My World: June 2021…
This is part of a series of articles where our contributors describe how they think things will look a year from now.
The accelerated switch to e-commerce will boost demand for larger warehouses
At Tritax, initially with Tritax Big Box REIT plc and more recently with Tritax EuroBox plc, we have invested in the structural changes to our collective retail experience as e-commerce has developed. Covid-19 has accelerated the penetration of online e-commerce and made a significant and permanent sea change. Newly created online habits for both young and old will increase the popularity of both home delivery and click-and-collect, with a corresponding rise in demand for modern, large distribution warehouses that have the space to incorporate greater automation and social distancing resilience – the so-called new normal.
Regardless of the duration of covid-19, businesses will include pandemic risk analysis and mitigation within their normal business planning. Increased automation within warehouses, carefully synchronised staff shifts and more space to hold larger inventories to combat supply change uncertainty will underline the importance of large-scale, technology-driven logistics in the economy.
Retailers and manufacturers will revisit their supply chains, re-evaluating the risk of just-in-time supply and its counterparties in terms of geography, provenance and certainty of supply. Government will encourage on-shoring of several key industries to ensure a minimum capacity is retained within UK plc. Italy, abandoned in its hour of need by the EU, delivered a stark message to all in terms of medical security; the scramble for ventilators has underlined the need for a UK manufacturing capability.
There is likely to be a reweighting of manufacturing and supply from Asia to closer to home, as businesses balance their exposure to extended supply chains for the sake of cheaper goods against closer, more expensive but more certain goods. All of this cements the status of distribution warehouses and the emerging technology within these critical buildings as key infrastructure assets, vital for protecting the supply chains across all industries operating within the UK and Europe.
Both 2020 and 2021 will be all about income and security. Focused and strategic asset management will be key in order to preserve and create long and strong income with the best tenants. Our focus will remain on working closely with our customers to ensure that they are able to provide essential services and products across the UK.
We have learned to work from home efficiently, while appreciating more the value of time in the office. Sequenced office time and risk management of staff contact will see staggered use of offices. Analysis of who needs contact time with whom to work most efficiently, and a reorganisation of how offices are used, both to maximise productivity and to adhere to social distancing measures, will see a new working pattern emerge, with targeted commuting and office time the new normal.