The dearth of quality industrial space in areas like the North West could restrict the ambitions of e-commerce retailers, according to a new report by law firm Addleshaw Goddard.
The “How soon is now? The future of logistics” report outlines how the growing need for online stores and delivery companies to have “last-mile” distribution hubs in expensive urban locations is fuelling a land supply crunch. Addleshaw highlights the lack of supply in the North West, with less than 1m sq ft set to be built in the next year.
Jonathan Powling, partner at Addleshaw Goddard, said: “E-commerce growth and an increased global flow of goods are big drivers of change, but if we fail to deliver new employment space, then the stark reality is that some retailers will not be able to expand their online operations and others will be forced to significantly raise delivery charges to meet the increased costs of warehousing. This will ultimately affect consumer choice and value.”
Addleshaw estimates that while nationally 18m sq ft of space needs to be built annually, only 3.5m sq ft is due to be delivered in the next year.
Out of lack of supply comes opportunity for investors though, as Powling said: “A lack of new development and an overhang of inactivity since the recession have caused growing supply-demand imbalance. This is pushing up rents and making industrial far more attractive to institutional investors.”
The report includes a range of contributions from a range of developers, investors and professionals on various aspects of logistics.
Chris Gardner, development manager at Miller Developments, said: “The logistics market has changed a lot more than we could have ever envisaged when we began work on Omega. The industry is much more hi-tech, with a lot more skilled and office-based jobs. Already around four to five thousand jobs have been created.
“Today there is no lack of demand. The North West is very well placed geographically to serve the majority of Britain from the motorway network, and supplementing that network is the key thing to help the logistics industry deliver the growth that the country needs.”
Of the report’s 13 policy recommendations for government, some are familiar enough, such as exemptions for speculative schemes; creating an industrial forum to identify sites; empowering local planners. But there is a strong demand for greater recognition of the sector’s importance, with a call for councils to be made to designate sites for industrial use. The report also demands that “the government must commit to at least matching existing grant funding once the UK has left the EU.”