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Humber Express at iPort Rail Doncaster 16

Greener supply chains can drive the occupier market

Despite wider economic headwinds and recent turbulence in the markets, occupier demand in the logistics sector remains positive.
We are continuing to see a shortage of availability, with speculative programmes continuing across a wider range of size bands – including some of the UK’s largest warehouse facilities.
But as development continues, occupier requirements continue to evolve. Innovation, efficiency and are still high on priority lists, while just in case remains a driver for supply chains and nearshoring increases.
Not only should that mean more efficient, more sustainable warehousing coming forward as standard, but opportunities to look more holistically at the movement of goods to and from these assets deserve more attention.
Rail freight, in particular, needs greater recognition as a faster, greener, safer and more efficient way of moving inventory into place.
Each modern freight train can take 60-70 HGVs off the road, reducing At the same time, the UK’s road networks are under pressure, with congestion issues and the older demographic of UK HGV drivers means many are retiring without replacements, while non-UK drivers are now much more restricted.
The challenge for real estate is delivering these sites and the complex facilities they require.
At iPort, just outside Doncaster, we recognised this potential early on and made a strategic rail freight interchange central to the 800-acre logistics hub.
At the time of opening, iPort Rail was the first inland freight terminal to be open and operational for a decade and in its first year took 22,520 long-distance HGV journeys off the road.
Since then it has become one of a growing number of facilities in the UK able to provide an integrated multimodal service, opening up new routes and markets as well as offering greener supply chain alternatives.
While it took some time initially for occupiers to appreciate the advantages of the rail freight services on their doorstep, that quickly changed and iPort Rail is now well-established, with most of the businesses based at iPort – from online global multinationals to UK companies – using rail as part of their inbound container journeys.
Subsidiary services ensuring the smooth movement of goods are essential, so providing electric vehicles to transport containers from the rail terminal to facilities across the estate lowers both cost and carbon footprint. Importantly, too, the terminal is open to businesses based throughout the area, increasing the flow of goods across the region.
In fact, the growth of services at iPort Rail has been so rapid that we are now considering expanding the rail facility further to meet demand. It has become a valuable business in its own right, as well as an integral part of the wider iPort estate.
So even though it is encouraging to see more rail developments coming forward, there are still further opportunities for logistics. Greater integration of real estate and rail freight means we can better serve occupiers as their decarbonising agendas move forward, whatever the other challenges on the horizon.
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This article was first published in Property Week on 25 November 2022.
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Built to suit your business (1)

Speed to market 

As the logistics boom continues, securing the right space is getting harder. Speculatively developed units offer ready availability, but they’re not always right for a long-term commitment, and the best sites – often in gateway or corridor locations – face fierce competition. Now built to suit space is seeing a resurgence.
At Verdion’s iPort multimodal logistics hub in South Yorkshire, the final building in its most recent tranche of speculative space is now let and the team is focusing on speed to market for bespoke space too, shaving several months off delivery times by creating development-ready sites for units up to 74,000 sq m.
The 800-acre site has capacity for 6 million sq ft of 24/7 logistics space in total, with 52MVA power and a strong local workforce with over 5,000 people expected to be employed here on completion.
Speculative space is exactly right for many companies, but the benefits of build to suit are not talked about enough in this race for space. Especially as technology is advancing, an established business with complex systems often finds that a high-quality real estate specification significantly improves operations. Ecommerce is here to stay so investing time in the right premises, including expansion space, can make very good sense.
iPort benefits from Verdion’s European experience, bringing in leading edge design and construction techniques from across the continent. Even for speculative warehouses the attention to detail is impressive. The way that concrete floors are specified, the column placement, even the 2.4m concrete plinth that surrounds each building, all are designed to increase durability and make daily operations as smooth as possible. Yards are 55m deep and gates are wider than usual – every detail improves each occupier’s bottom line.
Environmental impact is particularly important. All buildings are constructed to very high environmental standards, all with EPC rating A and certified as BREEAM Very Good. Roofs are ready to house solar panels in line with occupiers’ operational requirements and each new unit has infrastructure for EV charging. The iPort estate itself is also a pleasant working environment for employees with 400 acres of land dedicated as green areas including wetlands and wildlife havens.
This goes further for warehousing that is built to business’ own specifications. Since it was founded in 2010, Verdion has delivered three mega-warehouses for Amazon – two at iPort, the other completed early near Dortmund – as well as bespoke manufacturing and distribution facilities for blue chip companies in sectors from pharmaceuticals and hazardous goods to automotive and dairy supplies, bicycles and fashion.
Our technical team works directly with clients to design and specify each building in line with their requirements, bringing 20+ years’ experience and leading edge thinking to the table. This process is helped further by infrastructure and services being put into place early and the ground prepared ready for building to start as quickly as possible.
And it’s this final point that is the most important. The team’s philosophy at iPort always comes back to two essential factors: what do customers need to do business as effectively as possible in the current economic climate, and how can Verdion help them to deliver it.

