When location matters
With growing consumer expectations of next-day or even same-day delivery, retailers and logistics providers are looking to store and distribute products at hubs and depots ever-closer to their final destination.
As a result, the “last mile” is a critical component of the logistics sector. Logistics operators are increasingly looking to supplement their existing property portfolio with additional urban capacity in towns and cities, in order to meet the growing customer demand and consumer expectations.
The problem is that availability of suitable land in the vicinity of key urban locations is scarce, with logistics developers often competing with other uses, such as housing or retail, for development sites. This results in higher land costs, which can significantly affect the commercial viability of a logistics development.
Should sheds go upwards?
The availability of suitable sites is scarce and land costs are escalating. But the intensification of industrial uses within congested urban locations is unavoidable. Developers and operators who want to stay relevant and play their part are having to take a more innovative approach to the provision of logistics facilities.
Although commonplace in many parts of Asia, multi-storey facilities are still very rare in the UK. The development uncertainty and perceived risk of such projects is putting off many developers. However, in many instances a multistorey facility can combine provision of much needed capacity with increased returns for the developer.
What are the different types of multi-storey warehouses?
“Multi-storey” is often used as a catch-all term for various types of facility. Whilst some will have mezzanine levels which are accessed internally using goods lifts, others will have vehicle access and dock doors on each floor.
The appropriateness of each solution will depend on the building function, level of automation and single/multi-tenant nature of the facility.
What needs to be considered?
There are several factors to take into account when considering multi-storey logistics, including:
- The impact on the site and local area due to traffic intensification
- Operational considerations (automation, floor loadings, clear spans)
- Impact on rental income & yield
- Additional structural complexity
- Fire and life safety systems
- Extended design and build programmes
- Investor appetite for multi-storey
- Mixed-use facilities (combining logistics with other uses such as data centers)
- Consideration of alternatives including high bay warehousing, or repurposing existing assets.
The argument for multi-storey warehouses
Although the capital cost per square metre for a multi-storey facility is higher than a single storey warehouse, when considered alongside the land cost and expected revenue, there are clear situations where a multi-storey facility would be more profitable for a developer.
To help balance and resolve these considerations, we’ve developed an innovate tool which models the various cost, value and design parameters which affect the viability of multi-storey facilities. By using our Arcadis tool when considering project viability, developers can rapidly evaluate various options for any particular site. This allows them to identify the optimum scenario for the development, potentially increasing residual profit by up to 50%.
Whilst the numbers of multi-storey facilities in the UK is still very low, it’s a growing market and one from which we can take best-practice learnings from all around the world. At Arcadis, we have experience globally in the design, development and management of multi-storey logistics facilities, and can combine this with our understanding of the UK market to help navigate the business case and find the best solution.
When it comes to solving the capacity challenge facing logistics today, the design and construction of multi-storey warehouse facilities could be the answer we’re looking for.
Contact Paul Needler at paul.needler@arcadis.com to find out more.