Changing shopping habits mean we need to allocate retail-chain space differently: the rise and challenges of logistics centres.
As we discussed in our previous article on data centres, the pandemic has fundamentally changed life in the UK. Our increased reliance on online services post-pandemic has increased the need for logistics centres throughout the logistics chain, as we demand more goods more quickly than ever before. the UK is now third behind China and the USA in online shopping spend per capita in 2022.
Although Covid has delivered change in 18 months that would otherwise have taken a decade or more, this shift to online retail looks set to be permanent and grow further. Look ‘under the bonnet’ and the challenge for companies is to expand existing sites, and source new ones to fit the logistics chain.
What kind of sites are being explored by logistics developers in your areas?
George: At Kanda we are seeing an uplift in the number of sites for logistic centres development outside of London. These are new sites or extensions to existing sites. These tend to be quite large, to accommodate the storage and retrieval of goods before they are sent on to smaller logistic hubs in town and city areas.
These large logistic centres are typically sited in proximity to major road networks for access by HGVs and are usually proposed on farmland or former industrial sites, away from residential areas. These sites can have a wide range of different land uses adjacent to them, from scrap-metal plants to farmland. Former warehouse sites are preferred, however today logistic centres are very different from the historical image we have of warehousing. Modern logistic centres are high-tech and require new buildings with excellent electrical and data connectivity, so we are seeing more applications for redevelopment of warehouse or brownfield sites.
Michael: It’s the opposite in the capital as people seek B8 sites in zone 2-4. These ‘last mile’ sites are often smaller and more often than not are surrounded by very densely populated areas as retailers look to position last mile logistics close to their customer base. The challenge in London is that these sites have often been dormant for months if not years, so bringing forward these sites changes what people have got used to – and that’s silence.
What are the challenges for developers with these sites?
Michael: There are a whole host of challenges for these smaller last-mile logistics hubs. The communities often don’t realise the complex logistical chains behind their online purchases, and for immediate residents, at first look these hubs often offer few community advantages other than faster delivery times.
The major concerns are increased traffic, noise, and an impact on local air quality. Whilst the statistics show that bringing these sites back into use can cut carbon emissions, it’s important to work up a clear, convincing, and compelling narrative at the start, and engage locally from ‘Day One’.
George: Depending on how close the proposed site is to any residential areas, and in fact, we have worked on a couple of sites recently that are close to traveller communities, the most common concern is typically around increased HGV traffic and noise. Nearby businesses can be fairly supportive of large logistics centres.
Are there ways in which logistics hubs and centres can mitigate some of these challenges?
George: Whilst we do see a lot of applications for similar use or former industrial sites outside of London, there is also an opportunity in the out-of-town retail or business parks that were created in the 70s, 80s and 90s. Because these are dependent on car use, and people’s shopping habits have changed, these sites are becoming more and more redundant and provide opportunities for a different type of development – for instance logistics centres. As is commonly reported, high streets are struggling to attract and retain a vibrant retail offer. It seems obvious to encourage retailers to relocate back into high streets; breathing life back into town centres and reversing the trend where shoppers have to rely on private car use to visit out of town shopping centres. These old out-of-town retail parks could allow other development to come forward that is not so traffic dense. That way we could really ensure that the retail space we already have is pivoted to fit the needs of today’s shopper who will shop online but will also visit a vibrant local high street. That’s the dream anyway.
Michael: Sustainability is the major concern for inner London hubs. Extra traffic on main roads, and more vehicles on quiet roads to these sites come alongside wider pollution and air quality concerns. For B8 sites coming out of long-term hibernation in London Boroughs, leadership is key. The use of electrical vehicles must be essential, deliver the Living Wage, and work to hire people in the immediate local area through link ups with councils and Job-Centre-plus. Without a compelling narrative from the start, an already adversarial planning process could descend into pitch battles and corporate reputational risk.
George: To that point, we are starting to see robots being used – perhaps that may be the future of logistics?
Michael: Robots certainly present another set of challenges, which perhaps we can discuss later but one thing is true, logistics hubs and centres in the UK are here to stay.