A large, empty warehouse hall

It was glamour all the way* for your author last week as he spent a morning in the suburbs of west London, visiting warehouses. These big boxes – the largest of which we saw spanned more than two football pitches in size – are integral to the functioning of the global economy. It’s not just e-commerce which is spurring demand for warehouse space but also the increasing trend towards all businesses building better inventory to mitigate supply chain challenges.

Our host for the trip told us that warehouse vacancy rates in the London area are at their lowest ever, with barely a percentage point of spare capacity currently available for rent on the market. This is evidently great news for the warehouse owners, but it is also spurring a rush to build new sites. The challenge here is lack of availability of suitable plots, particularly given that demand is strongest for new sites most optimally positioned for ‘last mile’ deliveries. Savvy buyers are acquiring strategic sites and converting them into warehouses as well as accelerating new development of previously owned land.

Men presenting a new warehouse

The speed at which new boxes are going up certainly impressed your author. Many of these have been pre-let even prior to completion, another indicator of the robustness of demand. Beyond simply providing a shell in which to house goods, it was also noticeable that each new site is kitted out with sustainability in mind from the outset (while older sites are being similarly upgraded). What this means is not only LED lighting in the warehouse, but also electric vehicle charging points outside, rooftop solar panels, water recycling schemes and plant-filled surroundings, often in the form of living walls.

With the average asset life of a warehouse being in the region of 20 years and with tenant rent reviews typically occurring annually, we were told by our host that it was “worth going the extra mile” in terms of warehouse design from the outset.  Warehouses, it would be fair to say, are no longer just a means to an end. Much work is being done by the major players in the field to engage with local schools and colleges. The key message: industrial logistics can be cool. Much of what occurs inside a warehouse is now driven by data science. Expect more automation and even better design in the future.

* On the subject of glamour, The Future Trends Blog will be taking a break next week as your author will be in the Alps skiing. The Blog will return towards the end of February.

7 February 2023

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Click here to view all Blog posts.

Photos taken by the author.

Alex Gunz, Fund Manager ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

Disclaimers

The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital LLP believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital LLP, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital LLP is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital LLP disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

The document is protected by copyright. The use of any trademarks and logos displayed in the document without Heptagon Capital LLP’s prior written consent is strictly prohibited. Information in the document must not be published or redistributed without Heptagon Capital LLP’s prior written consent. 

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