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Poll says warehousing now 'most appealing asset class'

28 September 2018

74% of real estate asset controllers say distribution and logistics is now the most appealing property asset class, according to research from law firm CMS.

This is in stark contrast to a sharp decline in sentiment towards the retail sector, which has fallen from being favoured by 35% in 2016 to just 7% in 2018.

Research compiled by FTI Consulting on behalf of CMS surveyed 353 real estate investors, developers and advisers, controlling combined assets worth £400bn to examine their views on the key factors driving the market.

Ciaran Carvalho, head of real estate, CMS UK, said: “UK logistics has benefitted from a tide of international capital. Global players have been captivated by the transformative impact of e-commerce on the sector. Its appeal is clear, with online fulfilment requiring about three times the warehousing space of traditional store bound models."

91% of real estate professionals said that demand will continue to increase in the UK.

However, both real estate professionals (85%) and retailers (83%) feel strongly that the future health of the logistics industry depends on securing a balanced trading agreement between the UK and EU.

Both real estate and retail specialists foresee continued high demand for both large out-of-town warehouses (76% and 72% respectively), however there is a discrepancy of views in relation to small, centrally located warehouses facilitating last mile delivery (86% and 55% respectively).

Since land is so scarce and expensive near towns and cities, the vast majority (88% real estate and 80% retail) think it is inevitable that warehouses will have to become ‘vertical’ or grow taller to accommodate demand.

The need to speed up and increase the volume of deliveries, largely due to the rise of e-commerce, is driving the key trends that are transforming the sector.