The rise of ecommerce has revolutionised the way we shop – but it has also transformed property logistics. Technology is helping retailers and carriers to manage stock movements, in-store click & collect and home deliveries, but it is also a costly investment. Who will pick up the tab? How are developers, investors, distributors and occupiers using ‘smart logistics’ to serve their customers? Yardi brought together a panel of thought leaders in a roundtable at Property Week’s Sheds Conference in Birmingham. The panel: Paul Crosbie, investment manager, M&G Real Estate Jonathan Gardner, head of asset management, Delin Capital Nick Kay, development director, St Modwen Properties Len Rosso, head of industrial and logistics, Colliers International Charles Spicer, Midlands industrial and logistics director, Savills Claer Barrett, personal finance editor, Financial Times (chair) CB: What do you all think the ‘shed of the future’ will look like? How will the needs of occupiers change over the next five years? LR: I don’t think we should call logistics space ‘sheds’ anymore. It is a much more technologically advanced product than the name suggests. Drones, robots and automation are all on the horizon, but I think the biggest change we’re seeing right now is higher eaves heights and mezzanine floors. Occupiers want to use all the space they’re paying for – not just the ground floor. PC: People are getting very excited about drone deliveries, but they are more likely to be used for rural areas rather than built-up urban locations where their use will be more restricted. JG: Occupiers will still be using vans and lorries, charge can bypass the 200-mile mark, it will really make a change to the use of this technology. NK: And look at the activity going on inside the shed. The rise of the ‘sharing economy’ is a big trend. We’ve seen Airbnb; now there’s a similar business called ZupplyChain for third- party logistics [3PL] companies with excess space to lease it out. If you can find space in areas of undersupply, it would make the market more fluid and ease the supply crunch. CS: The shed of the future won’t be one size fits all. Our market is very varied and diverse – so a manufacturer’s requirements are very different to that of a pure logistics operator. That said, we’re already seeing multi-level facilities and in the future we could well see subterranean ‘sheds’ in high-density urban areas. At the Property Week Sheds Conference, we’ve just heard a number of occupiers say they would not be averse to the idea of sharing space in the future so I anticipate more multi-user facilities as is commonplace in mainland Europe. There are covenant and lease issues but nothing that is insurmountable. We may see a company that is institutionally acceptable taking a ‘master lease’ and then space split between multiple users and companies in a Regus-type model. CB: As investors, how happy would you be with the idea of a shared shed? PC: A facility shared by a number of operators would be interesting if there was an overriding lease. It could give investors more comfort if there was some diversity alongside the main tenant. LR: DHL has been talking about that model for the past five years, but it hasn’t happened yet. JG: Well, it has happened in mainland Europe. 3PLs want to match their lease lengths with their contract terms. If they have a three-year contract, they don’t want to take a five-year lease. However, this comes at a cost – they accept they will have to pay a much higher rent in some locations. Other 3PLs will take a big lease and will stack the space with three or four different customers’ kit. Even then, there could be quite tough conditions to meet, such as 50% of the space being occupied by one client for the full length of the lease. PC: I agree that the sheds –...