by David Adams
When searching for suitable premises, small industrial companies are often hard to please. They require convenient accommodation usually within a very limited area. They may wish to work all hours and may prefer not to take any greater space than that essential for immediate needs. They may only be able to afford low rents and may insist on flexible tenancies rather than fixed leases, at least initially. For the institutional investor, the combination of small units with low returns and a regular turnover of tenants — often with above-average management demands — presents an unattractive prospect, even in times of high new-firm formation.
Yet, over the years, many alternative agencies have attempted to satisfy the persistent demand for specialist accommodation from small industrial companies. Between 1975 and 1980, for instance, Clerkenwell Workshops in Islington were acquired and converted by Urban Small Space, with financial support from the former GLC. By 1981, the workshops housed a thriving working community of 350 people employed in 120 separate businesses, often with close connections with one another(1).
Up and down the country, there are now literally hundreds of large and often previously decaying industrial premises which have been renovated and converted to provide lively and practical working environments for a variety of small companies. In some cases, individual entrepreneurs have taken a risk; in others, non-profit-making trusts have been formed; in other instances there has been substantial local authority involvement, either directly or indirectly.
Many local authorities in the 1970s recognised the harm caused to potential local economic development by the shortage of suitable premises for small industrial companies and began to build brand-new nursery units. Most of these were concentrated in inner urban areas, where funds from the Urban Programme were available. From 1980 to 1985, extensive private-sector involvement in new nursery unit construction was also witnessed as a result of the generous tax subsidies (Industrial Building Allowances) made available by the Chancellor through the Small Workshops Scheme.
In many towns and cities, the choice of accommodation for small industrial companies is therefore between converted (and usually cheaper) multi-storey accommodation and more expensive but purpose-built single-storey premises. There is often remarkably little available in the middle range. A few local authorities can, however, offer small companies accommodation in modern multi-storey units, purpose-built to cater specifically for the needs of small industrial users. Known generally as “flatted factories”, most of these developments date from the late 1950s to the early 1970s.
To many, flatted factories may well appear as a quaint legacy of an earlier age. The renewed interest in the conurbation of flatted factories which has occurred in London in recent years may therefore come as a surprise. Some would even doubt whether the record of flatted factory construction in the UK offers any useful experience to providers of other types of accommodation for small industrial users. But they would be mistaken. Whether other developers choose to follow the recent examples of such building in London, the experience gained from both the earlier and later periods of such development offers valuable lessons for those, whether in the private or public sector, seeking to meet the particular accommodation needs of small industrial users, either through renovation and conversion or through new development.
Two phases of development
A flatted factory has been defined as:
An industrial building of more than one storey, with two or more goods lifts and constructed or converted for multiple occupation. The building is subdivided into small separately occupied units which are used for manufacturing, assembly and associated storage.(2)
The development of purpose-built flatted factories in the UK occurred in two distinct phases. The first was associated with the massive waves of slum clearance which took place in many British cities from the late 1950s to the early 1970s. Several flatted factories were built during this period to rehouse small industrial companies displaced by clearance. The second and more recent phase dates from the late 1970s onwards, associated primarily with attempts by local authorities to stimulate economic regeneration in their local areas.
In the first phase, the construction of purpose-built flatted factories was pioneered by Birmingham City Council. In 1957, the five-storey Lee Bank House and the six-storey Nechells House, both located in the inner area of Birmingham, were opened. Together, they provided 190,000 sq ft of industrial accommodation for firms displaced by slum clearance. In many cases, the new blocks helped to retain the vibrant inter-linkages which had existed between many small businesses in the clearance areas.
In 1958, the London County Council followed suit with a four-storey development at Long Street in Hackney. The 72 units available have continued to prove extremely popular with the local clothing industry. In the mid-1960s, the GLC constructed two further flatted factories in east London, a four-storey block at Adler Street, Tower Hamlets, and an eight-storey block at Ada Street in Hackney.
Outside London, other major cities also developed flatted factories in this first phase. In 1968, Leeds City Council opened the three-storey Croydon House and the adjoining five-storey Barkston House in an established industrial area, immediately to the south of the city centre. In 1969, Liverpool City Council opened the six-storey Mulberry House, as part of the new Canning Place Complex on the edge of Liverpool city centre. The initial marketing brochure offers us a flavour of the times. It stated that:
The advantages of modern purpose-built premises on a prestige central site to tenants operating in older converted buildings needs no emphasis, similar buildings on the Continent and in Birmingham have met with great success.
The later phase of flatted factory construction, from the late 1970s onwards, has been concentrated exclusively in London. In 1977 the London Borough of Wandsworth completed the three-storey Avro House and, two years later, constructed the almost indentical Hewlett House on the next-door site. The most recent developments were all completed in 1985 by the then GLC: three-storey blocks were opened at Bayford Street in Hackney and Ensign Street in Tower Hamlets, and a four-storey block at Cremer Street, Hackney. These later developments owe very little to slum clearance programmes and a great deal to the growing interest among local authorities in promoting local economic regeneration. Both Wandsworth and the GLC sought to relieve the particular shortage of small industrial units and encourage new opportunities for employment. In certain ways, the later phase of flatted factory construction applied the lessons learnt from the earlier period.
