Trends and forecasts for the logistics & industrial market 2023

Whilst the construction industry continues to recover and regroup following the pandemic, there are new challenges to be faced in the forms of rising inflation, soaring energy prices and uncertainty over imports and exports. All of these are against a backdrop of the most challenging recruiting environment that many can remember.

These factors could arguably combine to create a nervous forecast for 2023, but our analysis of this situation leads us to believe that there is a definite silver lining to the challenges facing our industry. Whilst it will take a certain level of risk appetite for businesses to forge ahead, the benefits to be reaped could be plentiful.

It is true that we are operating in a very tentative financial and political environment. A shortage of planning personnel across many council departments is continuing to affect build times by injecting unavoidable delays into project starts. Added to this, increased investment in information systems has been necessary across many industries to allow personnel to work remotely and securely, which has added unforeseen costs into the budget. The rapidly rising cost of materials, including timber, concrete and steel, have compounded uncertainty in quoting for future work.

The industrial building projects that have been most successful this year have tended to be smaller warehouses of up to 50,000 square feet which are typically used as last-mile hubs for businesses engaged in high-priority and same-day deliveries. These are generally built close to or in towns and cities and whilst there is a limit to the amount of building work that will be approved for greenfield developments, there is significant potential to exploit in this arena. We have also been building teams for a lot of major refurb works this year as Developers and Logistics brands look to upgrade and extend their existing stock.

Stability

Creating warehouse and logistics space close to towns and cities provides stability for businesses that can hold a greater quantity of stock close to home. This reduces reliance on importing stock when it is required and risking a customs battle which could delay shipments, increase costs and inject uncertainty into the supply chain. Any delays risk delivering a poor customer experience and in this digital age, bad news spreads fast.

Efficiency

Not only does the establishment of increased logistics space create stability in the supply chain, but it provides the opportunity to embrace energy efficiency measures such as the installation of photovoltaic panels to generate electricity. This reduces a business' reliance on the National Grid and the associated energy costs which are not capped for businesses as they are for domestic customers.

Industrial space close to commuter hubs can also benefit businesses by providing jobs for local people, bolstering the local economy and supporting online shoppers in receiving their deliveries in a more streamlined and effective manner.

Much debate has centred around integrating living spaces into industrial buildings and this is likely to continue as the cost of living continues to bite. The Government and associated think tanks continue to investigate the potential of employing innovative solutions such as this. Indeed St. George and Segro have started on site on their V-Park project, a first of a kind development that includes residential, commercial and logistics aspects in one development. Glencar have been appointed Main Contractor on this scheme.

Summary

Whilst it is clear that the challenges of the last few years are continuing to evolve and to impact the financial climate, the demand for same-day deliveries, cost efficiencies, energy security and jobs means that the warehousing and construction industry is strongly positioned to weather the tough times that are coming.

At Build Space, we stand ready to support businesses needing to employ specialist staff on a permanent or contract basis to deliver logistics and industrial warehousing projects. Our in-depth understanding of this sector presents us with a unique opportunity to support businesses in delivering their projects to the highest of quality standards, within challenging timescales and tight budgets. Our contract staff can be deployed on flexible terms to suit the needs of a business, delivering precisely the right skills at exactly the right time.