Shedding preconceptions: logistics stakes claim for major role in post-Covid real estate market

Whilst the desperate scenes of empty supermarket shelves and booked-out online grocery delivery slots at the start of the Covid-19 lockdown feels like a distant memory, the crisis has shone a spotlight on an often overlooked sector in the UK economy: logistics and warehouses.

At the British Property Federation’s webinar “Getting the right (S)hedspace – how can the UK logistics play its full part in the post Covid-19 economic recovery?”, the panel explored the challenges and opportunities that the UK’s logistics and warehouse sector faces today.

A changing landscape 

“The logistics sector has been the unsung hero during the Covid-19 pandemic”, said Neil Impiazzi, Partnerships Development Director at SEGRO. The integral role that the logistics and warehouse sector plays in the UK economy has never been more apparent – during the ongoing pandemic, it has continued to support British manufacturers, retailers, NHS and other services that are essential to modern life.

The combined effect of Brexit and the shift in consumer behaviour has highlighted the importance of developing a resilient and flexible supply chain for businesses. Whilst the current level of e-commerce boom may not continue post Covid-19, the panel expressed confidence in seeing an overall upward trend in online shopping compared to the pre-Covid era. On this note, Kate Lawrence, Partner & Real Estate Manager at John Lewis Partnership, shared how retailers like John Lewis have been re-thinking their warehouse space and automation strategies in order to meet the changes in consumer demand.

Opportunities and challenges for industrial estates

Bridget Rosewell CBE, Economist & NIC Commissioner at the National Infrastructure Commission, remembered that 20 years ago, industrial estates were not even “unsung”, they were “undesirable” because they did not create jobs. Nowadays, industrial estates are multifaceted – from supply chain solutions to large R&D companies developing lifesaving drugs; from employing warehouse workers to data analysts and middle management running large scale operations. The workforce being created by industrial estates is far more diverse than it was a decade ago.

The panel hoped that the positive shift in the nature of modern industrial uses would create an opportunity to develop more “urban industrial spaces” that connect residential developments with regional and local warehouse infrastructures. After all, it is infeasible to build new homes without having a plan to build more industrial space to meet the consumer and business needs of the new communities. The key is to strike the right balance between residential and industrial developments through clever design and planning.

It is clear that in order to achieve continuous growth, the logistics and warehouse sector requires the government’s collaboration in reassessing the existing policy framework and planning process. Specifically, the panel called for the B1, B2 and B8 use classes to be re-examined to address the apparent disconnect between the availability of industrial land and the availability of “land for industrial use that meets the modern supply chain needs”.

Conclusion

Businesses need to evolve and adapt quickly as part of economic recovery post Covid-19. In a time of change, it has become ever more critical for businesses to provide innovative and sustainable logistics solutions in the short, medium and long term future. The interest that the current crisis has generated in the logistics and warehouse sector is a welcome opportunity to advance the potential of the sector.