Demand for urban logistics facilities is likely to increase fast in the next few years to meet the delivery requirements of urban populations.

But suitable property is often needed most in major conurbations such as Greater London, where it is hardest to find.

Cushman & Wakefield director Simon Lloyd said that there is already a shortage of sites in some locations.

When land does become available developers often want to maximise its use by creating denser developments with fewer, larger buildings with limited yard space.

“That does not always suit urban operations which can often lend themselves to smaller buildings,” he said.

Another problem with new development is predicting what a fast-changing market will demand in future.

Savills director Richard Sullivan, said that this is vital for the property industry to remain flexible and consider new solutions – this could include small facilities in the basement of new apartment blocks, for example.

“It is definitely not a one-size-fits-all solution and crystal ball-gazing is impossible – who knows what the next innovation will be that will affect customer expectations?” he said.

Knight Frank partner Charles Binks agreed that the exact nature of the market is yet to be established and that there will be a need for inventive thinking.

“Developers are starting to look at ‘sheds-and-beds’ schemes, for example, where residential and logistics schemes are co-located,” he said.

Segro is taking this approach and has joint plans with Barrett to redevelop a former Nestle factory in Hayes, West London, to create more than 1,000 homes and around 230,000ft2 of industrial space.

Alan Holland, Segro’s business unit director for Greater London, said:  “Logistics and residential ought to go hand-in-hand and could become a vital part of London’s infrastructure.”

Segro recently published a report called Keep London Working, which predicted that the Greater London Authority’s expected loss of former industrial land to other uses by 2031 could be reached this year. It called for an urgent review of London’s industrial land supply.

The company is working with the GLA to develop 86 acres of land in East London and recently signed up DPD for a 45,000ft2 building in Newham.

Last month Paris unveiled a scheme to enable freight operators to occupy centrally-located city hubs at affordable rates.

By Simon Jack