Our key takeaways from ShedMasters 2022

What sector insights can you share?

Kester:

Kevin Mofid, Head of Industrial Research at Savills, delivered an insightful presentation into the future of European Logistics, addressing the current market dynamic, upcoming trends and underpinning the strengths of the industrial and logistics markets.

We explored environmental, social and governance (ESG) issues and Inma Martinez, who advises business and government on how to turn digital transformation into a competitive advantage, shared her insights on how technology and artificial intelligence will impact the sector in the future.

Inma also discussed the growing changes in market behaviour due to the newer generation’s higher customer expectations, particularly in the Generation Z (Gen Z) and millennial market. Shopping patterns have changed, and the online retail sector is booming. Both individuals and businesses expect to get goods faster, more flexibly, and in the case of consumers, at low or no delivery costs. Because of this, there has been a rapid rise of new disruptors in the logistics market, such as last-mile delivery company’s like Getir. The COVID-19 pandemic has only accelerated the online retail growth, creating more demand for warehouse space.

Steven Alexander, Construction Director for GLP Europe, went on to present the Journey to Net Zero Carbon in the logistics property sector to understand how the real estate industry can help tackle carbon emissions and climate change globally.

It came as no surprise to hear some of the key themes resonating across the event included the sustainability agenda, the e-commerce effects on urban logistics, pressure on the supply chain and how we manage increasing demand for industrial and logistics space.

2021 was a record year for logistics take up rates, how is the sector responding?

Tony:

In Kevin Mofid's presentation we discovered that it was a record year for 2021 with 38 million m² of warehouse space being taken up across the EU.

There is a massive race for space; the most fitting way to describe the growing industrial market. The high levels of take-up are being driven by significant occupier demand from the online retail sector and third-party logistics sectors. With a vacancy rate of 2.91% - the lowest ever recorded - supply remains critically low. E-commerce will continue to drive growth, and there will be an uptake in demand for manufacturing facilities, leading to a continued shortage of industrial sites across all major markets, as the types of facilities in need compared to the ones available is not in balance. This leaves no choice but for developers to respond to the prevailing market conditions.

As a result, there is 18.6 million ft² of speculative warehouse space now under construction (Savills, 2022). Location matters more than ever when it comes to logistics and distribution, but it is now apparent occupiers are becoming less concerned by the cost of their rental space, and instead looking more acutely at the quality of the space they occupy providing an excellent working environment, alongside speed and cost of transportation driving the decision making.

What evolving industry trends were covered?

Kester:

Over the last ten years, development has predominately been driven by build-to-suit, with a limited number of developers inventory building. However, given the current conditions with the supply chain, the trend is moving towards both build-to-suit and speculative development.

Speculative development is now a credible route for occupiers and developers as it can help mitigate delay and alleviate the current volatile supply chain cost headwinds.

What was discussed about the importance of ESG?

Tony:

Environmental, Social and Governance (ESG) and its global and corporate importance was deliberated on numerous occasions during the morning sessions. Net Zero and sustainable development were also covered, but as we all now understand, all components of ESG and social value are at the top of developers, investors and occupier’s agenda.

This cannot be ignored for obvious climate change reasons, but responsible employers are now more than ever acutely aware of the need to provide a great working environment for their employees. For example, it is now commonplace for logistic park developers to apply WELL Building Standards.

There is huge growth and scope in the industrial and logistics sector and it’s encouraging to see it is playing necessary a part to reduce both embodied and operational carbon.