The rise of automation, potential of rail-enabled sites and the role of warehouses in supporting town centres were among the key topics at Place North West’s Logistics, Industrial & Infrastructure conference.
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More than 160 guests attended the event, chaired by Place North West editor Jessica Middleton-Pugh, at the Science & Industry Museum in Manchester.
Speakers included Steven Knowles, regional director of Harworth Group; Emma-Jane Houghton, expansion commercial director, and Rob Ewen, expansion delivery director of Heathrow Logistics Hub; John Searle, chief executive of Rochdale Development Agency; Amy Gilham, head of logistics at Turley; David Cunningham, architecture director of C4 Projects; Mike Hatfield, senior consultant of MDS Transmodal; Andrew Pexton, director at Avison Young; Gwyn Stubbings, planning director at Gazeley.
The event was sponsored by C4 Projects, Rochdale Development Agency and Euroclad Group.
Andrew Pexton, director at Avison Young, kicked off with an overview of supply and demand in the North West industrial market, which still battles with a lack of stock and competition with the residential sector for land.
- The market is in a state of flux according to Pexton, with take-up of less than 500,000 sq ft this year, however he is “hopeful that deals will land” after 31 October, when the six-month extension to Brexit is potentially over
- The big box market is “strong”, especially in the 100,000-200,00 sq ft size range
- Pexton stated that robotics systems were a “huge capital expense”, with automation systems costing up to twice the amount of a building
- Automation is being used for more trivial tasks and is leading to jobs being done quicker, with fewer errors and damages. However, Pexton said labour “remains important”
- Rents are increasing due to high land values and diminishing supply of warehouses, reaching around £7/sq ft
- The amount of possible land supply is positive but “timescale for delivery is an issue”. The main areas being looked at include Wigan, St Helens, North Manchester, Crewe, Warrington, Bredbury and Bolton
Rob Ewen and Emma-Jane Houghton of Heathrow Logistics Hub presented an overview of the Heathrow Airport expansion, with a focus on the logistics hubs the project is set to create across the country.
- Heathrow is currently responsible for 34% of non-EU UK exports. Houghton said the expansion should double cargo capacity
- More than 76,500 people work at the airport every week, making it Europe’s largest employment site
- The expansion will enable Heathrow to have up to 40 new long-haul routes, and increase domestic routes
- Off-site manufacturing is going to be important in the delivery of the expansion. Houghton explained that four logistic hubs will be established across the UK, with one location in the North West under consideration: Lillyhall Industrial Estate in Cumbria. The winning hubs are set to be announced next year
- Houghton said there will be supply chain opportunities across the UK as a result, as the expansion “should not just benefit the South East”
Houghton was joined on a panel by Steven Knowles, regional director of Harworth Group; John Searle, chief executive of Rochdale Development Agency; and David Cunningham, architecture director of C4 Projects.
- Searle discussed the Northern Gateway, a strategy which proposes 20m sq ft of employment space on land between junctions 18 and 19 of the M62 motorway, straddling Rochdale, Bury and Oldham. He said the proposal was fundamentally about the “distinct lack of supply” of industrial sites in the medium to long-term
- Houghton said the North West location for a logistics hub stood as “good chance as any” to get to the final four. She disagreed the inclusion of the North West was just for political reasons, adding that she is “personally committed” to develop a scheme that shares the benefits nationally
- Reflecting on Pexton’s statement that the market is quieter, Knowles said that there are only one or two site options for big box logistics, with more leaning towards mid-market enquiries. He said that it’s difficult to say how Brexit will impact on the sector, but the logistics and industrial market is “pretty resilient at the moment”
- Cunningham discussed design trends in the market which he said are a “little up in the air”. He said industrial units are being pushed to have more design intent, to “create higher standards”. Increased roof heights are being pushed back by some occupiers, due to sprinkler heads having to be 15 metres above floor level for insurance
- Photovoltaic panels are a key trend that Cunningham is seeing but he said there are still “teething issues” with the integration into buildings, with the question of insurance, and how can they be isolated without causing an issue to fire officers
- Knowles said operations in buildings “need to be more energy efficient” so there’s less demand for power, and added that Harworth is looking at how to become self-sufficient and linking solar power into sites
- Searle discussed how the industry needs to get “stuck in” to the planning process to ensure sufficient land is allocated, and the clock is “definitely ticking”
Amy Gilham, head of logistics at Turley, discussed how to change the narrative around logistics to afford the sector greater priority in the planning system by linking it back to housing.
- Gilham highlighted there is currently 69 sq ft of warehousing on average per home, with some areas such as the Midlands exceeding 100 sq ft
- If 300,000 new homes are to be built, Gilham calculated that 20.6m sq ft of warehouse space would be needed
- The North West is delivering 85 sq ft of warehouse per home, however Gilham showed that in the last year the region had only delivered half of warehouses it should have with the amount of housing that has been built. She added that lack of land supply is “playing out” here
- Locations of e-commerce warehouses are driven by demand; the North West is third for greatest online spend after London and the South East
- Gilham highlighted the potential of co-locating services to address logistics sprawl, using the Chapelle International Logistics hotel in Paris as an example. The site is rail-connected, delivering two trainloads per day into a terminal, as well as a metro. There are plans for offices, gyms and student housing, and Gilham said “you wouldn’t necessarily realise that there’s logistic space in the area”
Mike Hatfield, senior consultant of MDS Transmodal, presented on the current position and future trends of infrastructure and transport.
- As roads get more congested, there will be demand for more rail-served sites. Currently 8% of sites in the North West are accessible by rail
- He added that this is of further importance as lowering greenhouse gas emissions are at the top of the agenda for the country, and freight is going to play “a big part”
- Hatfield suggested HGV driver shortages will also contribute to the need for rail-led sites
- Hydrogen HGVs are “a long way off” said Hatfield, with autonomous trucks “not happening anytime soon either”. He added that battery-powered light goods vehicles will play a greater role
Andrew Pexton and Amy Gilham joined Hatfield on stage for a panel, with the addition of Gwyn Stubbings, planning director at Gazeley.
- Gazeley recently submitted an application for a three-storey warehouse in London in a UK first
- Stubbings said he is seeing industrial being appreciated more, after the London Plan aimed to protect strategic industrial land, and “stop the rot” of industrial sites becoming residential
- He added that he met with Ministry of Housing, Communities & Local Government last year to educate on the value of logistics to the UK economy, and for it to be referenced in the National Planning Policy Framework being redrafted at the time
- The response from ministers was that logistics was already covered under commercial development, however Stubbings insisted the sector needed its own section as it has “unique requirements”. This resulted in new paragraph on strategic distribution being included, which Stubbings said might “seem like a small thing” but is “critical to us as an industry”
- Hatfield said HS2’s main impact on freight will be that it will allow existing fast trains to relocate to HS2, allowing the capacity to be released for other services
- Pexton said rail-enabled sites in the North West haven’t seen high take up, with his understanding that there “needs to be a certain distance to make it worthwhile” to deliver by train. He added they are starting to see container firms relocate closer to ports
- Gilham asked if there was a role for some retail sites to be quasi-retail and quasi-logistics. She noted people are very happy collect packages from stores now, rather than have them delivered to home, and she’s starting to see those uses included in planning applications for the high street
The presentation slides can be accessed below:
The next Place North West conference is Meet The Authorities: Public-Private Partnerships on Thursday 27 June.
Find details of all upcoming Place events here.
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