A survey of 11 of these flatted factories was completed at the Department of Town and Country Planning at the University of Manchester in 1987. A summary of the results is presented in the table. Some of these developments have proved highly popular, while, as vacancy rates and rental levels show, others have fared less well. Discussions with managing agents, caretakers and some of the tenants revealed little correlation between the age of the property and its apparent success. It became evident that purpose-built multi-storey industrial accommodation is quite capable of proving popular and functional for a variety of small companies. Tenants in the developments included companies in clothing and textiles, printing, film processing, in the food and catering industries, in small crafts and in the wholesaling and distributive trades. Yet the image of flatted factories among architects and developers is generally poor. It is often suggested that they offer the worst of both worlds — inconvenient but expensive accommodation in poorly designed buildings with few common services of inter-firm linkages. A comparative analysis of the developments surveyed revealed whether this is or need be so.
Practical convenience
Nowadays, most manufacturing companies would, if possible, choose to be located on the ground floor. Yet many small firms opt for an upper floor of a converted multi-storey factory or warehouse. This is usually because very small units are more readily available and are cheaper in converted premises. Yet firms often have to carry an unknown cost arising from the inconvenience of transporting materials and finished goods up and down the building. The more limited the conversion, the fewer modern facilities are usually available to ensure easy movement: the more comprehensive the conversion, the more expensive the accommodation.
Flatted factories can, in theory, overcome the inconvenience of converting older multi-storey premises by meeting current standards for access and servicing. They should ideally provide easily approached and wide loading bays, sufficient goods lifts with adequate capacity and generous internal corridors. Each of the flatted factories visited exhibited some of these elements, but few demonstrated them all. At Leeds, for instance, the goods lifts appeared to be working well and the internal corridors were quite wide, but the loading bays were blocked by parked cars. In Wandsworth, the whole yard could easily be blocked off by two or three heavy goods vehicles and the internal corridors were rather narrow. At Ada Street, Hackney, provision for access and car parking would now be considered substandard. At Bayford Street, Hackney, one of the more recent developments, care had to be taken to site car parking beneath part of the building. Internal lifts were rather small, but external access to each unit was available via balconies.
Flatted factories offer intensive industrial working space in a small area and convenience therefore depends on careful initial design and afterwards a constant management presence. The role of caretakers in providing supervision of common areas is vital. At Lee Bank House, in Birmingham, the caretaker played a crucial role in establishing friendly relations with tenants, keeping goods moving and generally providing a watchful eye. Many types of firm-require access to their premises outside normal working hours. This was available in Birmingham, but in some other cases its absence led to criticism being expressed.
Firms who require neither constant ground-floor access nor use heavy, noisy or vibrant machinery may be perfectly happy with modern multi-storey functional accommodation. The variety of small industrial companies housed in the flatted factories visited indicates a potentially wide market. The smaller a firm the more likely it appeared to take accommodation further up the building, since it would make only limited demands upon the goods lift. For this reason, the initially larger units in both flatted factories in Birmingham have been subdivided on the upper floors to provide much smaller units. On the whole, the study revealed that accommodation above ground-floor level became inconvenient only when a company expanded to such an extent that the use of the lifts became almost continuous. Nevertheless, although many small companies may be perfectly happy once they are in occupation, a psychological barrier may exist deterring them from taking accommodation above ground-floor level, even in purpose-built premises. The design and marketing of any new development is crucial in overcoming this.
Quality of design
Many of the difficulties experienced could be traced to an inadequate specification in the original construction or layout. The need for generous provision for access, circulation and car parking and for lifts (size and number) has already been underlined. The ability to combine or subdivide original units without difficulty has proved advantageous in both Liverpool and Birmingham.
Particular thought also needs to be given beforehand to the arrangements for waste removal. Flatted factories represent a highly intensive form of manufacturing and inadequate facilities for waste removal can become a source of constant complaints. It was also apparent in some developments that the provision of certain facilities on a communal basis for the block as a whole had simply not worked. In one case an initial communal heating system was in the process of being replaced by individual systems for each unit. The more recent developments tend now to provide individual wcs for each unit.
Although accommodation above ground-floor level should, in theory, enjoy greater security, it was obvious that in some instances this matter had been neglected in the design. An interesting variety of crime protection measures had therefore been taken subsequently to prevent intruders. In future, such matters could at least be attended to satisfactorily from the outset.
Particular criticism has often been levelled at banal and functional exterior appearances. In many cases there is a close resemblance to residential tower blocks built during the same period and applying the same building systems. Both the Croydon House and Barkston House units in Leeds had many similar features to the nearby notorious, and now-demolished, Hunslet Grange residential estate.
