E-commerce has completely changed the economy around the globe, including the industrial property market. As the global supply chain and politics have contributed to the demise of the UK’s manufacturing sector for the past 55 years, online retail is reviving it from its deep slumber through the growing demand in the light industrial property market.
With Amazon and online shops at hand, businesses race to provide faster service and lower shipping rates. The trend gave birth to the same-day or next-day delivery or what is collectively known as the last-mile strategy.
The government recognizes the facets of the last-mile strategy and tries to adopt new strategies to make logistic services environment-friendly. Many businesses are now considering light industrial properties because they are more cost-efficient and serve as strategic assets to provide faster and cheaper goods and services.
The term industrial often makes people think about factories and places for dirty work involving oil, chemical, and steel. However, the industrial property has different types, which include:
- Light manufacturing or light industrial properties.
- Heavy manufacturing.
- Research and development properties.
- Wholesale warehouses.
- Distribution centers.
- Storage facilities.
As a chartered surveyor in London, Phoenix & Partners will showcase the light manufacturing or light industrial property, its advantages to business owners, and why industrial leasing is becoming the gear behind the smooth-sailing online retail scene in the UK.
What is a light industrial property?
Light industrial property is an industrial space for assembly, production, and storage of goods. The average light industrial property often spans no more than 120,000 square feet. Products produced in a light industrial unit go directly to customers, unlike heavy manufacturing that provides goods for other businesses.
In the use class order, light industrial properties fall under Class B2. They belong to the use classes retained in the new use class order in September 2020. Light industrial properties don’t cause too much noise, allowing them to stay near neighborhoods compared to heavy manufacturing properties.
So, what makes light industrial space stay in the spotlight? The answer is in its structure, location, and function. Let us take this topic into detail below.
The rising demand for light industrial spaces
From the 2019 Savills Big Shed Briefing report, the industrial property occupancy in the Yorkshire region alone has reached 4.1 million sq. ft. The growing tenancy for industrial space in the leisure, food, footwear, and fitness sectors has driven its market growth.
Online retail businesses are exploring more efficient ways to join the last-mile strategy market trend by choosing the untapped goldmine of light industrial units. Though the aesthetic of the industrial properties is not as pleasing as commercial spaces, it holds a lot of opportunities for business owners to save on expenses. Here’s how:
- The structure of light industrial units has a wide floor area with high ceilings and industrial-grade HVAC systems.
- Unlike heavy industrial properties, light industrial units are also not specially designed for distinct production processes and come as a blank canvas.
- The doors are wide enough to accommodate shipments and deliveries.
- Leasing or rental costs of light industrial properties are also significantly lower than commercial units.
Businesses that can take advantage of a light industrial space
Since an industrial unit comes undesigned and unmodified, any business can put up anything in it as long as it fits the space, either a vertical rack, a mini lab, or an indoor growing room. The most attractive feature of a light industrial structure is its flexibility, and these are the ways businesses use it to their advantage:
Climbing clubs and gyms
What better way to utilize the height and space of an industrial space than to mimic a steep mountainside. The open space of light industrial units makes climbing and fitness enthusiasts hone their climbing strategies and skills before going for an actual climb.
The Climbing Lab in Kirkstall Industrial Park in Leeds is only one of the many sports and recreational brands that ventured into industrial units for wiser facility management. They offer indoor bouldering activities on climbing walls with varying difficulty levels. The benefit of the industrial space to indoor sports activities include:
- The high ceiling provides plenty of elevation space for the customers to use the fitness or sports facilities simultaneously.
- The ventilation is well-equipped with industrial-grade equipment.
- The sunroofs and windows also provide natural light leading to lower energy costs.
- There is enough room for expanding the facilities for new services or activities.
- The noise from the fitness activities like barbel falling on the mat will not cause any issues to neighboring units.
Assembly and production of consumer goods
Though smaller than factories, light industrial spaces have adequate energy load and space to handle mid-sized machinery. They also provide growing small businesses a space for increasing their production of goods to supply the increasing demand.
The growing hydroponic and aeroponic farming industry uses light industrial properties for their indoor farm. One of the pioneers is LettUs Grow in Bristol, an aeroponic technology and farm management service provider. They build automated indoor farming systems to help the urban communities grow their food and have a more sustainable food system.
Other industries that can smoothly operate in a light industrial space in the assembly and manufacturing niche include:
- Automotive assembly.
- Small to medium-scale food production.
- Furniture assembly.
- Garment production.
- Hydroponic/aeroponic farming.
Brewing and taproom businesses are also exploring the flexibility features of light industrial spaces. Contrary to the typical line of taprooms in commercial districts, small brewery business owners are dipping their toes in the industrial property market by merging their taproom and fermentation facility in one location.
Pressure Drop Brewing in London is among the businesses that ventured into an industrial space. They placed their fermentation tanks around the facility and some chairs inside and outside the building for outdoor dining. The facility gives a unique vibe that allows the customers to see how their alcoholic drinks are made.
The machinery needed in a printing business can also fit in an industrial space. The high ceiling and industrial-grade HVAC system also help mitigate the chemical emissions produced from the printing process, making the workplace safer during operations.
