UKREiiF 2024: BPF launches logistics manifesto

By Liza Helps Property Editor, Logistics Matters

THIS WAS the call from the British Property Federation as it laid out its manifesto for the logistics property sector on Tuesday this week at the third annual UK Real Estate Investment and Infrastructure Forum (UKREiiF) 2024 in Leeds.

BPF Logistics Property Board Member and planning director at Newlands Developments Benjamin Taylor said: “There has been a shortage of logistics space for at least a decade. The combination of rapid growth in the digital economy, limited land availability and an outdated planning system have created a distorted market in which businesses cannot always access the space they need in the right locations. This in turn impacts jobs and the efficiency of supply chains, as well as increasing vehicular miles.

“We need a change in mindset whereby logistics is prioritised in Whitehall and treated as critical infrastructure if we want the UK to be a higher-growth and lower-carbon economy.”

At the manifesto launch Savills head of commercial research Kevin Mofid illustrated how forgotten  the logistics sector is by policy makers and those in Government: “There is not even a metric for looking at logistics and its contribution to the economy  in the Office of National Statistics.”

Despite contributing some £230 billion GVA to the economy, logistics – in terms of data capture by government and upon which policy is framed – comes under a variety of transport and travel related SIC codes; its economic contribution is mixed in with that of taxi drivers, the UK space programme, and agricultural storage activities. 

The UK Standard Industrial Classification (UK SIC) classifies business establishments and other statistical units by the type of economic activity in which they are engaged. The Office for National Statistics and other Governmental bodies use SIC coding to help them see and understand the business activities of UK companies.

The manifesto, ‘Building the UK’s Critical Infrastructure’ is the second of five sector-specific documents the BPF is publishing ahead of the election.

The logistics manifesto sets out the vast economic contribution made by the sector, including £232 billion per year in GVA and 2.7 million direct jobs, and calls for changes to the planning system to provide more support for logistics development and upgrades to the national grid so warehousing roof space can be fully utilised for renewable power generation.

Since 2010 £170 billion has been invested to deliver vital logistics infrastructure but the UK continues to face a long-term undersupply of modern, well-located warehouse space. According to Savills, availability is consistently below the 8% ‘equilibrium’ level – at which supply, and demand, are broadly in balance – meaning businesses may not be able to access the space they need.

In order to unlock further investment and accelerate the delivery of logistics space, the BPF is calling for Government to:

• Form a new cross-departmental Freight Planning Forum to elevate the status of logistics within Whitehall, ensuring the need for warehousing is closely aligned with the delivery and upgrade of transport infrastructure.
• Introduce a strategic planning approach, whereby decisions are made at the appropriate national or regional level, rather than by local authorities alone.
• Create more flexibility within the Local Plan systems, so real-time market data can be used to forecast future demand and determine how land is allocated. With Plans taking on average seven years to adopt, the current system means local policy cannot keep pace with changes in the economy, such as the growth of ecommerce, that increase the need for logistics space. 

It's not just planning that the BPF has in its cross hairs, the industry body is calling on the Government to:

• Invest in faster grid connectivity so that power generated can be more easily exported
• Introduce higher ‘feed-in’ tariffs to incentivise property owners to invest in solar power infrastructure
• Provide grant funding for innovation in battery and other local energy storage solutions for logistics parks

It believes that the logistics sector has a critical role to play in the transition to a greener economy and the UK meeting its net-zero 2050 target. Currently the roof space of the UK’s existing 3.6 billion ft2 of industrial and logistics buildings could be utilised to generate 15GW of solar power – 25% of the UK’s total power requirements and five times the amount projected to be generated at the Hinkley Point nuclear power station.

However, the inability of the grid to accommodate this is seen as a huge missed opportunity and a brake on deliverability of much needed logistics space.

Chair of the BPF Logistics Property Board and Chief Executive at SEGRO David Sleath

said: “Logistics space is critical national infrastructure, enabling the efficient movement of goods across the country and supporting millions of jobs – but we are only scratching the surface in realising its full potential.

“After years of demand outstripping supply, we can unlock significant investment and drive growth across the UK by taking a more strategic approach to planning and ensuring rapid changes in the economy are feeding through into how we allocate land.

“Furthermore, our analysis shows that warehouse buildings could hold the key to meeting the UK’s renewable energy requirements if the national grid is upgraded and Government carefully plans how to incentivise investment into solar power infrastructure and drive innovation in energy storage.

Commenting on the BPF Logistics Manifesto GLP UK Managing Director Bruce Topley, said: “The sector is expected to grow by 50% in the next 5 years, but this will be challenging unless some fundamental changes are made in the way that we plan and connect our facilities. Given the significance of the sector and the barriers it faces, we believe that major reform of the planning regime and the appointment of a Logistics and Supply Chains Minister would be a great step in the right direction. A coordinated approach with Ministerial backing could boost the economy as well as have a significant positive knock-on impact on other key areas such as energy security by accelerating and enhancing grid connectivity of large solar sites on the rooves of warehouses and exporting it back to the national grid. We urge the Government to take note.”