Land shortage still a challenge

Photo by Caspar Rae on Unsplash 

DEMAND SOARED during the course of the coronavirus pandemic and since then the logistics industry has been running at capacity. 

With vacancy rates currently at low levels, businesses are snapping up warehousing as quickly as they are put on the market. It is predicted that to keep pace with e-commerce growth alone the UK will need to create millions of square feet of logistics space over the next five years. But where is the land coming from to build the required infrastructure for storage and distribution?

In Yorkshire there is still a shortage of allocated land for industrial use which is hampering the supply of new strategically located mid-box warehousing with easy access to transport links. This is set to continue in 2023, though if the economy does shrink, the flip side is it could free up suitable sites should some businesses need to slim down their operations.

Various local authorities are earmarking commercial development on old colliery sites in the region. However, the big sheds being built on these disused pits are usually quite a distance from the existing motorway network. This will make uptake difficult as truck movements will involve unnecessary miles leading to higher fuel costs. Land needs to be adjacent to the motorway network.

Expect to see more companies looking for distribution hubs and storage premises with an emphasis on supply chain resilience. Onward is flooded with enquiries for these units so we’re always keen to add to our portfolio of commercial property. An uncertain economy and further supply chain disruption will ensure that demand for quality mid-box warehousing is still outstripping supply. 

Gazing into my crystal ball, automation is the buzz word for integrated warehousing solutions, materials handling, packaging and transportation. Automatic guided vehicles (AGVs) in large distribution centres are transforming the industry but you may still have a similar amount of human input due to both the software and mechanical equipment servicing/maintenance involved. 

Exchange of labour

Meanwhile, robotisation is ideal for highly-regularised environments with unaltering repeat processes, but in many circumstances the irregularity of sizes, weights and often unreliable or variable quality of supplier products will fox the current levels of AI. As soon as you get a non-standard item you will probably need a human to sort it. Rather than labour saving it’s more like an exchange of labour!

Blue chip companies like Amazon have got robots everywhere in vast warehouses, but in our level of the business I don’t see a great opportunity for robotisation. Onward was quoted for a robot tug the equivalent of three, four, five years wages of a person. So, you need to be forward looking for a relatively simple process and know that you’re probably going to be repeating the same thing for years to make robots cost effective.

Most warehouses that come on to the market are specified as a multi-use building so as not to limit a future use of the site. Whether automated or not, effective space management that can maximise efficiency is vital for warehouse productivity. It not only gives businesses room to hold more inventory and grow in future, but also has the potential to improve operations and distribution processes. 

In spite of the current economic climate, we are experiencing continued high demand from every angle in the marketplace. With two more deals in the pipeline Onward is investing in land for new facilities that will help provide excellent business opportunities for those involved in warehousing, distribution, retailing and light manufacturing.

More than holding its own in the challenging commercial property market, we have a pre-lease agreement on a current facility which is undergoing modernisation, while we’re close to a speculative purchase of a brownfield site.

It seems 2023 will be a rollercoaster ride for the UK economy and logistics sector. Onward is in the strongest position commercially the company’s ever been in and is looking forward to further opportunities that may come along.

Neil Storey has nearly 40 years’ experience in the commercial property sector. He is a director of Onward Holdings, a fourth-generation family business operating industrial warehousing in the North of England. The company has sites across Yorkshire including Castleford, Normanton, Featherstone and South Kirkby.

For more information, visit www.yorkshirewarehousing.com