A combination of beds and sheds has long been the investment strategy of choice for investors who want a share in what have been the two best-performing property sectors of the past five years.

Now London developers are delivering a literal merger of beds and sheds, co-locating residential and industrial use to create 30,000 new homes and as much as 3.8M SF of new logistics floorspace in London, new analysis showed.

Turley, the planning consultancy, calculated that 22,622 new homes in co-location schemes have been approved by local planners since 2019, with a further 7,749 currently in the pipeline. Almost 39% of the units approved count as affordable housing.

Co-location overwhelmingly means that London beds are stacked on top of London sheds, rather than side by side. Turley said that 81% of co-location schemes integrated residential and industrial space vertically, rather than horizontally.

With co-location schemes now in progress across at least 13 of London’s boroughs, the research indicated that a significant number of Londoners may soon live in co-location developments that combine both industrial and residential to create mixed-use places.

Most of the co-location schemes are in Ealing, Brent and Southwark, but there has also been growth in the eastern London boroughs of Waltham Forest, Newham, Barking and Dagenham, Greenwich and Tower Hamlets.

Residential developers are behind 74% of schemes, with institutional investors promoting a further 13% and just 9% the work of industrial or workspace developers.

Turley said the new sector is made possible by the policy E7 of the Mayor’s 2021 London Plan, which provides a policy framework for developers and decision-makers to integrate industrial, logistics and employment uses with new homes as part of a masterplan-led mixed-use regeneration initiative of designated and nondesignated industrial land, whereby the protection of the most important strategic industrial locations remains a priority.

“Co-location schemes are still a relatively new concept within the UK planning sector and largely unique to London," Turley Planning Director Catriona Fraser said. "At first glance, the schemes might be looked upon sceptically — is it truly possible to create a shared environment that knits together the competing interests of industrial and residential occupiers? Yet, the pace at which these schemes have begun to spread across the capital shows growing trust in their credibility and deliverability.”

Maximising the development potential of industrial land through co-location has the potential to play a critical role in delivering new, affordable homes for Londoners, supporting economic growth and creating exciting new places within the capital, she said.