As we enter the ‘golden quarter’ for retail, retailers and logistics operators are starting to look ahead to a Black Friday and Christmas period like no other.
The sustained increase in online sales and demand from consumers for speedy deliveries has been putting pressure on logistics operators since the start of the pandemic and has shown no signs of slowing.
One solution third-party logistics firms (3PLs) are considering to deal with the anticipated rush is to increase their fleets and therefore their ability to fulfil deliveries quickly and efficiently. This is a trend we have seen emerge over the last few quarters, with increased requirements coming through from operators looking for land specifically to park their expanding fleets.
Amazon is of course the biggest player in the market and recently took an additional 8-acre plot adjacent to their new 149,000 sq ft speculatively-built facility at Multiply in Bolton for fleet parking. And we are seeing other logistics operators follow suit, including UPS, DPD, Hermes and Royal Mail who are all looking to take up additional parking sites in anticipation of the upcoming peak Black Friday and Christmas period.
However, it’s not as simple as ‘seek and you shall find’. The lack of available warehousing stock and development land, particularly in close proximity to urban centres, has been well reported, and it’s not just scarcity of land.
There are other issues to consider when looking for land to park and dispatch fleet vehicles. Getting planning permission for uses that don’t maximise employment opportunities is a big challenge. And you also have to factor in the impact of increased traffic and carbon emissions on the local community.
Government-led green initiatives are translating to the logistics sector with e-commerce and 3PLs working hard to develop their own green agendas to future-proof their last mile delivery networks. As a result, we are seeing more requirements coming through for urban sites which have the capacity for additional power to accommodate expanding electric fleets – another hurdle to jump.
Right site, right area
Operators are generally looking for parking sites that are located close to or next to their existing warehouses, as it is more efficient. We are seeing some deals where this is being achieved either with land acquisition for parking or by agreeing multi-storey car parking leases on nearby sites. In some cases, we are seeing operators willing to pay excessive rents to funds (to match the loss of investment value) for the right site in the right area.
It will be interesting to see how this shortage of land, alongside the existing challenges of Brexit and HGV driver shortages, will impact the ability of retailers and operators to fulfil their delivery commitments during this vital final quarter of 2021. One way or another it needs to be addressed, and quickly, if retailers are going to avoid disappointing their valued customer base on Black Friday and Christmas Day.
About the author:
Len Rosso is head of Industrial & Logistics at Colliers. He has more than 30 years’ experience in the sector advising developers, occupiers and funds on the upcoming trends and challenges within the sector.
To contact Len, email Len.Rosso@colliers.com