London Is On The Road To Becoming A Smart City, But E-Commerce Struggles To Find Its Place

Every day, delivery trucks flood London’s main roads. The drivers are en route to different destinations, but many are on the road for the same reason: to meet the growing demand for last-mile delivery. City officials welcome the increased economic activity e-commerce players bring, but overcrowded roads and increased carbon emissions have started to conflict with the city’s mission to improve sustainability.

London has introduced several new initiatives to make the city smarter and more sustainable. In an effort to reduce carbon emissions and manage traffic congestion, the government is encouraging fewer automobiles on London’s main roads. Industrial developers are beginning to think about how their warehouses can facilitate effective last-mile delivery services, while still complying with local plans and initiatives. 

“The city wants to see vehicles off the road, but that doesn’t take away from the fact that people still demand goods,” Savills Head of Industrial and Logistics Occupier Services Sally Duggleby said. “Developers need to start thinking about how they can work with local authorities to build facilities that continue to support e-commerce and meet consumer demand.”  

A Smarter, Greener London

As London’s population grows, car traffic has become a challenge for the city. Local authorities have pledged to invest £200M into improving its bus network while the Tube, Docklands Light Railway, Tram and London Overground commuter rail network have all undergone upgrades. The city enacted a daily congestion charge of £11.50, discouraging Londoners and commuters from driving in designated congestion zones.

In the most recent draft of Mayor Sadiq Khan’s London Plan, the city is pushing for land use that facilitates shorter, regular travel by walking or cycling. 

Industrial Impact

Enacting last-mile delivery strategies that complement the London Plan has been more challenging. Next-day and now same-day delivery have prompted industrial developers to move closer to consumers, impacting everything from noise pollution and air quality to traffic congestion. 

London’s commercial real estate market has taken note of the importance of location. The city is seeing more industrial development concentrated near residential areas. In London, 54% of industrial units are within a mixed-use environment of retail or residential units, with another 3% in predominantly residential communities. The boroughs of Wandsworth, Islington and Camden have a combined total of 6.7M SF of industrial space, according to a Deloitte U.K. report. 

In the U.K., some e-commerce companies leverage the rail network for delivery, but the majority of products are still transported via roadways. The City of London sees more delivery trucks than other large cities outside the U.K., Duggleby said.

While several local authorities have been willing to cooperate with industrial developers, others want London’s industrial facilities to become office space to limit the number of cars on the road. The city and its developers have not yet reached a resolution. 

“There is no easy way to convince the city to support these projects, but we can start by incorporating industrial into government-supported types of development,” Duggleby said. “Local authorities recognise a need for mixed-use, so we need to build in more of these environments.”

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