“There’s going to be this transfer of activity from what we used to call a kind of bricks-and-mortar high street, to where more and more goods are going to be fulfilled in distribution centres and go direct-to-consumers from logistics operations, fulfillment centres, and the like, than through traditional retail channels,” believes Ward.
Kevin Mofid, Head of Industrial Research at Savills, sees the “Online retail piece as without doubt the biggest driver,” but critically “online retail fundamentally requires more warehouse space closer to population centres” to give the customer the right mix of speed and choice. This will drive a major change in dynamic in most markets, from one where much of the final logistics is directed from large out-of-town warehouses and then into cities, to one where resources are more distributed and often smaller facilities closer to urban centres play a major role.
“The core fundamentals of location and connectivity will remain key,” says David Sleath, CEO of property giant Segro. “Sites which are close to urban conurbations, with large employment pools and customer base, and key transport routes will always be in most demand and attract strong competition from developers.”
“There’s about three types of real estate strategies,” explains Caton, “one is a centralized distribution centre,” such as the UK’s large midlands warehousing parks, “two would be to have a large DC on the periphery of the city … where the rents and labour are a little less expensive, but you’re around an hour’s drive or more from the city centre. And then the third would be last mile locations, which are within the markets, and you could even go so far as to talk about urban depots. The trend absolutely is to go towards these last touch facilities that are within the cities…. Last touch and urban are categories where we’re seeing more demand.”