For Growth In The Industrial And Logistics Sector To Continue, Landlords Need To Digitally Transform

The UK’s industrial and logistics sector has seen years of unprecedented growth. However, to face upcoming economic turbulence, property owners and landlords need to streamline processes and safeguard income as much as possible, said Garreth Cosgrave, MRI Software business development manager, strategic accounts. 

To do this, they need to look to technology. 

“There’s a move away from just using various pieces of software to embracing a full digital transformation that links all elements of a business, from lease management to energy management,” Cosgrave said. “Selecting the right proptech solution can help businesses make more informed decisions, no matter how much their portfolio has grown.”

Driven largely by the e-commerce boom that surged during the pandemic, the industrial and logistics sector has grown rapidly. In Q4 2020, the sector attracted £5.58B in investment — for the first time, this was more than the office sector.  

As a result, many landlords and industrial property owners have expanded rapidly, which can mean their business systems are disparate, MRI Software Enterprise Sales Manager Malcolm Payton said. Forward-thinking businesses are now looking to unify business operations.

“Customers are looking for a technology partner, not just someone to sell them software,” Payton said. “They want a provider that can help them to grow. For many, this means bringing distinct business systems together by updating technology and creating a coherent, modern system.”

Logistics and industrial property developer, investor and manager Network Space approached MRI Software seeking a new proptech solution. Network Space has hundreds of tenants across its multi-let estates and wanted a solution that could manage all aspects of property and investment management. 

“We were looking to replace our set of old systems, which we knew weren’t working for us,” Network Space Group Finance Director Dan Adamson said. “Each business unit operated from a mixture of spreadsheets for each process, which was making it hard to make decisions and identify trends.”

One of the reasons Network Space selected MRI Software’s Horizon solution was its ability to bring together all business data for everyone to access. It also integrates with the business’ separate customer relationship management system, Salesforce. 

“Since implementing Horizon, our teams have saved time and have better control of what’s going on,” Adamson said. “Everything is now digital and everyone can use Horizon to do what they need to, such as raising invoices or approving purchase orders. Our finance team plays a key part in helping us deliver our goals, and technology is essential.”

Using an end-to-end property solution puts a business in better shape to adapt as a potential recession starts to have a wider impact, Cosgrave said. The recent demand for logistics space is providing opportunities for construction, but with that comes rising labour and materials costs that all need to be managed.

“We have the budgeting solutions to ensure construction projects are controlled and also that, once built, they will be viable,” he said. “We can look to the future to ensure the right tenant can be secured to provide the necessary income stream.”

Software can also help a business to take advantage of opportunities to increase income, Payton said. As take-up in the industrial and logistics sector slowed in Q3 2022 following a long period of record-breaking take-up, this will become more important. MRI Software’s Contract Intelligence is an artificial intelligence document abstraction tool, which allows a landlord to quickly spot lease breaks. 

“A portfolio of spaces will include many types of leases," he said. “If a business acquires a portfolio, they could take on hundreds of leases. Using technology allows them to see where they can uplift rent, which helps landlords ride any storm that is coming.”

There is a general misconception that using an end-to-end proptech solution is a risk that may not provide return on investment, Cosgrave said. However, if a landlord or property owner can use software to identify opportunities to increase income, that will more than cover the cost of the solution. 

“There is also a belief that software takes a long time to implement,” he said. “Go back a decade or two, and developers would be on-site for days installing a bespoke solution. Today, we offer standard implementations which a customer can configure in the front end. The software can be deployed more or less instantly and be accessed through a browser or mobile app, which takes away complexity and disruption.”

Although installing a new system is straightforward, it is simplest at a new industrial property, Cosgrave said. This is especially the case with technology to monitor environmental measures. Sensors to monitor temperature can be installed during construction of a property. 

“Environmental, social and governance crops up in industrial and logistics more than any other sector,” he said. “The fact that there are more people with the title 'director of ESG' shows how awareness and focus has grown. These people know that software is a way to help them address ESG, to enable them to benchmark with third-party schemes or monitor energy use.”

To reduce environmental impact, as well as address other challenges, the owners and landlords of industrial and logistics assets will have to be open to using technology more effectively, Payton said. The time has passed to ignore what technology can offer as legislation and customer pressure increase. 

“Some businesses are still using the same software they have used for years, without seeing the need to explore what else is available,” he said. “The ‘nothing is broken, so why fix it?' approach may have served many businesses well to date, but they need to look to the future and see that by using the latest technology, they will be in much better shape to mitigate future challenges and seize opportunities.”

This article was produced in collaboration between MRI Software and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.