With spare space in European cities at all-time low and growth in online shopping at an all-time high, massive warehouse space has become a crucial part of supporting modern life.
A major new report from Colliers International lists six predictions for the sector. It says that multi-storey warehouses and fewer, bigger shops will make up the future of retail as millions more shoppers head online around the world.
Among the reports six key predictions are:
High street face-lifts: While the very worst hit high streets will die off, many regional and sub-regional centres will be revamped with cafes and leisure outlets, parcel collection points and shared work-spaces filling vacant shops. High streets across Europe weren’t hit as badly as those in Britain during the recession, largely because of Europe’s differing shopping habits and reduced oversupply of space. Just as major retailers are now content to be in just 50 locations rather than 200, new chains are filling vacant spots.
Super-sized warehouses: Soaring land costs mean developers will find more floor space on a site by building upwards. Prime warehouse assets have enjoyed significant yield compression in recent years. Companies like Next, River Island and John Lewis already rent millions of square foot of storage space. Being able to store closer to people’s homes could streamline deliveries further and allow retailers to better use their supply chains and retail outlets as pick-up locations. In Japan, ProLogis Parc Narita III is a 661,000 sq ft (61,400-sq meters) giant industrial facility spread over seven floors. Europe could soon get its own skyscraper sheds.
Digital urbanites unite and take over: Research shows that urban-based, digitally-literate consumers will dominate countries’ populations over the next two decades having a profound impact on how retail is shaped and delivered. While Europe itself will see comparatively modest growth, a surge across China and India will create huge opportunities for existing retailers who have the benefit of established infrastructure and brands which often attract emerging market consumers.
Show rooming pays: “Show rooming” is jargon for when shoppers look but don’t buy, or snap a product up online instead. This has been one of the drivers or companies reducing retail space and shifting capacity to more cheaply priced warehouses, which can deliver straight to people’s homes. However, smarter retailers will use technology – such as augmented reality, 3D printing and biometrics – to turn more of a profit from the theatre of real world retail. Offering unique experiences, bespoke products and additional offers can help build balance sheets and brand value.
“Retailing patterns have changed but the sector is resilient. Many high streets will focus much more on leisure together with in-store collection which could be a good way of re-using redundant space as pick up points,” explained James Watson, head of retail investment at Colliers International.
“With mobile shopping rising across the globe, retailers will increasingly shift capacity from the high street to warehouses to save money on rent and so they can send things quicker to customers.
“A lot of retailers still want the showroom on the high street and, indeed, some online retailers have specifically opened shops, like Amazon in Seattle. Over time, some districts will inevitably fall out of retail use altogether.”