London dominates due to demand from online shoppers, but supply is constrained
According to the new Future Gazing: Logistics - The Last Mile Report by global property adviser Knight Frank, optimal locations for 'last mile' logistics space is now being driven by not just where online shoppers live and work but also the increasing complexity of delivery models.
The transformation of how location choices are made is evolving rapidly from business-to-business activity to a consumer led approach.
The shift in consumer behaviour is well-documented with shoppers the driving force behind the evolution of online. The biggest impact of e-commerce is the change in expectations when it comes to delivery, spearheading the pace of change in the 'Last Mile' logistics space. Logistics and industrial stock built before the digital era wasn't ideally fitted-out or located to cater for the new e-commerce driven demand.
However, while the consumer is leading the change, the UK's Top 10 E-commerce 'Last Mile' Hot Spots are also determined by supply (being constrained), affordability (with prime space at a premium), accessibility and to a degree labour supply and changing labour markets.
Based on these factors the UK's Top 10 E-commerce 'Last Mile' Hot Spots are:
The Top 30 locations with the highest proportions of online shoppers are all located in London, where there is escalating demand for space in what is already an undersupplied market. Correspondingly London dominates the Top 10 ranking.
Stephen Springham, Head of Retail Research at Knight Frank reports, "Consumer demand is one of the major trends that is changing the industrial model and the ongoing growth in multi-channel shopping is having a huge knock-on effect. Industrial sites used to be located near to suppliers, or strategically located in the middle of the country or by major transport hubs, but now an increasingly demanding consumer is drastically changing the location and requirements for floorspace."
Charles Binks, Head of Logistics & Industrial, Knight Frank also commented, "The rise of online has created the 'anything, anytime, anywhere' on-demand consumer, with increasingly high expectations. The pressure to shorten delivery times, narrow delivery windows and fulfil the 'I want it now' delivery options, is radically changing the logistics landscape. The drive for efficiency and accessibility is continuing the growth in the 'hub and spoke' distribution model, with increasing importance on the role of 3rd party delivery services, which is driving the need for 'Last Mile' logistics space.
"Traditional factors such as affordability and supply continue to have an impact on location choices, particularly in sought-after locations where industrial land competes with other sectors such as residential, and there is a lack of stock."
Outside London, other strong 'last mile' locations include areas around Northampton and Coventry which both fall within the Top 10 and Leicester, Ashfield and Staffordshire, which are ranked in the expanded Top 30 hot spot locations, due to the determining factors.