However, the more recent factory designs, particularly those built by the GLC, offer some grounds for hope. The Bayford Street development in Hackney incorporates attractive brickwork detailing, interesting curvature and exterior steel balustrading. The Cremer Street scheme nearby owes much to naval architecture.
The recent developments simply prove that good design can be incorporated into multi-storey modern industrial buildings. It was noticeable in the study that the better designed buildings incurred fewer external repairs and were able to charge higher rents. A high specification in design is not simply an aesthetic matter: it pays dividends later on.
Rental costs
In rental terms, flatted factories occupy the middle range of the market. Rents charged are higher than for converted older property but lower than for newly built single-storey accommodation.
Although certain tenants may consider that flatted factories offer the worst of both worlds, having neither the cheapness of older property nor the convenience of ground-floor accommodation, a substantial number may well enjoy greater efficiency in a well-managed development.
Companies whose need for ground-floor accommodation is not so great as imagined would derive higher returns without the need to pay full market rents for ground-floor accommodation. Indeed, several authorities offer rent reductions to those tenants occupying more than one unit, and the GLC generally reduced rents payable by 10% for every floor above ground level. If the lifts are in good working order certain tenants would, therefore, enjoy substantial benefits in locating on the top floor of an eight-storey building.
For investors, the picture is rather different. All the schemes visited were built and managed by local authorities. The developments were usually constructed to provide accommodation for small firms displaced by slum clearance or, more recently, to encourage the provision of employment, as part of local authority economic initiatives, rather than to satisfy any commercial investment criteria. It is unlikely that any of the developments would have been able to show an immediate rate of return required by a commercial developer. Nevertheless, since modern multi-storey accommodation, if well designed and managed, is perfectly capable of satisfying the accommodation needs of many small inner-area companies, new developments in specified areas may well qualify for a DOE city grant.
Common services
Rents quoted for the flatted factories may include a service charge, but in most instances this was levied separately. It was, however, standard practice for the landlord to bear responsibility for building insurance, maintenance of the external fabric and cleaning, lighting and heating of common parts. The service charge almost always covered the provision of caretakers and, in some instances, security, waste removal and the provision of wcs.
There was little evidence of common business support services (telephone-answering, secretarial help, technical assistance) in any of the flatted factories studied, despite the evident popularity of such services in workspace schemes now operating in converted premises.(3) Perhaps their absence in flatted factories is due primarily to the lack of public entrepreneurship among local authorities rather than to any potential lack of use among tenants.
Sadly, very limited evidence was found of interlinkages between different firms in the same scheme. In one of the Wandsworth blocks, three separate woodworking firms operated an integrated production process. In Lee Bank House in Birmingham, close links between separate firms of signwriters, printers and word-processing bureaux reflected evidence of a strong sense of community within the building. Elsewhere, no clear management policy existed to attract similar types of company in a building.
At present, unlike many workspace schemes, flatted factories display few marks of common identify to bind together their diverse tenants. This is, however, probably due more to the style of management than to any inherently disadvantageous features of a development.
Conclusions
Experience suggests that the more successful flatted factories are those where careful attention has been paid to original design and subsequent management. Location needs to be carefully chosen, bearing in mind existing industrial linkages and the current pattern of demand. While these conclusions apply equally to any conversion for, or development of, small industrial units, they do suggest that the idea of flatted factories should not be as quickly dismissed in the UK as has been the case in the past. It is, indeed, evident that a modern multi-storey development with a high standard of specification can provide very suitable accommodation indeed for a variety of small inner-area companies. In principle, flatted factories could help to fill the clear gap in the industrial property market between older, converted premises and speculative single-storey nursery units.
For any developer seeking to construct modern multi-storey industrial units or, for that matter, to renovate and convert older property, the experience from the two periods of flatted factory building therefore offers some valuable lessons. The study suggests that early attention to the following matters would enhance the prospects for long-term success in accommodating small industrial companies:
(1) A high standard be adopted in the design and layout. Generous provisions be made for access, circulation and car parking, for lifts and for waste removal. Attention to these matters will help in the promotion of a development and in avoiding the long-term deterioration of common parts.
(2) The internal layout be designed in flexible modules of, say, 500 sq ft with opportunity to combine up to six modules in units of up to 3,000 sq ft.
(3) An inclusive weekly figure to cover both rent and basic services be quoted in marketing rather than a reference to £ per sq ft. Preferably, certain business support services should also be made available on an additional and strictly commercial basis.
(4) An established industrial area be chosen for the location.
If small companies can be persuaded to locate in modern multi-storey industrial buildings in the future, they would certainly be able to offer higher standards of security and better working conditions than found on many recent conversions of older buildings. Where, however, clear shortages still exist in the supply of small industrial units, both new-build and high-quality conversions of multi-storey property could offer attractive alternatives in the future.
References
(1) URBED (1981) Recycling Industrial Buildings, Capital Planning Information, Edinburgh, p 20.
(2) Estates Gazette January 7 1983, p 31.
(3) Martinos, H (1986) Workspace Development for Small Businesses, LEDIS Review No 1, The Planning Exchange, Glasgow.