FUTURE GAZING

Future Gazing 2024 in summary

Conclusion
Written By:
Claire Williams, Knight Frank
3 minutes to read
Categories: Publication Future Gazing 2024

10 key points:

  1. Though industrial and logistics property is not a visible part of our consumer transactions and is largely absent from the daily activities of modern urban lives, many items and services we rely upon are made, stored, and dispatched from industrial and logistics facilities. The activities that take place within industrial and logistics space support a wide range of economic functions as well as our national supply chain infrastructure. To ensure support for the growing population and economy, sufficient provision of industrial and logistics stock needs to be considered.
  2. A growing population and shrinking household sizes are driving a need for more housing. Each additional property is a potential delivery address and each household will need industrial and logistics properties to support the supply chain infrastructure that provide both critical and discretionary items/services.
  3. Housing decisions made at a local level can have far-reaching implications for the industrial and logistics sector. A desire of local government to favour certain uses of industrial and logistics space can have unintended consequences, such as a lack of distribution infrastructure for local residents and businesses, stifling the growth of the service sector, or limiting options for business expansion.
  4. There is currently 109 sq ft of occupied industrial and logistics floorspace for each dwelling in the UK. This relationship between the household and industrial and logistics operations has changed over the past ten years as lifestyles have changed and our supply chain needs have evolved. There is more floorspace per dwelling now compared with ten years ago and this trend is expected to continue due to growth in household incomes, increasing urbanisation, changing consumer preferences, including rising online sales and demand for convenience, as well as an expanding manufacturing sector, and a drive for greater supply chain security.
  5. In London and the South East regions and key cities, the confluence of growing urban populations, hospitality industries and consumer demand for convenience support robust and growing service sectors. Industrial and logistics facilities in and around urban centres are in demand for various activities, such as laundry and catering services. These ‘servicing the services’ add to other sources of demand for urban facilities, including last-mile distribution.
  6. There are also rising alternative sources of demand, with warehousing offering versatile space suited for conversion to uses such as film studios or leisure uses such as trampoline or climbing centres. Industrial parks can also provide large sites suited for data centres, or research and development uses, etc.
  7. Understanding the segmentations of demand within the sector is critical to delivering the right facilities in the right locations, supporting the activities that take place within these spaces, and broader economic functions that rely on these activities. The different uses and functions within industrial and logistics space and the scale of operation impact operational costs and location choices, and the capacity utilisation of the space varies accordingly.
  8. Although improving efficiencies and better use of space are generating greater capacity utilisation, rising operational costs or a lack of facilities will mean that some operations are not feasible, and a lack of options for expansion can limit business growth (or lead to relocation).
  9. An additional 111.6 million sq ft of industrial and logistics floorspace is needed to service the growth of retail, manufacturing and service sector activities over the next five years. If the rest of the sector experiences the same growth rate, industrial floorspace would need to rise by 225.7 million sq ft.
  10. Accommodating the forecast growth in demand, and providing the right space in the right locations, will require a joined-up approach to planning and an understanding of the connection between households and industrial and logistics space, as well as how this is changing.