The COVID-19 pandemic has shown what an important component the logistics sector is to the world. At the end of May 2020, e-commerce sales achieved record growth (£2.1bn up from £1.3bn from the year before) as organisations adapted to coping in the challenging social and economic environment. According to the Office for National Statistics, the last and first time online sales broke the £2bn mark was in December 2019. As companies seek to make their supply chains more efficient, the adoption of digitisation, mechanisation and automation into operations is becoming more prevalent.
Having dealt with the unprecedented global circumstances well, the logistics industry will have to monitor the upcoming challenges that manufacturers face over the next 12 months. This is due to the current environment where the global demand for some products has diminished. It is expected that in the short-term, this will restrict the industrial space to reach the record levels of occupational activity that were anticipated in 2020.
According to Colliers International, it is expected that online demand will outstrip demand for warehouses. Consumers are thought to be more used to purchasing goods online and occupiers must be able to adapt accordingly, and will see supply chain models reviewed in a bid to scale capacity.
Demand for urban logistics has significantly increased over the past five years up until the outbreak of COVID-19. Due to the initial disruption, there was reduced activity for smaller distribution warehouses as some occupiers took a pause from their expansion plans. However, despite this, the market grew as larger distribution warehouses reached 100,000 sq.ft or greater during Q2 2020. Colliers expect demand for units sized between 30,000 sq.ft and 150,000 sq.ft located in proximity to urban town areas, will return as businesses transition from crisis management mode to future planning.
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