Introduction
Logistics property is a vital part of the supply chain infrastructure, serving the booming e-commerce industry and fulfilling the growing demand for fast and reliable delivery services.
These industrial properties can broadly be categorised into two types: large distribution warehouses and “last-mile” delivery hubs.
Large distribution centres are often located on the outskirts of cities. These store and process vast quantities of goods and act as key nodes in national and international supply chains.
In contrast, last-mile delivery hubs are smaller and closer to urban areas. They are designed to expedite the final stage of delivery, ensuring packages reach consumers as quickly as possible.
Key characteristics of logistics properties
One of the defining characteristics of logistics properties is their strategic location, often situated near key transport links such as highways, ports and airports. This proximity minimises transportation costs and improves delivery efficiency.
These facilities are also known for their extensive fit-outs, which can include features such as advanced automated sorting systems, climate control and significant floor-loading capacity. While these enhancements are crucial to their operations, they can also be expensive and are often specific to the occupier, making logistics properties a substantial investment.
Rising demand driven by consumer habits
The surge in online shopping has dramatically increased the need for logistics properties, particularly in urban areas. Consumers now expect fast, often next-day deliveries, which has led to increased demand for both large warehouses and last-mile hubs; this shift in consumer behaviour is a major driver of the logistics property market.
The green transition in logistics real estate
As sustainability becomes a higher priority, the logistics sector is also embracing greener practices.
With investors prioritising sustainability and energy-efficiency standards for buildings (such as BREEAM, NABERS and highly rated EPCs), eco-friendly features like solar panels on rooftops and energy-efficient HVAC systems are regularly being incorporated into new warehouse developments.
Developers are also opting to repurpose existing buildings rather than embark on entirely new construction projects. As well as being a cost-saving method, this shift underscores a collective commitment to environmental responsibility and a reduction in the carbon footprint within the industry.
Investment appeal and resilience of logistics property
Unimpeded by recent economic challenges, logistics properties have remained attractive to investors. Strong demand has kept yields relatively stable, with large portfolio deals continuing.
Investors are drawn to the consistent demand from e-commerce and the long-term leases typical of these properties, which provide a reliable income.
Over the past five years, the sector has shown resilience, outperforming others in spite of financial uncertainty.
