London is losing its industrial land stock at an alarming rate, and developers and investors will need to be increasingly innovative and radical in response. That was perhaps the key topic at this week's Last Mile conference which heard from leading figures in the logistics space at the BAFTA building in Piccadilly.

Like most advanced cities around the world, London's history is wedded to large-scale industrial development. You have hardly walked 10 minutes before you bump into redeveloped warehouses along the snaking River Thames such as Butlers Wharf, which now boasts some of the most sought-after residential property in town.

But London is losing its industrial space. Since 2001, the capital's industrial land stock has declined by 18%, or 1,500 hectres, according to data from the Greater London Authority. Jules Piper, its deputy mayor for planning, regeneration and skills, describes this as a "huge concern" for business in the capital.

While the wider UK logistics sector still "remains a landlord's market" and can bank on continued rental growth in the coming months, according to CoStar director of market analytics Grant Lonsdale, it appears there is a greater pressure on those in London and the South East market to provide the right spaces for urban logistics, both today and in the future.

CoStar News found many industry leaders at the conference preparing sites to host electric vehicle fleets, as well as looking at developing multi-storey warehouses in the face of high land values. Critical also is improving planning strategies when trying to win over communities averse to "ugly" industrial development. CoStar News is a media sponsor of the conference.

Part of the key to good, modern warehouse development is flexibility, according to Patrizia director Luke Le Brun, who was speaking at a session on designing and planning sheds for future businesses and their needs.

But Le Brun said the common 'sheds' tag used to describe warehouses played down the "complex" nature of modern facilities, insisting that developers were dealing with "increasingly ambitious requirements" from occupiers.

In April, GLi, a joint venture between KSP and Patrizia, was granted planning for the development of two "ultra-sustainable" warehouses in Croydon, south London. The buildings, known as CR1 and CR2, will provide circa 108,000 square feet of industrial space. They will be fully electric and provide maximum photovoltaic coverage on the rooftops.

The Patrizia director explained that the company's approach to urban logistics development would mean that buildings would remain "best-in-class" in for a number of years as he listed some of the criteria it checked its plans against, starting with what he called the "fabric" of the property.

"We try and build as high as possible. Land is extremely expensive and with uses as diverse as film studios to urban farms, or to standard logistics buildings, adaptability and flexibility starts with having as much space as possible on the site. We tend to build to 15 metres, which is the maximum allowed by planning."

Le Brun added that building tall warehouses also left the door open to installing mezzanines within warehouses that could be used for offices, production or restaurant and bars. "Ability to install mezzanines means that people can use the building in a lot of different ways.

"We want to create attractive environments for people to work and it's not just warehouse operatives; these are sophisticated businesses with many, many different functions that will be based in these buildings... so [we] have to ensure the building works for a third-party logistics company, a film company or food production firm.

"So we are trying to cater for as wide a range as possible and how those occupier needs are going to change over the lifespan of the building."

Keeping a healthy amount of yard space should also be a feature of modern, urban logistics properties, according to Le Brun, despite high land values. He said: "We don't know what the fleets are going to look like going forward - could they be electrified in a few years time? That building needs to adapt to changing fleets over the forthcoming years.

"Reducing your yard space and overdeveloping on the site is an easy way of cutting down the range of occupiers that might want to use your building over its lifespan."

Power was another key consideration listed by Le Brun, who said GLi sets an "ambitious range of targets" to increase sustainability at sites, such as allowing occupiers to generate renewable energy on-site. He said plant rooms at GLi properties allowed space for batteries to store power made via solar, giving them "security and visibility" over their energy.

Warehouses use large amounts of energy to run lighting and cool buildings, as well as powering machinery. Although UK Warehousing Association CEO Clare Bottle said greater efficiency was reducing these power uses, she suggested electric vehicle fleet charging and increasing use of automation and robotics would place further strain on energy demands.

At a session on planning for the energy infrastructure shift, Bottle said that it would be important for warehouses of the future to generate renewable energy, both for their own use and for other sectors that could tap into any surplus via the National Grid.

She urged industrial developers to make better use of solar energy, with "few warehouses" having the technology on their rooftops despite offering a large area to capture sunlight. UKWA analysis shows that warehousing has the roof space for up to 15GW of new solar, which could generate 13.8 TWh of renewable electricity per year and double the UK’s solar PV capacity.

Bottle said costs should not get in the way of solar panel installation. "There are plenty of different financial mechanisms which are available to help with that... It is much more cost-effective to do it on a warehouse roof [opposed to a home] and the payback is often three years."

Developers, asset managers and occupiers agree alike that the sector needs to have access to reliable and reasonably priced energy, but panellists suggested the it could not go it alone and would need wider help to access enough energy and help create it for other industries.

As well as reforming energy regulator Ofgem, Bottle said the government could remove business rates penalties from the devolved nations when carrying out green upgrades on buildings to encourage more to increase renewable energy production, such as installing solar panels.

She added that the planning system also needed to change amid talk from both main political parties to bring about reform. "What would be valuable would be for local authorities, not only to have some rigour about the way that they review their local plan, but also to have a statutory obligation to have detail about energy planning as part of the local plan."

In a separate discussion, the importance of good access to power was made plain by Chris Davies, co-founder and CEO of vertical farming company Harvest London. In March, the company agreed to lease 140,000 square feet at Prologis Park Beddington in Croydon.

