The socio-economic impact of businesses in the railway arches
customers may have access to a stepped rent deal if they can demonstrate that they might otherwise struggle to adjust to changes in market rent.
3.19
These agreements help ensure that short- term shocks to an organisation’s finances do not affect their ability to continue to lease the space and facilities they need by providing gradual ‘steps’ in rent over time to market rates. Over the past two financial years, The Arch Company estimates it has contributed more than £1.5m in rents to the businesses and organisations that need them most through these agreements. The commitment to ensuring that businesses and organisations are less affected by financial shocks is reflected in The Arch Company’s approach to the pandemic. Just over one year into the company’s acquisition of properties from Network Rail, the pandemic caused significant financial issues for occupants of spaces. The Arch Company responded to these pressures by providing 1,550 customers with three months' rent free as part of an £12m Hardship Fund.
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Size
3.21
The spaces maintained by The Arch Company are predominantly small units. More than 90% of spaces in the portfolio are less than 5,000ft 2 , 20 the smallest amount of space needed under current guidance for a small company with 50 workers. 21 These smaller spaces disproportionately cater for the needs of small businesses. An industrial micro-business, for example, would typically employ 1 – 10 people, and so would require on average between 36m 2 and 360m 2 of floor space; 22 77% of industrial properties in The Arch Company portfolio meet this criteria in Inner London, whilst just 46% of all industrial properties in the same geography do so. 23 Likewise, 88% of The Arch Company industrial properties in Outer London meet this criteria, compared to just 51% for all industrial properties in the area. The average commercial space in The Arch Company portfolio is 247m 2 , with the average industrial space being 244m 2 . Under current standards for the average amount of space occupied per worker, an industrial space of 244m 2 would support approximately 7 workers onsite. 24 The figure below shows the distribution of the sizes of these properties.
3.22
3.23
20 This statistic uses GIA as the basis of analysis.
21 100ft 2 per employee is generally considered the minimum within office workspaces. Other types of uses requiring machinery, retail space, storage, etc would require larger spaces. See Eptura, 2023. How Much Space Do You Need per Employee?
22 Using the employment density for the B2 – General Industrial use class.
23 VOA, 2023. Summary valuations: non-domestic rating list entries 2023
24 Current national estimates from the HCA, 2015. Employment Density Guide, and London-based estimates from the CAG Consultants, 2021. London Sites Database, both put the average amount of occupied space per worker in B2 or light industrial space (not including warehousing, storage, etc) at 36m 2 per full-time worker. 244m 2 / 36m 2 per worker = 6.8 full-time workers.
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