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Stacking up or stalling? ‘Beds on sheds’ model to deliver almost 30,000 new homes in the capital

The ‘beds on sheds’ model is reshaping London’s housing market, with more than 22,500 new homes as part of Co-Location schemes granted planning permission in the capital over the last five years, according to our latest research.

Co-Location refers to the knitting together of industrial/logistics, residential and other non-industrial uses to form mixed-use developments. It is a growing development trend in London to boost housing supply and employment floorspace.

Our annual ‘Co-Location in London’ report assesses the delivery of the beds on sheds model in the capital, and analyses approved and live Co-Location planning applications to understand how this development type will shape the city over the coming years. 

The Co-Location schemes that have secured planning permission over the last five years will provide a net additional 271,800 sq m of industrial floorspace in the capital once built. 

With the concept now having had several years to bed in, and in the context of wider market challenges – including rising interest rates, build costs, and other economic- and policy-related uncertainties – the latest edition of the report also seeks to understand how the current pipeline of Co-Location schemes is feeding through to delivery on the ground. 

Despite these adverse market conditions, Co-Location developments are still supporting the delivery of affordable homes in London too, with 38% of approved schemes made up of affordable housing – above the 35% target set by the Mayor. However, the affordable housing level significantly reduced to an average of only 24% in schemes approved over the past 12 months, another clear indicator that developers and local authorities have to adjust to macro-economic factors impacting development viability.

An analysis of current live and approved planning applications also demonstrates continued appetite for, and conviction in, Co-Location. 

While there has been a slowdown in the number of new Co-Location developments coming forward over the past year, we have found that 58% of approved developments are showing signs of on-site delivery, with 38% under construction, including demolition of existing sites. 

If those schemes which are currently awaiting determination are approved and implemented, a total of 29,688 new homes could be delivered across the capital. Together, these schemes would also add approximately 375,789 sq m of employment floorspace to the market. 

Co-Location schemes can address two of London’s most complex development challenges – boosting housing supply and maximising employment land – making the beds on sheds model an increasingly popular development choice. 

Boroughs including Ealing, Brent and Southwark are currently leading the adoption of Co-Location schemes. However, we found that a clearer, more proactive policy environment for Co-Location is also beginning to crystalise across the wider capital, with an increasing number of local planning authorities adopting dedicated policies, site allocations and masterplans to guide the development of new Co-Location schemes. 

Catriona Fraser, Director, Planning  said:

“Now in its third year, this report demonstrates that the Co-Location model is not only here to stay in the capital, but has the potential to deliver a significant uplift in new homes and employment and logistics space, particularly in Co-Location hotspots such as Ealing, Brent and Southwark. 

“Despite a slowdown in the number of new schemes coming forward, the indicators clearly point to continuing appetite for this development type. 

“More than a third of the Co-Location schemes that have been granted approval over the last five years are currently under construction, so we’ll be closely monitoring over the next 12 months how the market responds and whether this will result in an influx of new schemes coming forward.

“London could become a blueprint for the adoption of successful Co-Locations schemes if it continues on its trajectory.”

24 April 2024