A new report on the logistics sector identifies energy security, technology and data, and social impact as the three key factors which need to be embraced to ensure the long-term viability and success of both new and existing assets and developments.

The report – Unpacking the Future of Logistics – has been produced by international law firm Osborne Clarke. It is based on interviews with key individuals working in logistics including developers, occupiers and researchers. 

The report concludes that energy supply and security, the use of technology and data, and the growing influence of local communities are all essential factors which will shape how the sector can thrive during an age of energy disruption, digital transformation and the further democratisation of real estate.

Osborne Clarke’s international head of the built environment, Ian Wilkinson, who is based in the firm’s Bristol office, said: “Logistics is at the core of many of today’s economic and social issues.

“An efficient logistics function is essential for improved productivity, something all our governments crave. A net zero, socially responsible supply chain is what our legislative frameworks demand. Logistics delivers all this in an increasingly disrupted world but it needs a future-focused approach where disruption is seen as opportunity.”

The impact of progress, innovation and changes in energy, technology and social impact factors have been examined by the report. The insights provided by the interviewees broadly split into three areas – the building, the operating model and the community in which logistics facilities are based.

The physical building will need to evolve and this requires consideration of:

• Energy supply and security – a grid connection with sufficient power and/or on-site renewables, especially given increasing amounts of energy required and the importance of energy efficiency.

• Compelling workplace – these sites will need to work for both warehouse and office staff given that more warehouses will have multiple functions including office space for management, IT and marketing functions and creative studios.

• Technology and data – these are the enablers of innovations such as the ‘as-a-service' models around robotics and transport. GreenTech is also fundamental for improved energy efficiency. The output of much of the technology is data which can be used to improve existing processes but also used to monitor and anticipate trends and create additional income streams for occupiers and investors.

Deborah Harvey, partner at Osborne Clarke, said: “Demand for energy security, cost certainty and carbon emission reduction is driving energy innovation but the regulatory and tax frameworks in Europe are failing to keep up. Existing regulations are not suitable for the variety of generation models that we see today. Logistics owners who become power generators therefore need to be regulation savvy.”

The evolving operating model

A key change is the relationship between landlords and tenants. It’s moving from transactional to collaborative and from short-term to long-term. There is a noticeable increase in collaboration around automation and mobility as a service.

Given the cost of a sophisticated fit out, requirements around the robotics and automation are the starting point for building design. In many cases there are fully build-to-suit solutions, so it’s the automation that will also shape tomorrow’s logistics assets both in the size of buildings and the scale of occupiers’ portfolios.

Mobility as a service (or truck as a service) will increasingly be available. It gives occupiers the flexibility to ‘dial up or down’ the vehicles they need to meet seasonal peaks and to decarbonise their fleets.

Data as an asset class is increasing being recognised by the real estate sector and wider investor community. The data exhaust – the raw data created from warehouse management systems, automation, trackers, mobility and onsite energy generation – has potential benefit and value.

Building owners or occupiers may look to directly monetise data, by packaging and selling access to their aggregated data. Potentially of wider importance, is the internal value of data to property owners and occupiers. For example, data about vehicle movements can inform decisions about where to site distribution centres or electricity infrastructure; data about which parts of buildings are accessed at which times can optimise the design of future building layouts; and information from heating and lighting systems allows prediction of energy demand and better design of building control systems.

Tamara Quinn, partner, Osborne Clarke says: "Rapid improvements in data analytics, enhanced by machine-learning and AI systems, will transform the quality of insights that can be gleaned from a building's data, but for these systems to have maximum effect, they should be trained on high quality data: accurate, up-to-date, well-structured and rich in contextual detail.

“Building owners need to make sure that tenancy and management agreement terms ensure that they hold this data, or at least have wide rights of access and use, alongside tenants.”

 The perception of logistics in the community

Logistics parks with their large faceless buildings and high traffic movements have not always been desirable neighbours. Regardless of whether they are in city centres or out of town, they are often accused of being dirty, noisy, industrial spaces that attract a low-skilled and poorly paid workforce.

Logistic sites need to be seen a ‘value-adding neighbours’ if they are going to continue to secure development space and to be able to operate effectively (including at often unsociable hours). Local communities must understand the economic and social value of these developments.

Key to success will be the industry promoting their value. For example, the industry could be much more vocal about the highly skilled jobs that they create, but also their contribution to the environment and the other ways in which they contribute to the local community and economy.

Fran Claes, partner at Osborne Clarke, says: “Across our built environment team we have seen that positive social impact delivers tangible business advantages. These include better access to responsible capital, better alignment to the targets of authorities who permit development, and better alignment to local communities, promoting positive adoption rather than costly objection. 

“All this helps to attract the best occupiers at the best rents and the very best employees.”

The full report can be viewed or downloaded as a pdf from the Osborne Clarke website.