As e-commerce continues to grow in the UK, so too does the demand for third party logistics and, with that growth, come challenges and opportunities for the sector in equal measure. Finding the right logistics warehouse, with the right fit-out and the right lease terms and structure are key to helping 3PL’s deliver on their promises and provide the flexible, elastic, supply chain solutions that customers demand.
As supply chains have evolved, so too has the way 3PL’s lease warehouse space. With rising customer expectations and changing patterns of demand across the ups and downs of the cycle, 3PL’s need the flexibility and agility to respond quickly and cost-effectively. This need to respond to fluctuations in demand and rising customer expectations means some 3PL’s are often reluctant to constrain themselves to traditional lease terms of ten years or more and are often seeking buildings with a high-level of fit out already in place. The structure of the lease is also an important consideration and ticking all these boxes requires a collaborative approach, where property company and 3PL work together to identify the right solution.In short, it’s about both parties having a clear understanding of the end goal and asking the right questions to ensure
At a time when the logistics landscape is constantly shifting, the speed at which a lease can be secured and the way in which the lease is structured could mean the difference between securing or losing a valuable contract. Most 3PL’s simply can’t afford to be tied to long lease terms where they may end up paying for empty space or where they have outgrown their space and have no flexibility to renegotiate. This need for speed also makes high-level fit out an attractive option if it’s already in place and either included in the rent or offered as an advantageous rental supplement.
For landlords, this need for short-term relationships should be viewed as an opportunity to invest in the long-term success of the customer’s business. By providing flexible solutions for customers, the landlords of logistics buildings can become trusted partners and foster long-term relationships with the customer –even if that relationship is sometimes based on a series of short term commitments.