If London is to recover from the pandemic and remain competitive on the global stage, it will need sustainable local jobs and a cleaner, greener, last-mile delivery network: both things that industrial logistics development can offer. However, as most local planning authorities in Greater London know, land earmarked for industrial development in the Capital has diminished significantly over time and greater consideration of the importance of industrial logistics is now being urged if targets around economic growth, job creation and air quality are to be met.
The Mayor of London's new London Plan acknowledges this problem to some extent and seeks to preserve Strategic Industrial Land (SIL); however, local planning departments remain under pressure to support the delivery of much-needed new housing, based on the Plan's target of 52,287 new homes a year for the next 10 years. The importance of SIL becomes clear when you consider that every one of these new homes will require services provided by the numerous industrial businesses that make modern life possible – including last-mile logistics.
During the pandemic, online shopping doubled to 36% and is unlikely to drop back to pre-COVID levels. With homes in the Capital requiring more home deliveries, it might seem logical to locate the facilities processing these parcels far outside the city; however, this does nothing to help local job creation or reduce emissions.
The shortage of industrial land (the natural home for logistics space) is already driving up rents , with occupiers being forced further out into surrounding counties. Over 1,300 hectares were lost in London between 2001 and 2015, and with more land being released for residential or mixed-use development by boroughs each year, the situation is worsening.
A key benefit of locating logistics properties within easy reach of the households they need to serve is sustainability. A recent report by MIT Real Estate Innovation Lab for Prologis revealed that carbon emissions generated by online shopping are 36% lower, on average, than those generated by visits to out-of-town shopping centres. By placing goods as close as possible to the end consumer, the report found that urban fulfilment centres can reduce carbon emissions by a further 50%, whilst speeding up delivery and reducing overall cost. These shorter, ‘last-mile' delivery routes are also ideal for electric delivery vehicles, which reduce carbon emissions by 27% and are essential if targets around air quality, personal vehicle use and congestion are to be met.
More industrial logistics property development in London would also create job opportunities for local people, at a time when the unemployment rate in London is 6.5% - 1.5% higher than the national average. The UK logistics sector now supports 2.6 million jobs and that number is rising due to the increase in demand for online deliveries and sophisticated logistics management systems which require skilled individuals to install and operate them. Indeed, today's modern logistics warehouses provide a wide variety of jobs in areas such as customer service and data analytics, as well as traditional warehouse roles.
There's now an urgent need for Government, local planning teams and their policymakers to refocus and work with developers on industrial sites and consider new ideas. Strengthening local communities and serving London's growing population in a sustainable way is going to require imagination: that could mean delivering new housing developments with their own micro-fulfilment centres or building multi-level logistics properties that deliver the floor space required.
Refocusing on industrial development could be an opportunity to build a better London and support the Capital's economic recovery by delivering jobs, protecting the environment and ensuring new homes have access to the services they need.
Robin Woodbridge is head of capital deployment at Prologis UK.
