Regeneration: meeting needs in a changing environment
A Land Securities Group case study

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Page 2: Focus on development side of the business

The development business unit at Land Securities develops and re-develops sites that it rents out, either as a whole or in small units, to other businesses. Land Securities understands that land is a resource that has a limited supply but by developing and re-developing existing land it increases the amount of usable property available to meet its clients' needs and create financial returns to its shareholders. The aim of Land Securities' development unit is to find and develop the right properties for different customer requirements. This involves effective business to business marketing; understanding what other organisations need and providing it in a way that adds value for both sides perhaps because of its location, facilities or design.

Customer requirements will, of course, change over time. For example, in retailing there has been a movement towards out of town retail parks and so Land Securities has to find appropriate locations and develop the land for these types of developments. By providing the right kind of development in the right place, at the right price, Land Securities can provide a good service while also increasing its own profits and rewards for its shareholders.

Market segments

The development unit focuses on distinct markets segments:

a) Central London offices

London is the financial centre of the UK and hugely important in many sectors such as insurance and banking. Demand for land in the city is very high and given the limited supply of available space this leads to high rentals. However the level of demand cannot be guaranteed and will vary with external factors such as the state of the economy and business confidence. In a recession or time of economic uncertainty, for example, demand for property may be lower leading to lower rentals as has been the case in Central London since 2002. Land Securities therefore has to forecast demand based on a prediction of economic influences; from these forecasts it develops its own plans to buy and develop property. The requirements of customers wanting to locate in central London can include:

  • prestigious buildings in good locations in the City or West End because they feel this reflects the brand values of the company
  • good transport links so staff and visitors can access the property easily and reduce commuting time
  • a good quality environment to make working in the buildings a more positive experience and help to attract and retain staff
  • strength of London as a global financial and business centre.

b) Retail development

This part of the development unit involves the regeneration of several of the UK's major city centres such as Birmingham's Bullring shopping centre. With increasing incomes in these areas consumers are no longer satisfied with run down shops and a lack of places to eat and drink. They want modern facilities with plenty of choice and good quality services. Regeneration has brought bars, clubs, restaurants, cafés, better shopping facilities and infrastructure.

c) Kent Thameside

Property prices have become very high in the South East due to the rapid growth in demand for homes and offices. In particular there has been an increase in demand for housing because of the growth in the number of families wanting their own homes. However local councils have refused planning permission to firms wanting to build in greenfield areas. To overcome these restrictions, firms such as Land Securities have developed brownfield sites and have gained permission to build mixed use facilities (e.g. housing and offices).

One such ongoing development is the huge area of Kent Thameside where Land Securities has developments planned that cover more than 1,000 acres and include 10,000 new homes and 300,000 square metres of commercial accommodation. The government supports this type of regeneration that is re-developing urban areas rather than allowing building in locations that were previously undeveloped. This saves the countryside and also reduces the number of people commuting to work in the cities and the consequent pollution.

Land Securities Group | Regeneration: meeting needs in a changing environment