The DC3 building is one of six warehouses on the Prologis estate, where the occupier will use the BREEAM ‘Excellent’ and EPC A-rated facility to grow herbs and salads for food retailers. Davies said one of the key features that helped swing his business's decision to move to Croydon, as well the building's height and links to the A23 and A205 roads, was access to power.

"The thing that actually convinced us about that site was the power plant that is right next door. We have 140,000 square feet of roof, and if we filled that with solar, that would only be 2% of our power requirement. But we are getting all of our power from the power plant that is right next door.

"When I think about how we choose properties, the concept of collocation is a very big one; collocating with power, collocating with distribution networks. Our big customers for this next facility are going to be the retailers, so how far are we from their distribution centres, how far are we from a range of these customers."

With high land costs, the temptation to venture into multi-storey industrial warehouses is there for developers, with British Land lodging plans for a near 400,000-square-foot multi-level logistics development in Enfield, north London just this March.

When asked if Patrizia could enter the multi-storey urban logistics game, Luke Le Brun said: "We can't make that decision on our own, and I think it's all about a conversation between landlords and occupiers, and developers and occupiers as to what facilities occupiers want to occupy and what is feasible for landlords to build.

"We are absolutely ready to go out and build multi-storey warehouses if we understand that is what occupiers want, and I know that we are going to build the right thing. But it's not the answer to everything, it's the answer to certain types of business."

One such facility, Industria in Barking, completed last month. The Long Reach Road scheme by Be First, the regeneration arm of London Borough of Barking and Dagenham, comprises over 100,000 square feet of industrial floorspace in two connected buildings, one of three and one of four floors.

Those behind the scheme say it is London’s first scheme to respond to the London Plan, by providing a new stacked industrial building in East London. Speaking on multi-storey industrial schemes, the GLA's Jules Piper said it was a "pioneering way" to service demand for industrial space in the capital.

But he stressed this type of infrastructure would not work for all cases. "As the GLA, we need to work with industrial developers, Boroughs and everyone that has an interest in the industrial and logistics sector to ensure that local plans, masterplans and individual development proposals recognise the strategic role of industrial land for the capital and really promote its intensification and collocation, where that can work."

Multi-level industrial, along with renewable energy utilisation, are just a couple of ways urban logisitics is developing to move with the times and serve current market needs. Another way the industry is hoping to evolve is by shedding its unfortunate "ugly" tag, which can often lead to concern among local community residents about schemes popping up on their doorstep.

Speakers at the 'Identity Crisis' session in the afternoon said the industry still has work to do to change the public's perception on warehouse development. Emma Thorpe, planning associate at BeFirst Regeneration, listed some of the common concerns around industrial developments, including noise levels, design aesthetics and increased local traffic. She suggested ways these could be overcome.

"It's really important that we start talking to local stakeholders at the earliest stage possible, right from design conception though pre-application and actual determination of planning applications. By doing so, we can really help us as developers to understand their needs and aspirations and in the best of cases that I've seen, it's led to really positive partnership working.

"Getting the design of a scheme right is fundamental to overcoming a lot of these concerns. With noise, it's thinking about where we can put our buildings so they themselves act as a buffer which can help to minimise acoustic fencing around a site to help open up a design and integrate it into the local community."

Thorpe added that developers should be thinking about schemes and highlighting how they could add social value to areas via job creation and skills training, and crucially change the perception around sheds. "By doing this, not only can we have very efficient industrial hubs, but a great employment and staff base around them which helps uplift the community."

With the most collocation schemes approved for planning in London, Southwark Council is an example of a local council that is working with residents and stakeholders to highlight the positives of logistics schemes in urban areas. As well as Industria in Barking, it recently approved British Land's multi-level industrial logistics hub along Mandela Way.

Councillor Helen Dennis, cabinet member for new homes and sustainable development at Southwark Council, said clashes with residents around developments usually stemmed from a "lack of planning" and stressed the importance of an "intelligent, imaginative and informed" design code for developers in the area.

Clear planning has also helped the council to getting landowners and developers to understand what type of buildings Southwark Council wants along the Old Kent Road, along with convincing neighbours about the development which sits close to residential properties.

"We've had to take care with conflicts that might arise form the collocation of these different uses, but we've done so by setting out a really clear masterplan structure for the area, proposing a series of different use typologies and services, so residential can co-exist."

The Council also has a mixed-use scheme that will further integrate residential and warehousing at 313-349 Ilderton Road, that will provide 250 student units sitting on top of circa 11,000 square feet of light industrial. It replaces a former tyre dealer’s yard.

With urban logistics "moving into towns" across London, Mountford Pigott architect Ian Robinson suggested the sector had to do more to incorporate sustainable materials, insisting that the buildings were still too heavily reliant on carbon intense components, such as concrete and steel.

"In terms of net carbon, we've made a great start on that, building facilities that are offsetting [carbon] like mad, with all-electric platforms and EV charging. But there are issues coming down the tracks.

"We are not tackling the fundamental problem of embodied carbon...Can we use more sustainable materials? Can we use, for instance, more wood, can we go back to locally available materials, can we use more brick?"

Robinson also pointed out the juxtaposition between industrial and residential land uses, saying one of the challenges of the next few years would be making the pair work alongside each other.

He added: "There's been a push for industrial intensification, which has led to the whole concept of of beds and sheds over the last few years, and they seem to be quite unhappy bedfellows. It's hard to make 'big-box' industrial work with residential over the top of it.

"I think we have to look at different ways, more imaginative ways and collocation, rather than trying to cramp those uses together."