Large space sets pace The logistics sector is thriving as businesses expand and profits soar. We explore the opportunities and challenges owing to the record levels of demand for large warehouse space.
I
t may come as a surprise to discover that not every business sector has been hammered by the pandemic. While companies operating in leisure, offices and conventional retail stores have been hit hard, many in the logistics sector, in particular, large warehouses, have seen their businesses expand and an increase in profits. Why? Because demand in this area – led by the longterm trends of digitalisation, supply chain resilience and an increasing focus on sustainability – far outweighs supply. Rob Champion, Fisher German partner and industrial property specialist, explains: “Covid-19 accelerated what was happening anyway, which was the move from bricks-and-mortar retail to online. Retailers and ecommerce businesses have been taking up warehouse space at a phenomenal rate.
20 fisher german magazine
We’ve never seen growth like this before. Initially that wasn’t necessarily what we had expected, because we didn’t really know what Covid meant, but it’s gone from strength to strength.” Record levels of demand and take-up mean the sector is struggling to find new sites. And that is creating exciting potential opportunities for landowners. Major companies are combing the UK for either existing buildings or possible development sites and finding that their options are few and far between. Landowners who are prepared to do deals that allow logistics developments are likely to find that the financial rewards are significant. However, outdated notions of what may be permitted in certain areas might be dissuading potential landowners from engaging with interested parties. Rob
says: “If we can marry the requirements with the appropriate land, then there’s a strong prospect of working that through the planning process because of the strong economic development angles that come with it. The process could be fast tracked.”
Industrial vs residential
Another underreported fact is that well-located industrial land can now outperform residential land values in many key locations across the country. Rob explains: “Historically, landowners have often held the view that residential was going to drive the highest return on their land if they were ever to sell it. What we’re finding now is that industrial and logistics is outperforming in certain locations and can be quicker at getting through the planning system.”