Verdion Gallin

Modernising and future proofing – the challenge of new specialist facilities

For most companies, real estate is a critical factor for success and an essential part of corporate strategy.
However, it also brings with it a range of challenges, principally tying up considerable capital that would perhaps be better spent on core business. At the same time, many businesses are affected by a shortage of space, especially in urban areas.
Today, only a few companies have their own reserves that could be freed up for expansion or modernisation.
At the same time the shortage of suitable land zoned for commercial or industrial use is extreme. For some, with flexibility, creativity – or both – it’s possible to relocate to new facilities close to an original base, but for others their existing location means that a new building or expansion in close proximity to the existing company headquarters is an unfulfillable wish.
In these circumstances, looking further afield can be very successful, and will be increasingly common. DeLaval, the world&#8217;s leading supplier of products for the dairy industry, spent years looking for a site at its traditional headquarters in Hamburg for its new European distribution centre. The solution was to move to Gallin, 60 km east of Hamburg but in order to retain its own skilled workforce – DeLaval employs a total of 190 people at the site – the design of the building focused on their wellbeing. So in addition to the distribution centre and storage areas, a prestigious office building was developed, with communal areas including a dining facility offering freshly cooked food served free of charge, sports and yoga rooms and a creative space where people can read or meet colleagues to exchange ideas without mobile phones or laptops.
But who, if not the companies themselves, finances such specialised real estate? Developers are not the only people assisting in this area, but institutional real estate investors are going further and increasingly seeing the advantages of acting as both funders and owners. With long-term leases, cash flow is secured. In addition, the more specialist the building, the higher the user&#8217;s own investment given that fit-out can be just as expensive as the property itself. This financial commitment gives the investor additional security.
Nevertheless, the third-party usability of the property is vital. Thanks to clever planning and modern construction technology, however, even production properties specifically designed to meet the needs of heavy industry can be designed to be versatile. For example, Verdion has developed a production facility for Materion in Alzenau where melting furnaces for precious metals, cranes for transporting metal carriers and complex exhaust air systems are all essential. However, the entire facility is designed in such a way that the building can readily be used as a logistics site at a later date. The hall is already fully pre-equipped with dock doors, and possible future loading yards are currently being used as parking lots – all without restricting current requirements.
Actually developing this type of real estate requires more than just technical expertise and forethought, however. To be truly successful, it also needs a translator, someone who can transfer the company&#8217;s needs – what is required, what is desired – into the building plan of the property via an extended process flow.
The key, as we have seen, is to think differently, with clever and flexible solutions that truly understand and reflect each company’s operations and focus on a seamless process – from location and staffing choices, through to financing, delivery and occupation.

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Logistics market changes and opportunities post-COVID-19 

Without question, it has been an interesting year to launch a logistics fund.
Despite the many challenges faced by companies and individuals as a result of the global pandemic, some elements of the real estate market have continued at pace, prompting reassessment from investors forced to re-examine risk profiles under these unexpected circumstances.
Appetite for logistics, alongside residential, continues to grow – especially in key subsectors that have seen increased demand during lockdown conditions across Europe.
E-commerce is the clear frontrunner. In Germany, online grocery shopping in particular has experienced a major boost since the spring. The German Association for E-Commerce and Online Trade (bevh), for example, now expects a 68.6% increase in online grocery sales for the fourth quarter this year, making it the fastest growing sector ahead of medicine (55.1%).
Pharmaceutical companies are clearly another area to watch, not only because of online sales growth and the surge in vaccine production, but new regulations mean that storage facility requirements need to be reassessed. Many older properties no longer conform, and businesses need modern premises quickly.
Manufacturers face different pressures but with many looking to take real estate off their balance sheets to concentrate on core business, increasing numbers of investment opportunities should come to market here as well.
We are seeing first-hand growing institutional investor demand for these specialist facilities, and the long leases and attractive income streams they can offer.
But when demand for logistics has already been strong for some time how can this latest surge be fulfilled?
We know that space for development is already scarce, especially at the edges of large towns and cities. While standard projects in traditional locations work well, do they still offer the returns that investors expect?
Our first fund – VELF 1, which closed earlier this year and now has €316m to invest – is focussed on a different approach. We believe that in this market, existing assets and brownfield sites are under-appreciated. With the right approach, they offer significant potential for both transformation and above-average returns.
Edge of centre and urban infill locations that help meet the e-commerce sector’s last-mile requirements are particularly attractive. Other, perhaps overlooked, strategic sites across Germany, Northern Europe and the Nordics with the right fundamentals are worth considering too.
Existing properties and single- or multi-let, logistics parks with long- or short-term leases in place could all offer potential for reconfiguration, modernisation and/or expansion.
In its simplest form, this could mean extending buildings to create additional space on the same footprint. Larger sites mean the chance to implement a new masterplan and either completely redevelop or offer new space for existing tenants before reconfiguring  the rest of the site or property to create more floorspace.
Despite everything that has happened this year, 2021 is set to be even more active with more investment activity capitalising on the opportunities that this changing market is generating.
We hope that there will be no looking back in our sector. The megatrends behind logistics sector growth – digitalisation and the rise of e-commerce – are set to continue long-term, hastening the decline of sectors and businesses that cannot keep up and accelerating those able to adapt and thrive in this evolving trading environment.

Intelligent, informed insights, via Verdion

Greener supply chains can drive the occupier market

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