Attendance at the Marketplace was up 50% on the previous year and the occasion was given extra spice by The Great Debate – a forum for occupiers and developers to discussthe question “Are developers addressing the modern needs
Facilitated by Noella Pio Kivlehan, Nick Whitten and Emily Wright from Estates Gazette, the three sessions gave an opportunity for a forthright exchange of views.
Panellists included Travis Perkins Property Director, Philip Joyce; Kevin Sey of DHL; Nigel Harris from John Lewis; Verdion CEO, Mike Hughes; Chancerygate’s Alastair King; Paul Till from LaSalle Investment Management; and Gareth Osborn of SEGRO.
It soon became clear that occupiers are concerned by the lack of supply in the market. With DHL’s Kevin Sey observing: “There has been no spec development for the past three or four years. The biggest concern we have got is there are very few new large warehouses being built ready for take-up. That will give us a challenge”.
Developers are clearly now moving to make up the shortfall and Alastair King of Chancerygate revealed they were now currently progressing in excess of 300,000 sq ft of speculative multi-let development and have plans to increase this substantially in 2015.
However, Verdion’s Mike Hughes cautioned that the development sector must ensure that it is building space that occupiers actually demand. He pointed to the gap between the type of properties occupiers are now demanding, and those that institutions are prepared to fund.
“I don’t think there’s quite enough flexibility in meeting the needs of the occupiers,” he told the audience.
“Let’s not get too hung up on the fundamentals being of institutional standard. Does it work, does it have long-term value? If it does, then do it.”
Paul Till, head of national business space at LaSalle Investment Management, said occupier demand has simply not been high enough to warrant speculative development in most areas. But he added: “Over the last five to 10 years, the logistics business has changed beyond recognition. Retailers and distribution companies have a habit of changing their business plan and philosophy.
“Now the trend is towards larger regional distribution centres and small hubs. What’s to say that won’t change?”
Segro’s Gareth Osborn echoed this theme: “A lot of last-mile delivery operators still haven’t worked out the optimum business model. We don’t know what they might be doing in five to 10 years’ time.
“Will cross-docked facilities be obsolete in five to 10 years? We’re in a period of transition.”
The Q&A sessions that followed each panel discussion further revealed the diversity of opinions in themarketplace and painted a picture of a sector which is very much in transition.