4 Reasons Why London CRE Might Be Heading For White Van Gridlock

Takeout meals and one-hour delivery of online purchases: Londoners want their stuff quickly and it all adds up to a lot of vans.

The volume of light commercial vehicles on London’s roads rose 23% from 2000 to 2016. White van volumes show no signs of slowing.

So is London commercial real estate heading for delivery gridlock? Perhaps, according to JLL’s new Logistics in London research, which explains why the volume of delivery traffic could keep on growing, and how pressure on London's industrial floor space will get ever more urgent. JLL said it will force changes in the office, retail and logistics sectors, including alterations in behaviour, new multi-storey warehousing and widespread use of freight consolidation centres.

“London is rapidly reaching a critical point where it does not have enough industrial stock to meet rising demand both from distribution firms but also leisure uses/operators. Several of the drivers of change highlighted in our research may result in relatively modest modifications to industrial land use, but coupled with the loss of industrial land to other uses such as residential there will still be a tight picture in terms of supply,” JLL Lead Director for U.K. Industrial & Logistics Group Andy Harding said.

Here are four retail trends clogging the roads and changing how and where goods are delivered.

1. The morning commute will become prime shopping time

You are sitting on a delayed Southern Rail train, or trapped on the Tube. What do you do? You play with your phone — and, increasingly, you order stuff. With an average London commute of 46 minutes, that is plenty of time to spend, and by 2020 around 45% of retail sales will originate in phones. The effect could be huge morning and evening spikes in retail activity with implications for deliveries.

JLL said: “With consumers looking for shorter delivery times, including one-hour delivery, this has the potential to put huge pressure on delivery companies at peak rush hour times. This will have major implications for an already-congested and polluted London and put pressure on retailers and carriers to fulfill these orders.”

More small-scale urban warehousing will be needed.

2. Your parcels are still being delivered to your office

You ordered a super-sharp new suit as your train rattled through Clapham Junction. But in the new world of London logistics, it probably will not be delivered to your office. JLL reports deliveries of online purchases to offices will slowly become "out of bounds" — whether by voluntary or mandatory arrangements as efforts to cut vehicle emission pollution and the risk of gridlock kick in. City Hall is already looking at restrictions on personal online deliveries, and Canary Wharf has introduced a voluntary moratorium.

More click-and-collect points will be needed of a kind Amazon and Doddle have established. Transport hubs will be popular locations for collection facilities.

Meantime office landlords will follow the example of Axa at 22 Bishopsgate and create new freight consolidation points in their buildings, cutting out extra van visits for loo roll and stationery.

3. Your dinner

Eight million Londoners wanting maybe a million takeouts a day equals chaos. Soon new solutions will be necessary for the £6B-plus takeout market — and JLL said they are on their way. Takeout app Deliveroo is hoping to cut out journeys and improve efficiency by opening “dark kitchens” to provide meals from a central location, extending the reach of restaurants in unrepresented (or under-represented) parts of the city. So far the idea has extended to Battersea, Camberwell, Dulwich and Canary Wharf. It is now looking for 150 more, each up to 7,500 SF of convertible industrial floor space, with a target of 40 a year. UberEats and Amazon Restaurants are heading in the same direction.

Simultaneously, restaurants and hotels will be demanding new industrial floor space for supplies and prep. JLL said 179 new restaurants opened in London last year, so demand is growing fast. Does this spell yet more competition in the already-tight London small box shed market? JLL hinted it will, and will push rents up.

4. Because Trampoline Parks

If all this is stressing you out, how about going for a nice therapeutic trip to a trampoline centre to bounce the frustration away?

Maybe think again. Leisure uses are multiplying the stress on London’s industrial floor space. At midyear, the fast-growing trampoline park sector had sprung into eight industrial buildings totalling 256K SF, JLL reports. Trampoline park occupiers are looking for more sites of around 20K to 30K SF each. “As this trend continues, we predict further losses of industrial land to D2 leisure space,” JLL predicted.