As the retail sector
struggles, the industrial and logistics sector goes from strength to strength.
A significant growth in online shopping is fuelling the need for logistics hubs
in locations where customers can receive deliveries as efficiently as
increase in the rents of industrial assets means they are as lucrative an
investment as retail sites. Many investors are looking to convert their retail
assets into logistical space.
fringe sites and town centre retail units are increasingly catching the eye of
developers. Amazon has shown an interest in last-mile, smaller-scale parcel
distribution space providing access to high-density city centre populations.
The global impact of Covid-19 is only accelerating this demand.
are considerations for investors before they press on with a conversion.
out a feasibility study allows investors to assess how rental values for
last-mile logistics compare to retail. Doing due diligence will establish the
viability and cost of converting the space. Investors should investigate where
there is any potential lease-end dilapidations recoverability, and whether
planning permission is required for the change of use.
detailed review of the existing building services provisions is also needed to ensure
they can still safely accommodate the new configuration. For example, if you
are planning to roll out all-electric parcel delivery, your current power
provision may not accommodate that. A review of the fire engineering strategy
and statutory compliance due diligence also needs to be undertaken.
of the load capability of ground and upper floors is important, too. Will they
be able to withstand increased loading capacities of dense storage? This would
require laser levelling surveys and potentially floor-to-ceiling height changes
on ground and upper floors.
there is a lot to think about when repurposing a retail asset to logistics
space, the long-term benefits make it worth considering.
Sword is a partner at Hollis