ULEZ Expansion: Disruption and Displacement of Industrial?
Posted by Knight Frank Newcastle on 18th September 2023 -
Putting all political machinations to one side, what impact might the expansion of ULEZ have on the industrial real estate market across the capital – and beyond?
A temporary headache or a catalyst for change in the industrial landscape in Greater London?
What is ULEZ and where is the expansion?
As planned, but not without court challenges, the Ultra Low Emission Zone (ULEZ) expanded on 29th August 2023 to cover all 32 London boroughs and the City of London.
ULEZ in London has been in effect since April 2019, first following the same map as the Congestion Charge. The zone was expanded in October 2021 to cover a larger portion of Central London, with borders at (but not including) the North and South Circular Roads.
While the geographical area has now expanded to cover all Greater London, the charge and conditions of compliance remain fixed. As ‘carrot and stick’ government programmes go, the ULEZ represents a ‘stick’, pushing London residents and businesses to operate less polluting vehicles.
Aimed at improving air quality through a reduction of roadside emissions from older, more polluting vehicles and limiting congestion, the scheme charges a daily £12.50 fee (in addition to the Congestion Charge) for driving non-compliant cars or vans within the zone.
To be compliant under the minimum Euro emissions standards, petrol vehicles must meet Euro 4, diesel vehicles must meet Euro 6 and mopeds / motorcycles must meet Euro 3. While heavy goods vehicles (HGVs) and other, larger vehicles over 3.5 tonnes do not pay the ULEZ charge, these vehicles must meet Euro 6 under the previously implemented LEZ standards and comply to more stringent safety requirements.
Industrial heavily affected by expansion
What does this mean for Greater London industrial?
We examined data by CoStar and found that approximately 4,400 additional properties now sit within the expanded footprint. This represents a massive +130% increase from the approximate 3,400 properties that sat within the previous zone, bringing the total number of affected units to 7,800.
The additional volume of affected industrial space is in the region of 113 million sq ft, up from approximately 63 million sq ft in the 2021 ULEZ, bringing the total volume now affected to 176 million sq ft. The average sized unit within the ULEZ is now 22,644 sq ft, up from 18,887 sq ft in the previous zone.
Whether unit counts or floorspace, we’re talking big numbers.
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