It is old news that ecommerce is transforming the retail sector. But as we can see from Ikea's latest announcement that it is turning its stores into warehouses, it is also transforming the real estate sector.
As more products are delivered direct to consumers and stores become shop windows, the demand for warehouses and big box logistics property is strong.
In our latest real estate report, Box Clever http://bit.ly/2DZ48xw we explore the drivers that make logistics property a highly attractive asset class and consider the varied challenges facing the sector.
This major piece of research into logistics property draws some interesting conclusions. 91% of the 350+ real estate investors, developers and advisers that we surveyed think demand for warehouses will increase in the UK over the next two years. The top two concerns regarding Brexit for the 250 UK retail decision makers we surveyed are new customs requirements (44%) and the declining popularity of British brands and products among EU buyers (35%).
One point in the report I thought was particularly interesting was the comment by David Sleath, Chief Executive of SEGRO, that where electronic vehicles are used for last mile delivery this will increase demand for urban warehouses close to the final delivery point.
Ekaterina Avdonina, Managing Director of Delin Capital Asset Management, predicts that warehouses will become part of the sharing economy, with occupiers renting pallet space and racking space by the day or week.
On sector innovation, those surveyed thought autonomous vehicles (driven by pressure on air quality), blockchain (increasing efficiency and transparency) and 3D printing (mass customisation leading to smaller inventory levels) were more likely to have an impact on the industry in the next couple of years than drone delivery (over-hyped) or augmented and virtual reality (such as Vision Picking being trialled by DHL).
As Ciaran Carvalho says in his introduction, the sector's popularity inevitably generates increasing competition and investors, developers and retailers need to "box clever" to stay ahead of the pack.
Ikea is turning parts of its vast out-of-town store network into distribution centres for home delivery as part of a “radical transformation” at the world’s largest furniture retailer.