The rise of urban logistics

The approach of the London Olympics is highlighting the vital importance of logistics for the successful functioning of cities.  This is partly because arrangements for the smooth running of the Games, including the Olympic Route Network (ORN) and Paralympic Route Network, (PRN) will impact on freight flows.

The Olympics is only the latest ‘event’ to put the spotlight on urban, or city, logistics.  Indeed, a combination of factors is coming together to raise its importance. These include increasing urban populations, a growing interest amongst policy-makers and operators in promoting more sustainable logistics – to minimise the adverse economic, environmental and social impacts of freight transport movements – and the growth in internet retail, which is focusing attention on ‘last-mile’ solutions. All of these suggest opportunities for logistics operators, property developers and investors.

Over recent years, many property developers and investors in the industrial sector have focused their attention on the big box logistics market – and for good reason, as occupier demand for this type of property has surged.  Looking forward, there will be plenty of potential associated with small, or at least smaller, sheds to service the growing requirements of urban logistics.

Whilst major cities already have established industrial areas and buildings, developments in logistics and transport will give rise to changing location and property attributes. This is highlighted, for example, by the distinctive features of many e-fulfilment centres, the different requirements which could emerge from greater demand for shared user facilities, such as urban consolidation centres, or the changing property requirements that could arise from the growing use of different transport vehicles, such as smaller electric and hybrid delivery vehicles.

Big box logistics facilities clearly have their place, but there are compelling reasons for logistics operators, developers and investors to take a closer look at the distinctive issues associated with urban logistics and the ‘small shed’ sector. Over the medium and long-term, this will be a growth area as many cities are predicted to see significant population and economic expansion.