I really enjoyed this afternoon’s Bisnow webinar discussion “Winners & Losers: How Resilient is the Urban Logistics Sector“ hosted by my colleague Paul Burke, which you can watch in full by following this link:
Given the urban focus of the event, discussion was held around how to achieve last mile delivery with reduced pollution and congestion and at a lower cost. Generally, it was viewed that whilst we are moving towards electric delivery vehicles we are still some way off delivery by drones. One interesting idea was, whether we might see franchises for delivery to specific areas and another was around multi-storey warehouses. The increased need for last mile delivery units and the difficulties in finding suitable space were discussed, as was the possibility of repurposing failing out of town retail parks into delivery and distribution hubs.
In terms of specific issues caused by COVID-19, whilst many occupiers have been facing significant disruption to their businesses, some industrial tenants have seen their businesses grow. One example given was a vegetable delivery company seeking increased (temporary and permanent) space having seen its revenues increase tenfold in recent weeks. Whilst they anticipated a reduction in demand once things “return to normal”, they are also confident that they will retain some of their new customer base. Another example was retailers who are receiving stock but are unable to sell it, so need temporary storage space until they can move this backlog.
The panel also mentioned the issues faced by multi-channel retailers, who have the technology and infrastructure to continue operating their online business, but who could not continue due to social distancing requirements for their employees. The panel pondered whether this might accelerate the use of robotics, and reflected on an anecdotal comment they had heard that, “robots can’t get sick”!
There was a difference of views on what might happen to rents and therefore, valuations, which is to be expected given the current uncertainty. As in all sectors of the property industry, there was a clear view that there would be a new “normal” and that people’s behaviour and expectations will change. Overall however, as with so much in the current climate, we cannot yet foresee with any accuracy what those changes might be long term.
WINNERS & LOSERS: HOW RESILIENT IS THE URBAN LOGISTICS SECTOR?