Real Estate and Logistics meeting the needs of the supply chain

5th June 2019 Commercial

The logistics industry is transforming at an incredible rate. The risks and opportunities for shippers, carriers, logistic companies and investors due to start-ups, new technology and customer expectations are resulting in a rapidly changing logistics landscape. Retailers are continuing to move towards a greater online content and are having to continually adapt to keep up with their competitors and the Amazon effect. At the same time, customers increasingly have higher expectations with demands for near immediate delivery and a seamless service.

Premises need to work with the new technology and the use of the electric vehicles. If companies are taking premises for the long term, they may also need to consider other disruptive technologies, like drones, driverless vehicles, IoT, blockchain and 3D printing.

Using drones in logistics is not yet a reality and it may be a while before drones are used for the delivery of packages. However, the use of drones within warehouse space is likely to come first.

The use of 3D printing will likely change the way in which premises will be used. Will larger warehouses be needed? Or will smaller spaces be sufficient? Will products be printed in the delivering vehicles so that warehouse space is only minimally required but transport facilities become much more important?

With the large number of vehicles on the road and needing to be located close to that final mile, logistic companies are having to look at their real estate requirements for both now and in the future to keep up in this competitive environment. Such companies are considering whether to take smaller urban spaces, increasing or relocating their warehouse units. The length of leases is also important and some occupiers are looking at shorter leases or leases which contain a break clause allowing them to relocate or increase or decrease their space more frequently. Whilst other occupiers are looking for longer leases given the initial financial investment for fitting out their space.

Industrial and warehouse units are also becoming increasingly popular with investors as part of a property portfolio or as an individual purchase from both UK and international investors given the resilient logistics sector and the opportunities the sector is currently bringing to such units especially those operating as B2C companies. Investor yields are currently higher in this sector than for City of London properties.

There are a lot of changes and even more unknowns in the logistic sector and we look forward to working with our clients in this sector through any changes.

Whether you are a landlord, a new or existing investor, or a logistics and/or transport company, JMW’s transport and logistics team can assist your business with their real estate needs.

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Danielle Bessant is a Senior Associate located in Londonin our Real Estate Commercial department

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