The digitalisation mega trend is the most powerful mega trend today. It is defining the opportunity in logistics real estate, all while continuing to chip away at the survival of the beleaguered bricks-and-mortar retail sector.

Roughly a quarter of what we buy, we buy online. That’s driven by the three Cs of cost, choice and convenience. When consumers shop, they want the lowest cost and, by shopping online, they get the highest level of price transparency. Online shopping also provides the widest choice and the highest level of convenience - their goods are delivered where they want, and when they want.

What that means is increasing demand for e-commerce fulfilment space, firstly, in the ‘big box’ warehouse sector, where e-tailers require large distribution hubs to store and transport vast amounts of stock around the country quickly and efficiently, and secondly in smaller, urban warehouses for ‘last mile’ distribution as the nation’s appetite for next day – or even same-day – delivery proliferates.

The meaningful amount of money involved in moving warehouses makes selecting the right site and planning for future growth a critical consideration for businesses. Equally, the level of investment required to automate systems and improve efficiency – such as the arrival of the ‘cobot’ – means many tenants are less likely to move and abandon the investment in the specialist fit out and technological improvements they have put in place.

That’s great news for investors in the UK because there are plenty of REITs you can invest in specialising in this area. For example, the REITs provide investors with access to Amazon's largest e-commerce fulfilment centres in Europe, and the distribution facilities for third party logistics companies like UPS and DHL. With the supply of land for new urban hubs increasingly restricted due to population growth in cities and the associated demand for residential development land, we are also witnessing the evolution of multi-storey warehouses such as the six-storey industrial development completed by the REIT SEGRO recently in north-west London.

Go back to Mega Trend 1: Ageing population.

Click here to find out about Mega Trend 3: Generation Rent.

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