The short term future for the logistics market looks relatively predictable, with continued rental growth driven by growing demand for new warehousing to meet the ever changing occupier requirements and land constraints within the UK.
The speculative development spike that occurred prior to the financial crash is unlikely to be repeated, the trend being towards bespoke pre-lets. The combination of advances in technology, automation and robotics, increased rents, a lack of available land and changes in occupier demand could lead to multi-storey sheds being the norm rather than the exception. The cost and construction risks associated with such facilities will prohibit any speculative development but multi-storey sheds will come to represent the preeminent “build to suit” facility.
Availability of labour will remain a key factor for occupiers when considering their site selections. The majority of modern warehouses are intensely occupied and employ significant numbers of people. Increasing automation within online fulfilment centres brings with it more throughput, which in turn requires more manpower, as well as the need for a higher level of skill to manage these advanced facilities.
Drone delivery has attracted some headlines but there will be significant regulatory challenges and safety concerns that will need to be overcome first. A more deliverable “game changer” will be both electric trucks and driverless vehicles. The former will see a need for logistics sites to future proof themselves with regards to power requirements for the inevitable electric truck (in addition to car) charging. The latter, which has funding from the UK Government, will see small convoys of partially self-driving trucks being trialled on major British roads.
The fundamentals for Industrial and Logistics real estate are strong and at the prime end, the asset class has become almost economically countercyclical – seeing growth when other sectors of the market are faring less well. Constant advances in technology will put more power into the hands of both consumers and occupiers, changing the way products are manufactured, bought and transported.
Robert Whatmuff Director | Industrial & Logistics | +44 113 200 1819 |
robert.whatmuff@colliers.com
Colliers International | Perspective 23
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