‘First-mile’ logistics assets could become increasingly attractive to UK property investors due to global supply chain disruption, according to a new report from Knight Frank.
It its Future Gazing Report the property advisor said the need for increased resilience is ‘driving a reconfiguring of supply chains, evolving infrastructure requirements and the relocation of manufacturing hubs’ and this could fuel demand for first-mile logistics facilities by businesses.
The report highlighted trade tensions, labour shortages, Covid-related shutdowns and shipping disruptions as factors causing businesses to review their supply chains and explore the possibility of raising their total inventory holdings in the UK, which could in turn see them reshore operations.
According to Knight Frank’s research, firms across a range of industries are already considering reshoring and these discussions are most prevalent among pharmaceuticals and healthcare-related industries, supplemented by automotive firms, technology and biotech firms. The report pointed out that any ‘relocating or diversifying of production bases will likely necessitate a change in the configuration of the supply chain’.
Knight Frank also assessed 41 UK ports based on their suitability for future logistics investment and development, and accounting for various factors including port capacity, import and export growth forecasts and access to consumer markets and labour, Liverpool ranked highest for forecast export growth and in the top three for access to consumer markets and skilled labour. Grimsby & Immingham and London ranked second and third.
Claire Williams, industrial and logistics research lead at Knight Frank, said:“The rise of e-commerce has led to considerable change at the consumption end of supply chains, with additional costs and facilities being allocated to this part of the supply chain in order to raise service levels and reduce delivery times. However, rising costs and delays at the production end of the supply chain are driving a rethink of the locations of these facilities and the transport connections linking them to downstream operations.
“There is increasing awareness of the opportunities in the first mile of the supply chain. As we enter the next phase of the economic cycle and perhaps a new era for global trade, logistics investors and operators must look to supply chains, assets and opportunities that can provide stability for their operations and returns.
“First-mile markets can enable firms to build and maintain a secure and responsive supply chain for their end users. This demand will continue, with the potential to create attractive opportunities for income-driven investors looking to deploy capital into assets underpinned by strong structural tailwinds.”
