Here at Boxpod, one of our most active markets in commercial unit rental is the industrial and logistics sector. This is generally the warehouse unit – a place that can be used for storage, to help a business’s logistical needs, or to be fitted for the use of manufacturing or some other business activities, such as data centres.
Whether the commercial units are within towns or cities, or, indeed, out-of-town, demand is high, and this is for a number of different reasons. In this article, we are going to take a look at what some of these reasons are.
The factors affecting the industrial and logistics market span across social, economic, and political reasons, what is going on within the UK, but also what is going on in the outside world.
Reshoring and Nearshoring
One of the major impacts of Brexit, as well as other unrest around the world, has meant that importing goods and materials has become more expensive, more time-consuming, and more inconvenient than in the UK. This has meant that many British businesses have had to adapt themselves to procure their goods and materials from either within the UK or countries that are close to the UK and where their importation is easier for the business. This is known as reshoring (bringing these goods or materials from within the UK) or nearshoring (getting them from countries close to the UK).
This has meant that many businesses in the UK are having to change their storage and logistics arrangements, and has led to a higher demand for industrial and logistics units such as warehouses.
E-Commerce
We have seen the world of retail change drastically over the past couple of decades. With the rise of the internet and e-commerce, online and hybrid retailers are increasingly needing industrial and logistics spaces to store products before delivery to their customers.
With an increased emphasis on the importance of the speed of delivery, businesses are looking for their warehouse units to be conveniently located to deliver quickly, efficiently, and cost-effectively to their customers. This means that factors such as proximity to transport hubs, such as ports, airports, or motorways, are imperative. Consequently, those closest to their transport hubs are generally in much higher demand than others.
Another consideration to be made for industrial units used by e-commerce businesses is the need for good internet access. These businesses will often rely heavily on the internet, whether it is for automation, stock control, or managing orders. Many places that are out of town do not have as good internet access as those closer to town centres. This is, however, improving.
Data Centres
Another consequence of the ‘internet age’ is the increase in demand for high-speed internet, and the data storage that is required for the technological advances that we are seeing both in our everyday lives and in business.
The data is stored in data centres, a large space that uses a lot of energy, and is best placed out of town. Data centres can be located miles from where the people they serve are located. Energy efficiency is a big aspect of the suitability of the unit for a data centre, with many of them coming up with ingenious ways to deal with the heat produced by these centres.
Environmental, Social, and Governance (ESG)
Environmental, social, and governance – or ESG – now plays an important part in the management of any business. Ensuring that a business is considering its environmental and social impact, as well as its accountability and transparency. For this reason, for warehouse owners looking to rent out their space, ensuring that the unit is as effective for ESG as possible is essential to earn the best value that is possible. This could involve retrofitting or installing energy-saving measures at a minimum.
A warehouse that is sustainable is much more attractive to potential business tenants than one that is not.
Construction of New Warehouse Units
The way that the commercial world is today means that there is a much greater demand from businesses looking to rent a warehouse unit. And the logical solution is to construct more. The way that the planning laws are at the moment in the UK means that constructing new warehouse units is a lengthy process, and this has fed into the fact that there just are not enough units for the demand.
The British government has recently introduced its Planning and Reform Bill, a bill aimed at loosening the rules on construction in certain areas, in the hope that more houses can be built, quicker, and also the infrastructure that is needed to serve these new communities. And this should include industrial and logistics units.
If these new planning laws are effective – and additional warehouse units are also constructed this could be an effective way to help to satisfy the ever-increasing demand.
Final Thoughts
The industrial and logistics sector is ever-increasing in popularity and demand. They enable businesses in the world today to carry out their work as quickly and efficiently as possible, whilst incorporating the technology that is not only necessary, but also preferable to them.
As almost always is the case, the main driver behind the price that businesses would pay to rent a warehouse unit – or indeed that owners would charge to rent their commercial unit- is demand. The more demand, the higher the price.
In the case of industrial and logistics, demand is high not only from e-commerce businesses, but also from the more traditional businesses that use warehouse units, and the increase in need for data centres.
If you are a landlord looking to rent out your commercial unit, you can list your unit with us here at Boxpod.
We have a wide range of commercial units to rent, so if you are a business looking for a commercial unit, why not take a look at our website today?