Thursday 14th Dec 2017 - Logistics Manager

Hot in the City

Cities are crowded places at the best of times but when you are looking for logistics space it’s just that little bit more challenging: are there any solutions? Liza Helps reports.

This article first appeared in Logistics Manager, December 2016.

This article first appeared in Logistics Manager, December 2016.

Cities are crowded at the best of times but securing logistics space to serve them and other urban areas is getting increasingly difficult while at the same time demand for space is growing.  Andrew Gulliford of SEGRO explains: “Urban logistics is very much a new phenomenon, therefore it has to be development led. Basically there is not a lot of it and its significance is hard to pinpoint.

“It is more than just fulfilling the last mile to the consumer, it is a lot of different things – the obvious one is internet-related. It takes in aspects of home delivery and parcel delivery but also is about providing food and beverages to restaurants and catering establishments.
“Then there is the growth in convenience retailing and the need to replenish the Simplys, Locals, high street fresh and more luxury single basket purchases which seem to be a feature of urbanisation and perhaps the city-dwelling younger generation,” says Gulliford.

There is quite a plethora of drivers regarding urban logistics and these are features of a structural change in the supply chain that transcends economic impact.
These pressures for space still do not mean that securing logistics space is getting any easier. “The crux of the matter,” says Kevin Mofid of Savills, “from a development point of view, is all about where retailers need units; at the moment, that is close to population centres. The problem, I guess, is that the industrial land values are always going to be the lowest of any property type and peoples’ default position is to build residential or office space as opposed to warehouse space.”

From 2006-13, says a London Assembly report ‘The end of industry in London’ almost 1,492.52 acres of industrial land had been lost, more than double the target in the London Plan.  Industrial land loss is not just being felt in London there are concerns in Bristol, Manchester, Birmingham and other conurbations as well.

Simon Lloyd of Cushman & Wakefield says: “Land is tight in urban areas which means the opportunity for [urban logistics] is more limited. It has been overlooked because there is no available land supply or previously developed infrastructure and it will need public sector involvement to be resolved.”

Mofid agrees: “We need strong local authorities to act to make sure that land is retained for logistics use.” However, he adds: “They’re not necessarily keen to do that at moment because of increase in traffic and negative perceptions on the type of jobs on offer. In addition there is huge pressure for more homes nationwide. There are a lot of competing interests and political issues that need to be resolved. Unless local authorities intervene to ensure sites are protected for industrial and logistics use then other competing land uses will be able to push it out unless we can find a situation whereby residential and logistics can co-exist.”

SEGRO has been working on this aspect. It is redeveloping the former Nestlé plant in Hayes, West London and has partnered with Barratt London to provide up to 1,000 new homes as well as 230,000 sq ft of modern industrial and urban logistics warehouses. SEGRO and Barratt London are working together with Hillingdon Council to achieve planning consent, with SEGRO aiming to sell the land earmarked for residential to Barratt London who will be responsible for delivering the homes and community space on the former coffee and chocolate factory site.

Alan Holland, SEGRO’s business unit director for Greater London, says: “This is an exciting time for SEGRO as we embark on a new journey to deliver both first-class urban warehousing alongside a high quality residential scheme. London’s population is set to expand significantly over the next decade and with land supply diminishing rapidly, we understand the need to think creatively to meet the need for homes and jobs.”
Gulliford says: ‘There is no doubt of the need for urban logistics with the urbanisation of the population, and developers will have to be creative. Perhaps we will see multi-level logistics space as seen in Asia and more recently Paris.”

There could be another alternative – underground; with plans for a massive underground warehouse near Heathrow submitted to Hounslow Council only recently.
The proposal put forward by investment and asset management company Formal Investments envisages up to 1.88 million sq ft of warehousing and storage space underneath a 110-acre public park.

The scheme will be developed on the site, known as Rectory Farm using top down construction methods as part of a process of underground mineral extraction. This is because the site, which sits alongside The Parkway (A312) and Bath Road (A4), lies above one of the country’s largest remaining deposits of high quality gravel.

The idea is that work will start to extract the gravel from beneath the surface by a method called ‘top-down construction’. An area, will be fenced off, the topsoil scraped back, piles sunk into the ground and a concrete slab poured over the top.

The soil is then replaced and landscaped, the hoarding removed and the area returned to public use while the gravel is extracted from beneath the ground.
The underground space created by the gravel extraction will create nearly two million sq ft of 9m high warehouse floor space.
Under the proposals areas of park will be available to the public within 12 months of starting on site. It is not sure how quickly the warehouse space will be available although the plans envisage extraction of the gravel to take between seven and ten years.