Warehousing and Logistic Sector Time to Shine
As the Pandemic continues to accelerate various changes within the Commercial Property market, the Industrial/ Warehouse and Logistic sector is enjoying steady growth and strong Occupational and Investor demand.The continued growth in e-commerce and Brexit related demand also combine to underpin demand and support rising rents and capital values in Dublin and throughout the country.
In a recent Bloomberg Property Portfolio interview, Niall Gaffney CEO of IPUT, acknowledged a shortage of supply for modern high bay Logistic space in Dublin. Gaffney also stated that IPUT intends to develop and expand its Logistic Portfolio in Ireland over the next 3 years to help cater to expected future demand.
The increased demand for Logistic and Warehouse space looks set to continue throughout Europe and America. In the US, Real Estate Agents JLL recently reported that e-commerce represented half its leasing activity so far during 2020, representing an increase from the 36% level registered before the onset of Covid 19. The firm also believes that more than one billion square feet of Industrial space will be required over the next 5 years to satisfy the $900 billion increase in online sales over the same period.
Changes in the way we shop, work and live has resulted in an increased demand for flexibility in various sectors, including warehousing and storage space solutions. Can Co- warehousing become the new Co-working equivalent for storage space in an industry experiencing limited supply and increasing demand ?
Speaking at the recent Propertylocator.ie and Elephant Storage Lead Partner announcement, Jude O’Meara, CEO of Elephant Storage, noted a growing demand for increased flexibility in both storage sizes space and lease terms.
The changing face of Warehousing/Storage
Elephant Storage has adapted to a digital-first model over the past year to meet demand and adjust to the restrictions caused by the Pandemic. While Elephant Click & Store have very friendly and professional staff onsite, all customers now book online, as they opt for a contactless relationship whereby they sign up online and can amend their requirements easily at the click of a mouse.Without a doubt, the Warehouse/storage sector has witnessed some very major changes during the Covid-19 crisis. Many businesses have pivoted to a remote working model, which has caused a knock-on effect in terms of both company and staff requirements for storage.
For companies working in expensive commercial offices, it makes absolutely no sense for them to be using office space as a storage solution. Elephant Storage places a significant emphasis on flexibility. Unlike a standalone warehousing solution, there is no long-term lease involved as Companies need only commit for a month at a time. Also, during peak times or as their businesses grow, they can increase floor area very quickly. Similarly, during slower periods or if they experience a business downturn, they can instantly reduce their requirement.
The increased demand to work from home has resulted in employees looking to turn the “spare room” into a working office space, and so their employers have organised storage facilities for them at Elephant for the duration of the Pandemic. There are implications too, for employers, as they need to have access to storage that will be less impacted by Covid.
Private and Institutional investors will continue to target Warehouse and Logistic Investment on the back of increasing rents and occupier demand both in Ireland and Europe as these buildings become recognized and essential infrastructure to enable economies grow and evolve.
We also expect to see the Co-warehousing model expand as demand for flexibility and cost savings drive demand in the medium term. Digital transformation will continue to improve the service offering with health, security and safety being key factors for customers and staff.
As the market evolves in much the same way as the Co-working and Co-living models, the demand for additional ancillary storage services will adapt and grow. This could include van hire for commercial customers to the provision of a concierge service to accept or dispatch deliveries on behalf of clients. A broad-based storage and logistics partner that removes much of the repetition and hassle from offsite storage should tick many boxes!
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