher than historic trends alone would suggest. In some areas, the level of suppressed demand is even higher. 

The market signals approach has now been successfully deployed to support several public inquiries and examinations, where a more accurate understanding of demand has been critical to decision-making. Most recently, the method formed part of the evidence base in the Thrapston appeal (APP/M2840/W/25/3362393), where suppressed demand analysis played an important role in illustrating the true operational pressures facing the market.

This growing adoption demonstrates both the credibility of the method and the sector’s need for more responsive tools to support employment land planning.

Conclusion

By acknowledging the role of market signals, the draft NPPF opens the door to a more responsive, growth-orientated planning system.

As the government looks to unlock productivity, investment and economic resilience, adopting methods that reflect real market behaviour will be essential. To help galvanise this new approach changes to the PPG will also be necessary. These PPG updates must also provide detailed guidance to plan-makers, decision-takers and the development sector to facilitate a more ambitious approach for economic growth.

Further information

Contact Mark Powney or Alex Cole