The Future of Logistics and Industrial Property in the UK

It has been a bumpy ride for all industries in the UK over the past couple of years. In fact, it has been pretty bumpy for the whole world, but particularly so in the UK.

With the uncertainty over Brexit, swiftly followed by the onset of the COVID-19 pandemic many of us (businesses, organisations, and individuals) have been doing what we can to keep our heads above water.

One industry that appears to have benefitted from the pandemic is the logistics and industrial sector in the UK. The concern over manufacturing and logistics suddenly turned to success as internet shopping and home deliveries boomed. As the country opens up again, however, the logistics and industrial sector is once again feeling the uncertainty of Brexit and its implications – such as shortages in HGV drivers and delays in the procurement of raw materials.

Logistics, Manufacturing, and Industrial Property Pre-Pandemic

Before COVID-19 hit, we were already seeing a move away from high street retail and towards online shopping. Online platforms such as Amazon as well as individual retailers’ websites were growing in popularity, giving the warehouse and industrial property market a boost.

Although the online shopping phenomenon seemed to be turning into a trend, there was a degree of pushback from high street retailers, amending the physical shopping experience that they offer.

At the same time, with Brexit on the horizon, there was also a lot of skepticism about what the future was to hold. The future of manufacturing in the UK was uncertain both in terms of acquiring raw materials at the right price, as well as being able to export products quickly and at the right price. The effect of this uncertainty meant that we saw less foreign investment and a dip in demand for some industrial property.

During and After COVID-19

Here at Boxpod, we have noticed a rocketing in demand for industrial property during and after the COVID-19 pandemic. This is mainly due to the changing habits of customers (move towards online shopping) and a recovery in the industrial sector after the pandemic.

According to Property Week, 41% of industrial property occupiers are expecting to have an increase in the need for more space over the next two years, with 27.7% of people involved in the industrial property sector believing that COVID-19 had a positive impact on their businesses.

The success that the industry is currently feeling is not, however, without its challenges. Issues such as Brexit, the availability of raw materials, and workforce are worries for many companies in the industrial and logistics sector – perhaps, most notoriously, the shortage of HGV drivers that we are currently experiencing. Rising energy prices and the increasing need to incorporate sustainable practices are also potential obstacles.

The Future

According to the research carried out by Property Week, the biggest challenges to the future as determined by those who are working in the industrial and logistics sector are COVID-19 and Brexit (21.1% and 20.3%). After these, those asked believed that the next biggest challenge would be finding a supply of suitable new buildings to use. This shows how popular the industry is becoming – and, therefore, the need for a larger number of industrial units and warehouse property in the UK.

It is likely that as the country begins to head out of the COVID-19 pandemic – or, at least, learns to live with it, we will be seeing the industrial and warehousing sector looking to not only incorporate some of the changes made during the pandemic and Brexit, but take the new demands, trends, and preferences of their customers into account.

Digital Warehouses

With the evolution of technology and an increasingly digital world, we are also seeing a greater need for spaces where the huge amounts of data that are needed to run businesses in 2021 can be stored. It is stored in data warehouses – vast warehouses where digital data, servers, and other virtual world infrastructure is kept, allowing for services such as the cloud, streaming, and big data analysis. As we see demand for these digital warehouses shoot up, there is a great need for enormous warehouses where data can be stored.

Industrial Unit and Warehouse Rental Considerations

If you are looking to rent an industrial unit or warehouse, there will be several factors that need to be considered. These are, to an extent, dependent on the nature of your business, but some of the things that you should think about include:

Location – The location of your industrial property is almost certainly going to be a key factor to which one you get. If you are using the warehouse for the storage of products to be delivered, it must be located in a place where there is both easy access for deliveries (perhaps near to a port or airport, for example) and to be distributed – maybe close to motorways or a central location in the country.

Size – It is important to factor in the potential growth of your business if you are planning on moving premises and expecting to grow in size. This could be especially important if you are working in a business that is set to increase (data warehouses or distribution, for example).

Technology – Technology is continually changing the way that we work, and the industrial sector is at the forefront of many of these changes. We are currently seeing more and more businesses using robots, automation, and other technology to reduce the chance of human error, improve safety, and allow for factories to be productive 24/7. You may wish to incorporate these when considering your future industrial unit planning.

Offices – Some businesses choose to also have their office space in the same unit. One thing to consider may be the fact that some of your workforce may prefer to be working from home more, meaning that your need for the same amount of office space might be reduced.

Final Thoughts

After what have been a difficult few months for the whole world, one of the sectors that have seemed to do the best out of it all is the industrial sector. And this looks set to continue – especially when the wrinkles related to Brexit have been ironed out. This means that demand for industrial property and warehouses is likely to increase, helping to build a healthier economy and robust bounce-back after the uncertainty that we have been living with recently.

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