The challenges of Black Friday 2015 – the busiest online shopping day of the year as a result of heavy retailer discounts – will highlight a new need for super-sized warehouses, according to a logistics expert at Colliers International.
Tim Davies, the Bristol-based head of EMEA (Europe, Middle East and Africa) industrial and logistics at Colliers International, said that while Black Friday is traditionally associated with retail websites crashing under the strain of consumer demand, it will also reveal the challenges faced by logistics chains already under pressure as a result of the trend towards ecommerce.
“The way in which people shop has changed fundamentally in the past year, and this is having a significant effect on warehouse property,” he said.
Davies continued that the logistical demands of delivering online purchases made on Black Friday took on a new significance when viewed in the context of a new report from Colliers International, entitled ‘European Retail & Logistics Insights – From Sheds to Shelves’.
This shows that traditional warehouses are being reinvented into tech-focused distribution centres, and industrial property has outperformed all other types of commercial real estate, as a result of increased demand for space from companies like Amazon.
He explained: “With retailers conducting so much business online then there is less need for them to maintain stock within their shops.
“On the basis that warehouse rents are so much less than retail it is hardly surprising that retailers are now ‘selling from sheds’. Inevitably this sector has been one of the best performing asset classes in the UK and Europe over the last two years.”
The report predicts that from 2015-2019 in the UK, industrial property will not only outperform all other forms of commercial property but will also beat bonds and gilts.
It also states that millions of square feet of e-retail warehousing space will be required if e-retailing sales were to reach the predicted 20% of all retail sales.
This, together with competition for land around key European urban centres and the need to support same-day delivery, could see the emergence of ‘Skyscraper sheds’, sprawled across several storeys, as they are in Hong Kong, Singapore and Japan. These distribution centres would be orbited by smaller urban logistics bases from which consumer deliveries could be deployed.