Growth of urban logistic facilities set to rise

New models are required to meet the growing challenges of city logistics, says a report from property firm JLL.

JLL anticipates growing demand for different types of logistics facilities in cities, including trans-shipment facilities (where goods can be transferred onto environmentally friendly vehicles); shared-user consolidation centres; local facilities for last-mile fulfilment; multi-storey buildings; and underground facilities.

“Spurred by the growth of e-commerce and demand for last-mile fulfilment facilities, there has been increasing interest in urban logistics among property developers and investors,” said Andy Harding, lead director of JLL’s industrial and logistics group. “However, this is only a part of the story, as the issues associated with logistics in cities are much wider than servicing e-commerce growth. Cities present many challenges but also significant opportunities for real estate in the future. We believe that environmental and efficiency challenges will transform logistics operations in Europe’s major cities.”

Increased and changing demand for facilities will run alongside urgent new efforts to improve logistics efficiency and reduce emissions. Warehouses and suitable land for logistics activities will remain critical for efficient city logistics but if these activities are pushed too far out of the cities they service, this will drive up ‘stem distances’ (from warehouse to customers) and potentially emissions, the report warns.

Jon Sleeman, JLL’s head of EMEA industrial and logistics research, added: “From a property market perspective, city or urban logistics buildings are often considered a separate market segment, distinct from ‘big box’ logistics properties, that are mainly clustered at Europe’s major gateways (seaports and airports), along its strategic transport corridors and around its major cities. 

“This segmentation may be valid from a property market viewpoint, but these different types of property are often part of the same supply chains. This being the case, to understand potential opportunities for change in city logistics, we need to take a wider supply chain perspective.”