Warehouse occupiers are among the most sophisticated companies in the country – and are also the most misunderstood.
The crucial role that industrial and logistics property plays in the national economy was highlighted during the pandemic, when the delivery of medical supplies to hospitals, as well as home deliveries during lockdown, kept the whole country moving.
Before this, there was a lingering perception that warehouses accommodated unappealing neighbours in "metal-bashing" sectors or were occupied by companies that play a superficial role in the economy, and not generating many jobs.
Nothing could be further from the truth, as we explained at the Segro Investor & Analyst Day in London on 11 June, where by referencing our key customers, we lifted the lid on the integral part that urban warehouses play in today’s world.
The average young Londoner can live their daily life through our customers: drinking a morning coffee from Lavazza, travelling to work on a Metroline bus, while watching streamed content created at RD Studios, which is based at Premier Park in Park Royal.
That film or TV show may be downloaded from The Cloud via a data centre at Slough Trading Estate, then at lunch, our typical Londoner might order sushi made at one of our estates in Park Royal, delivered by our customer, Deliveroo.
After work, they might send a birthday present via DHL, before enjoying a few refreshing Camden Hells beers or even an evening listening to the Royal Philharmonic Orchestra, which is a Segro customer in Greenford.
And when they get home, there is a parcel waiting for them from another one of our customers, Amazon or Royal Mail.
At Segro, we bracket urban warehouse customers in three categories: movers, makers and enablers.
They are all attracted to London by the features that make it not just the capital of the UK but one of the most vibrant cities in the world:
- The nine million people living in London.
- The 25 million daily trips on Transport London routes on an average day.
- 22 million tourists visiting London every year.
- 94,000 retail businesses.
- 14,745 restaurants.
- And 22,000 music performances every year across 300-plus venues.
Movers like Ocado, John Lewis & Partners and British Airways use urban warehouse space to store, transport and sell goods. Their modern operations need high buildings to maximise racking capacity and flexible space to enable automation.
And they are being driven by trends such as data & digitalisation, supply chain optimisation, sustainability and urbanisation.
Makers like Town & Country Fine Foods or butchers HG Walter may have very intensive operations and the lay out within their warehouses will be determined by the production process.
They need to be in urban warehouse space because their perishable goods are consumed by local populations. They also need access to skilled labour and to be close to airports for international distribution. They too are being driven by supply chain optimisation, urbanisation and sustainability.
Enablers like Transport for London, Equinix and NRS Healthcare will vary their use of urban warehouse space significantly, depending on the goods or services being provided, with many intensifying their use of space through mezzanines and some requiring a "customer-facing" function.
They need access to skilled labour and to be close to the general population to meet ever-more demanding customer service levels.
Enablers are driven by data and digitalisation, urbanisation and sustainability.
The depth, complexity and variety of the urban warehouses customer base is incredible, and helps to explain why there continues to be such strong demand for this space in London and across big cities in continental Europe.
In Europe, there are growing populations and changing demographics and major cities, restricted or shrinking land supply, high levels of business activity and old and congested road networks, which put an added premium on the best warehouse locations.
Understanding what customers for these warehouses want and need demands close attention and a strong working relationship – not a "let and leave" approach, which some owners have sometimes taken.
It adds up to a very fast-moving world, where the best warehouse owners’ main focus is on encouraging extraordinary things to happen within their property portfolios.