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Savills: lessons from the UK logistics market

Top of the list is the availability of energy and labour which increasingly go hand in hand, Savills says.

Kevin Mofid, head of industrial research, at Savills, explains:

“The key driver for this is that online retailers in particular are becoming more sophisticated in their warehouse fit out by deploying robotics and automation to drive efficiencies. Increased robotics increases the productivity of the humans working in the warehouse and it is not uncommon for warehouses over 100,000 sq m to employ over 4,000 people.

“With many cities across Europe now benefitting from low levels of unemployment, warehouse occupiers are using advanced demographic analysis when choosing where to locate their new facilities. Indeed it comes as no surprise that in the UK, Amazon has chosen to locate almost 500,000 sq m of new warehouse space in the North East of the country where the unemployment levels are the highest in the UK.

“The next level of non-property analysis would involve examining whether enough energy supply is available to meet the requirement of the building. Highly automated warehouse facilities can require as much energy as 10,000 family homes therefore not all sites will be able to provide this. Typically, brownfield sites which previously housed a manufacturing facility tend to have good energy supplies which can be used by tenants of any new warehouse facilities.”

Combined, these requirements also impact the fabric of the building. The average building height continues to increase as occupiers look to maximise the cubic space by installing mezzanine floors, says Savills. Many speculative buildings are now being constructed to 21m clear height which in turn, impacts the floor which must be installed by the developer which would typically need to be strengthened to accommodate the mezzanine.

Warehouse and industrial park amenity also becomes key in this scenario as the type of worker required is generally more skilled. These robotics engineers and data scientists will require better café facilities, gyms, and other features more traditionally experienced on an office business park.

Mofid added:

“The locations of the future will be sites where these three factors can be overlaid against traditional real estate indicators such as low vacancy rates and areas of high demand. Where all of these factors combine will be the areas where rents increase fastest and void periods are lowest, meaning that new markets will continue to emerge across the continent.”

james.wallace@realassetmedia.com