The face of London’s logistics market looks set to be transformed by profound changes in consumer behaviour according to JLL’s new Logistics in London research.
The six key predictions in JLL’s report are as follows:
- M-commerce (mobile phone and tablet purchases) will lead to a surge in online shopping during peak commuting times creating new pressures on deliveries – this will have major implications for an already congested and polluted London and put pressure on retailers and carriers to fulfil these orders.
- Deliveries of online purchases to offices will slowly become ‘out of bounds’- whether by voluntary or mandatory arrangements. JLL expects that this could lead to new collection points being set up in London around transport hubs and convenience stores used by commuters to and from work. Consideration will need to be given to the frequency that these collection points may need to be fulfilled.
- Landlords of large office developments will take a more proactive role in logistics planning and good practice – as servicing many of these buildings is logistically challenging. Landlords will need to think about the services needed in these buildings and how they are delivered, pushing logistics higher up the agenda in new developments.
- Online leisure spending will drive demand for new industrial uses – for example, requirements for ‘dark kitchens’ across London are bringing food preparation back to the city with demand being concentrated in densely populated areas where industrial stock is limited. A lack of smaller unit development (sub 10,000 sq ft) will result in increased competition and in turn drive further rental growth in the industrial market.
- The shift in consumer spending to restaurants and hospitality will generate more demand for logistics space from suppliers to these sectors – operators will need to consider how this thriving market will be fulfilled. One option could be the use of shared consolidation facilities to efficiently service the city and reduce congestion and traffic in London.
- Industrial land in London will be lost to leisure use as consumers continue to change their habits – leisure operators have been targeting industrial space in London as it offers a cheaper alternative to retail space. We predict that this will continue and more industrial land will be further displaced by the leisure market.
Commenting on JLL’s findings, Andy Harding, lead director JLL’s UK Industrial & Logistics Group, said: “From a logistics perspective, servicing London is becoming increasingly challenging and change is on the way. London is rapidly reaching a critical point where it does not have enough industrial stock to meet rising demand both from distribution firms but also leisure uses/operators. Several of the drivers of change highlighted in our research may result in relatively modest modifications to industrial land use but coupled with the loss of industrial land to other uses such as residential there will still be a tight picture in terms of supply.”
Jon Sleeman, lead director JLL’s EMEA Industrial & Logistics Research, added “The demand for land and transport infrastructure within London will continue to rise. Due to its size and diversity, London is often at the forefront of new concepts and innovations as businesses develop new projects to meet or generate consumer demand. This combination of size, diversity and innovation will generate challenges and also spark exciting new opportunities for logistics in London.”