UK urban logistics market continues to grow despite challenges

Demand for UK warehouse space continues to grow

Warehouse capacity has grown significantly in the “Golden Triangle” in the Midlands because 90% of the population can be reached within a four-hour drive of this location, according to property specialist Savills.

The average figure for warehouse space acquired on new leases has grown from 15m sq ft to 32m sq ft since 2007.

Concentration on last-mile deliveries is increasing demand for urban fulfilment space as retailers try to improve proximity to the point of delivery.

Warehouse automation, is helping to unlock these urban logistics locations, which traditionally have limited and expensive labour pools according to property provider Prologis.

An additional trend is the conversion of bricks-and-mortar stores into Micro-Fulfilment Centres (MFCs).

High-profile landowners are beginning to indicate their willingness to convert parts of retail parks into urban logistics hubs.  

Fixed automation and mobile automation are aiding the re-purposing of urban brownfield locations. The flexibility of warehouse automation technologies is making the physical characteristics of the buildings housing them less significant.

Innovative delivery methods such as drones, autonomous vehicles and even hyperloops may change the dynamic even further but for the time being the expansion of click and collect and collection point networks is reducing the problem of the high failure rate of first-attempt deliveries which are deemed costly.

The demand for urban land is affected by land values which keep the focus on residential rather than on industrial development, and the fact that land is naturally limited in cities. The traditional resistance to the co-location of residential and logistics buildings also hinders the increase in urban logistics capacity.

On the plus side there is an increased awareness of the importance of this area as seen by the announcement of a major research centre for urban logistics based in Amsterdam. The 30-acre campus will encourage collaboration between interested parties with a view to reducing vehicle movements, emissions and noise pollution so urban logistics real estate becomes less of an issue for residents.

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