Last Mile Logistics Conference 2022

• Published date: 13 October 2022
• Subject Matter: Corporate/Commercial Law, Real Estate and Construction, Contracts and Commercial Law, Construction & Planning, Real Estate
• Law Firm: Forsters
• Author: Paul Grayson and Daniel Burr

On Tuesday 11 October 2022, Commercial Real Estate Senior Associate Paul Grayson, along with Construction Senior Associate, Daniel Burr, attended the Last Mile Logistics Conference at the Postal Museum in London.

The conference consisted of a number of interesting panel discussions involving key members of the logistics sector, as well as a free trip on the Mail Rail (see photos below)!

In this blog post, he shares his key takeaways from the event.

Current Market Conditions

• The developer's view: Inflation has led to a sharp increase in the cost of materials. Additionally, it is very difficult for developers to forecast pricing in the current market Developers can only price developments based on today's information. The current market volatility is requiring developers to make more assumptions than usual when forecasting how much a site will be worth once a development has reached practical completion.
• The contractor's view: The rise in the cost of materials has led to questions as to whether contractors can still deliver fixed price building contracts. The view is that this may still be possible, however it will depend on the type of project and the material selection. The earlier that contractors engage with their customers, the higher the chance that a fixed price building contract can still be delivered. If a fixed price building contract can be delivered, the customer may need to accept a mark-up on the fixed price to reflect current market conditions.
• The investor's view: Pricing is cooling due to the rise in interest rates and inflation. Investors are currently querying whether we have reached the bottom of the market, or if prices will decrease further. This has created a large amount of hesitancy in the market. If investors commit to sites in the current market, it is very likely that the investment decision will be due to the investor believing in the long-term vision for the site (as opposed to making a commitment solely due to pricing).

Delivering ESG

• Carbon sequestration: Science is likely to change how buildings are constructed over the next twenty years There needs to be a shift towards materials which use less carbon as well as an increase in funding for businesses who are studying how to remove carbon from the atmosphere and holding the same within materials (a process known as carbon sequestration).
• Retrofitting: In comparison to other sectors the logistics sector is unlikely to have a large problem with retrofitting existing...