What are people in the Industrial & Logistics (I&L) sector talking about recently?
The growth of online retail remains a hot topic.
Industrial & Logistics has grown into the star performer of property asset classes over the last decade, and the continued weight of capital trying to find a home in industrial property remains stronger than ever. This race for space is made even more competitive by rapidly growing alternative sectors such as film studio and data centre markets which are looking to acquire Industrial & Logistics space.
It is no secret that the pandemic has changed the way we do pretty much everything, and whilst the market share of online retail in comparison to traditional retail has been growing consistently over recent years, the pandemic has forced a mass shift in consumer behaviour. With all of us having to rely on online retail for our non-essential purchases for the majority of the last 12 months, the sector is confident that this sustained growth is set to continue, even as we move towards a return back to normality.
Following a record year for the industrial sector in 2020 - where do you see further growth in the I&L industry?
The dark kitchens trend of off-site food production and delivery is one to watch. Over the last five years we have seen an expansion in the concept as an extension of takeaways. However, as a result of COVID-19, there is a three-fold shift in retailer behaviour at play.
Firstly, we’re seeing a number of CVAs within the F&B sector being utilised to shed bricks and mortar restaurants that are under-performing. In these locations where a traditional restaurant does not have the demand required to make it sustainable, operators may opt for a dark kitchen/delivery facility instead, to service the customer base with lower overheads.
Secondly, the rise in ‘at home’ restaurant dining and meal kits is something that many restaurant brands had been looking at prior to COVID-19, but the pandemic has accelerated investment in this area, as it has been largely the only way for operators to generate revenue and returns for shareholder. Examples include Cote at Home, Patty and Bun, Arabica, Duck and Waffle, Sushi Samba and the list goes on.
Thirdly, the sustained drive to healthier eating has seen a rise in the recipe box/semi-prepared meal market, created and delivered by the likes of Hello Fresh, Gousto, Pasta Evangelists, Mindful Chef etc.
In my view, this is an area of the logistics sector that will continue to see sustained growth. Particularly as we come out of the pandemic. Many businesses and consumers are resisting a return to the Monday to Friday rat-race, instead settling for more time at home to achieve a better work/life balance.
If you had a superpower in the realm of real estate. What would it be?
To be able to see into the future.
About the Author
Georgia Pirbhai, Senior Surveyor, specialises in the Industrial & Logistics sector undertaking acquisitions, disposals and providing development advice to investors, developers and occupiers of industrial and distribution accommodation.