The shift towards online retail is causing drastic rethinking of many retailers’ logistics networks in view of the need to provide rapid delivery to consumers’ homes says JLL in its Predictions for 2015.
There will be a big increase in the need for urban logistics properties, but with a dearth of available properties the year ahead will be tough for occupiers.
“The property rethink though,” said Andy Harding of JLL: “is complicated by rising urban populations – a trend disproportionately driven by the demographics that are most likely to shop online. Within the ‘big box’ market, this will produce demand for extremely large e-fulfilment units and long, thin parcel hubs with extensive loading facilities. However, it will also result in an increasing need for a larger number of ‘urban logistics’ units: smaller versions of these parcel hubs, embedded in cities, enabling rapid response and delivery times.
All of this is further hampered by the fact that Supply will continue to dwindle in the face of robust demand from retailers, manufacturers and third party providers. “This shortage,” said Mr Harding, “will be felt right across the market, from smaller spaces where suppliers are often being asked to expand, through to the largest ‘big box’ logistics units. This will lead to above-inflation rental growth, which will be particularly marked in the ‘golden triangle’ and in the South East. There is also an emerging shortage of land – particularly in the locations that are most popular with occupiers and developers – with few major sites coming through the planning system. Land values could rise sharply as a result.”
There is a glimmer of hope with increasing demand and notable shortages, more developers investors and landowners are likely to seek to cash in and there will be an increase in speculative development – but only in prime areas.