Earlier this week, our Senior Director of Leasing, David Binks presented as part of Bisnow’s webinar, titled: ‘Can the best get better? Where logistics goes next.’
Here’s David’s ‘Top 5’ takeaways on what the future holds for logistics:
- COVID-19 has tested the robustness of the sector
Many supply chains have been severely tested as a result of the pandemic and lock down from the initial panic buying which cued short term spikes in demand, to the acceleration of online retail sales caused by high streets being closed and new adopters of online retail. As a result many logistics organisations are looking at the resilience of their supply chains to ensure that they can respond much better to online future disruptions.
Brexit is another added uncertainty that operators must take into consideration – and they will do so by planning for the worst-case scenario. Operators may have to bring their stock to the UK to minimise disruption, which may drive further requirements in the I&L sector. Operators could also decide that it is more environmentally sustainable to hold their stock closer to their customer base and avoid crossing boarders to bypass any potential delay at customs.
Furthermore, with peak season approaching including Black Friday, Cyber Monday and Christmas, this will generate high demand and occupiers will need to ensure that they can cope with these sudden peaks.
- Industrial & logistics developers and Occupiers must work together.
St. Modwen aims to provide its prospective customers with a combination of both speculative builds and build-to-suit facilities. There has been significant activity in the build-to-suit market led by a combination of factors including increased fit-out requirements of e-tailers, owing to the shift to online retail. This adds complexity to these sorts of logistics buildings and means developers need to work more closely with their customers to understand the what their customers need.
- Repurposing other types of estate can bring more logistics stock forward
Several companies are beginning to consider repurposing other types of real estate into logistics buildings. There have been a number of transactions completed recently that have seen retail parks bought for conversion in to urban / last mile logistics parks, especially in London. The sector may see more of this activity, particularly major capital city markets across Europe, where supply is limited and values are high, making the economics of such conversions more attractive. In due course this may expand in to regional cities and towns, but only where there is limited land supply, high demand from operators and where the economics work.
- Multi-level warehousing is growing in popularity
There has been a gradual increase in the height requirements from logistics operators where volume of a building is as important as the square footage. Operators use this additional volume to install Multi-level warehousing facilities with the use of mezzanine floors to increasing capacity and intensify the use of the building. This has also led to changes in the external areas of buildings, such additional yard or parking space to accommodate occupiers’ extra square footage as a result of the intensification of the use.
The importance of logistics supply chains has also become key during the pandemic. We hope that local authorities will begin to realise that the logistics sector is key to the efficient operation of the UK economy. They ensure the smooth movement of goods across the country. They employ large numbers of people from the local areas. Occupier’s technology, automation, robotics and increasing adoption of artificial intelligence inside their logistics mean that these buildings and organisations employ a highly skilled workforce, creating highly skilled jobs.
- Labour pools are key when identifying land and so is retaining staff
Labour is a significant factor in what many occupiers and suppliers look for in a logistics site, as staff costs are the number one operational cost in any organisation, relative to other incurred costs.
Subsequently, it is more important than ever that occupiers have access to a healthy, skilled and cost-effective workforce – as without it, they will struggle to operate. The phrase ‘location, location, location’ has now evolved into ‘location, power and people’. Retaining those people is of equal importance. St. Modwen makes a concerted effort to ensure its schemes support our customers need to attract and retain the best staff by providing on site amenities such as mature site landscaping, trim trails to provide an established environment for staff to work and relax in on site.