In 2008, I participated in my first Property Week Industrial Conference panel discussion at Celtic Manor. In my view we were at the top of a bubble market and I said so.
Now in a virtual format and after a year like no other, the mood may be edging the same way, but circumstances are very different.
E-commerce continues to drive our sector, turbo-charged in the last year and still only going in one direction as consumer demand for online shopping continues to increase.
But we also know that land supply is increasingly constrained – not just for last mile requirements, but for the larger distribution facilities close to ports and motorway junctions that keep smaller urban supply chains running, with land prices consequently rising fast.
Increasing demand and rising commodity prices are also raising construction costs and extending lead times for new building, with the last year reminding us how finely balanced global supply chains have become. Rent rises in current market conditions are inevitable.
Creating strong investment opportunities as these conditions tighten is going to be more of a challenge, but we should take our lead from the occupiers driving this sector’s growth and focus on innovation.
There’s potential for new thinking across every aspect of logistics investment, development, and asset management.
Successful investment will require ever smarter site analysis, development masterplans purposed to maximise usable space per hectare of land, and design concepts aligned as closely as possible to occupier needs.
Technology will be at the heart of the logistics industry of the future, creating greater efficiencies and a better use of finite resources. Less energy efficient space can be phased out, with technology enabling higher densities and more innovative building designs.
Planning decisions need to be quicker to help make delivery programmes shorter. BTS shouldn’t mean long lead in times – best in class logistics real estate teams can design and fast track specialist facilities too.
We have come a long way on ESG in the last year and now is not the time to put the brake on investment. Instead, it should play a greater role in early-stage thinking, especially energy efficiency and renewables.
Logistics has come into its own, and the future will see even greater transformational change. This conference isn’t just a chance to reconnect, but an opportunity to learn and collaborate better for the year ahead.
Michael Hughes is a speaker at Property Week’s Industrial & Logistics conference 26-27 May 2021
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