Next generation property investing: The digitalisation mega trend

6 minute read

Matthew Norris

Director, Real Estate Securities

Mega Trend 2: Digitalisation and the 3 Cs

What is the digitalisation mega trend?

The digitalisation mega trend is the most powerful mega trend today. It is defining the opportunity in logistics real estate, all while continuing to chip away at the survival of the beleaguered bricks-and-mortar retail sector.

Roughly a quarter of what we buy, we buy online. That’s driven by the three Cs of cost, choice and convenience. When consumers shop, they want the lowest cost and, by shopping online, they get the highest level of price transparency. Online shopping also provides the widest choice and the highest level of convenience - their goods are delivered where they want, and when they want.

Source: Center for Retail Research, Gravis Advisory Ltd, Office for National Statistics. The figures on this graph relate to retail sales only, excluding hospitality/restaurants, tickets, vacations and vehicle fuel, and hence may differ from estimates based on a wider definition of e-commerce.  By 'retail sales' we mean the sale of goods to the final consumer. U.S. totals have been adjusted to bring them into line with our definition of retail sales – excluding vehicle fuel, auto sales and prepared food sales (hospitality).

What that means is increasing demand for e-commerce fulfilment space, firstly, in the ‘big box’ warehouse sector, where e-tailers require large distribution hubs to store and transport vast amounts of stock around the country quickly and efficiently, and secondly in smaller, urban warehouses for ‘last mile’ distribution as the nation’s appetite for next day – or even same-day – delivery proliferates.

The meaningful amount of money involved in moving warehouses makes selecting the right site and planning for future growth a critical consideration for businesses. Equally, the level of investment required to automate systems and improve efficiency – such as the arrival of the ‘cobot’ – means many tenants are less likely to move and abandon the investment in the specialist fit out and technological improvements they have put in place.

That’s great news for investors in the UK because there are plenty of REITs you can invest in specialising in this area. For example, the REITs provide investors with access to Amazon's largest e-commerce fulfilment centres in Europe, and the distribution facilities for third party logistics companies like UPS and DHL. With the supply of land for new urban hubs increasingly restricted due to population growth in cities and the associated demand for residential development land, we are also witnessing the evolution of multi-storey warehouses such as the six-storey industrial development completed by the REIT SEGRO recently in north-west London.

Go back to Mega Trend 1: Ageing population.

Click here to find out about Mega Trend 3: Generation Rent.

Important Information

This article has been prepared by Gravis Advisory Limited (“Gravis”) and is for information purposes only. It is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Any recipients outside the UK should inform themselves of and observe any applicable legal or regulatory requirements in their jurisdiction.  

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Gravis Advisory Limited (Registered Number: 09910124) is authorised and regulated by the Financial Conduct Authority. Gravis Advisory Limited’s principal place of business is: 24 Savile Row, London, W1S 2ES.  

Gravis Advisory Limited is authorised and regulated by the Financial Conduct Authority registered in England & Wales No: 09910124. Gravis Advisory Limited’s principal place of business is: 24 Savile Row, London, W1S 2ES 


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