T-shirt printing businesses also need a lot of space for drying printed shirts and storing them in racks. Action Press in Burgess Hill is one of the leading printing businesses in the southern region of the UK. They use strategically-located light industrial space connected to road links to provide fast and quality service.
Regional storage and packing space of an online business network
Online retail stores that use the last-mile strategy also occupy regional light industrial units to launch same-day or next-day deliveries to their local customers. The light industrial space facilities can accommodate a packing area and vertical storage racks for a more efficient shipment process and cheaper shipping fees.
Though the name sounds sketchy, a dark kitchen is a new food business model where customers can buy their food online and receive it through food delivery or pick-up setup. The kitchen operations exist in a remote location to cook and prepare meals. Other terms used for dark kitchens include:
- Virtual restaurant.
- Ghost kitchen.
- Cloud kitchen.
The term dark kitchen stemmed from the setup of virtual kitchens where they have no windows or don’t have a distinct exterior design that suggests it is a fully-operational kitchen. Light industrial units can also function as dark kitchens due to their exclusivity, space, and industrial-grade facilities adept in handling heavy-duty kitchen equipment and room-sized freezers.
What makes light industrial properties attractive to investors, landlords, and tenants?
We are currently in an era where small business entities can exist without a physical store. As operations grow, online retailers can maintain their online presence but may need to expand their operations in a bigger unit to supply the demand. That’s where the opportunity for light industrial units comes in.
The priorities of varying business models changed, and an aesthetic space became the least priority. The top priorities are shifted to functionality, location, and costs. What makes light industrial units attractive to business owners are the following features:
To help you see the cost difference, the image above shows the commercial property for rent in London. Each square foot of the space costs £162, and the available space for occupancy only ranges from 100 sq. ft. The building is equipped with amenities that business owners can use to operate their businesses.
As for the industrial unit cost, the image above shows an industrial unit for rent in London. Each square foot costs £35 and allows the tenant to choose from a 400 sq. ft. to 1,000 sq. ft. unit. The property has several common areas like an outdoor patio for staff use. The place comes in a blank canvas with a lofted area for a proposed office or storage area.
Based on the two properties above, you may notice that the industrial unit is 78% more affordable than a commercial unit, considering that they are in the same city. Between 100-150 sq. ft. and 400-100 sq. ft, the available space in an industrial unit gives you more room for expansion – an essential feature if you’re looking into adding more products or services.
Due to its unmodified design, any business type can transform the interior design based on their process and needs. The bathrooms, entrance, and other common areas are also centrally-designed, making it easier to space plan and set up machinery.
Room for expansion
Unlike commercial properties with minimal space availability, light industrial units give you more room for growth. You can rent a unit from 400 sq. ft. to 100,000 sq. ft, depending on your provision for business expansion. If your business is gearing towards an expansion for the coming months or years, having extra space on standby can be an attractive property feature.
Gyms or indoor recreational centers often accommodate three to four adjacent industrial units to have enough space for new services or equipment.
Light industrial spaces are often part of an industrial park or estate in the UK, next to other business centers. They are connected to transportation links that give online retailers an edge in shipping their products. Some industrial units are located next to neighborhoods, making them closer to their customers and known to locals.
Unlike the glass walls and store-front locks in commercial spaces, light industrial units have high metal walls and bolted doors that are not easy to break in. They are equipped with surveillance cameras around the perimeter, and those located in industrial parks are also heavily guarded.
Ventilation and build design
Among the attractive features of industrial units, its equipment-ready facilities are the most sought-after standards for most businesses. The energy capacity is usually higher than commercial space, which will no longer require you to deal with the local energy provider. Other key advantages also include:
- The roofs and windows are designed to provide natural light that helps you save on energy costs.
- The HVAC system is flexible for any modifications based on the emissions from the process or product that you will have within the facility.
- Some units have a docking area for truck deliveries.
- The high ceiling gives plenty of room for vertical storage.
- The industrial area can also handle an adequate amount of noise, so you will never have to deal with noise complaints.
How to find the best light industrial space for your business
If you are a small business trying to find a cost-effective but strategic move for business operations, finding an industrial space is like learning a new language. There are new facilities to consider and the tedious task of setting up and designing an industrial unit.
To help you prepare to find the best light industrial property for your business, here are some questions that you should consider:
- How much space does your business operation need?
- Do you plan to offer a customer-facing facility like a kiosk or indoor dining?
- What location will give your business the edge against your competitors in the industry?
- Do you have available staff who will move to the new location, or do you plan to hire locally?
- In terms of expansion, how much provision space can you afford?
- How do you plan to use and layout the space?
- What modifications do you need to have with the energy, water, and ventilation systems?
- Do you need an internet service installed?
- Do you prefer a property with 24/7 surveillance and guarded gates?
In looking for a property, having a list of your ideal features based on your operations will make it easier to find a light industrial property that matches your needs. You may also seek the advice of a chartered surveyor in London who knows the ins and outs and the hidden gems in the local industrial property market.
Phoenix & Partners UK is a chartered surveying company that helps companies and small business owners to find the best deals and ideal properties for their needs. If you wish to inquire about light industrial property rental and acquisition or other commercial property concerns, you may talk to our real estate experts here.