LOGISTICS PROPERTY TODAY - King Sturge

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Employment in Logistics Industry – a skills shortage? Table 1 Employees of working age in UK logistics Logistics – a major source of employment Logistics activities support around 1.73 million employee jobs in the UK, according to Skills for Logistics, the Sector Skills Council for freight logistics. This estimate is based on official data derived from the Annual Population Survey (APS) using selective Standard Industrial Classifications to capture relevant logistics industries and Standard Occupational Classifications to capture appropriate logistics occupations. This means that logistics accounts for some 7% of all employees of working age in the UK. Table 1 provide a breakdown of employees of working age in logistics in the UK. Large warehouses can generate a significant numbers of jobs and a variety of employment opportunities, so the availability of labour and its quality have become increasingly important location factors for occupiers, in addition to traditional location criteria such as proximity to motorways Driver shortages continue Skills for Logistics estimates that there is currently a significant shortage of LGV drivers in the UK, although this shortage is not as great as had previously been anticipated. It conducted a Survey of employers of LGV drivers last year which questioned some 1,200 companies in the UK. Companies indicated an 8% shortfall of drivers, which approximates to 25,000 drivers if applied to the whole UK. After factoring in various assumptions, such as new recruits, military and foreign sources of labour, SfL predicts that there could be a shortage of approximately 15,000 LGV drivers in the UK Logistics industry by the middle of the 2006/07 financial year. It also found that the recruitment of new drivers Employment on logistics role SOC Definition Logistics ‘sector’* 9149 Other goods handling & storage occupations Other sectors Total in Logistics sector and related roles Number % 110,800 267,300 378,100 22% 8211 Heavy good vehicle drivers 169,200 135,100 304,300 18% 9211 Post worker, mail sorter, messenger or courier 174,200 41,400 215,600 12% 8212 Van drivers 59,800 144,800 204,600 12% 1161 Transport and distribution managers 36,600 46,700 83,300 5% 1162 Storage and warehouse managers 13,400 60,000 73,400 4% 4134 Transport and distribution clerks 21,000 38,900 59,900 3% Other occupations 411,800 411,800 24% Total 996,800 1,731,000 Source: Skills for Logistics, based on APS 2005 *Logistics sector defined in terms of selective Standard Industrial Classifications was perceived as either ‘very difficult’ or ‘difficult’ by nearly half of al employers. The shortage of drivers reflects a number of key factors. First, there is evidence that the ageing workforce is a problem contributing to labour shortage amongst LGV drivers but this is not conclusive. Official statistics (APS 2005) indicate that nearly a quarter of drivers were aged 55 or over. However the Survey of employers of LGV drivers (2005) by SfL estimate this to be around 16%. Second, it is clear that the industry is not attracting enough young people. Official statistics (Labour Market Intelligence) indicate that only 3.1% of the industry is under the age of 25. School leavers cannot join the industry without significant delay, due to the minimum age for gaining a category C+E licence being 21. Many firms will only accept employees aged 25 or over, for insurance reasons. An additional problem seems to be that companies prefer to recruit drivers from other companies rather than investing in training. According to the SfL Survey, employers recruit 64% of their drivers from other companies. Trainees represented only 16% of the workforce. Third, the industry still has a poor image which is problematic for attracting new recruits. There is a general perception of low pay, long hours, stressful conditions, poor working environment, heavy supervision and poor career prospects. Traditionally, lorry drivers tend to be white, middle aged men. Official statistics indicate that only 0.4% of LGV drivers are female. This is something that SfL is beginning to address. SfL, together with the FTA have just hosted the second Women in Transport event aimed at highlighting gender issues in the industry. Higher numbers of female recruits in the future could be a means to avert a future skills shortage. Is foreign labour filling the gap? The prediction by SfL of 15,000 LGV drivers by the middle of 2006/07 financial year is much lower than anticipated two years ago when it was forecast at 46,000. This is partly due to the effects of the Road Transport Directive not being as severe as predicted, but can also be explained by an influx of foreign drivers following the EU expansion in 2004. Some firms believe that the shortage of LGV drivers will be remedied by utilising foreign labour, particularly from eastern Europe. In May 2004 Poland and seven other mainly former communist states joined the European Union. By June this year a total of 447,000 eastern Europeans had registered to work in Britain. Most (an estimated 264,000) have come from Poland. This may not prove a long term solution as there is already evidence of a downward trend in the numbers, 57,000 who registered between April and June last year down to 52,195 this year. The Workers’ Registration Scheme figures published in August 2006 show that 49% were in temporary jobs, suggesting that they were likely to go back within two or three years. Recruitment of eastern European drivers could in the future create a skills shortage in central and eastern Europe, which are seeing considerable growth in warehousing. The government has announced that when Bulgaria and Romania join the EU next year there will be strict limitations to work permits imposed, with low-skilled workers only allowed to work in the food processing and agricultural sectors, so the positive effects of foreign labour migration may prove short lived. The shortage of LGV drivers in the UK logistics industry, although less than half of what was estimated two years ago should nevertheless not be underestimated. The impact of a foreign labour influx from expansion of the EU has helped mitigate the shortage, but may prove short lived as large numbers of people begin to return to their country of origin over the next two to four years. The industry needs to find ways to address certain problems such as the image of the industry, recruitment of young drivers and retaining current drivers.
NEWS & STORIES DC2, South Marston Park, Swindon DC2 is the largest existing speculative distribution development in the South West. King Sturge is acting as joint agent. Developed by ProLogis, it provides approximately 28,056 m² (302,000 ft²). South Marston Park is situated just 5 miles north of junction 15 of the M4 and accessed off the dual carriageway A419. It is ideally situated for access to London, the Midlands and the South West. For further information contact Tim Johnson on 020 7087 5300 or Giles Weir 01793 553 976. n Galaxy, Knowsley King Sturge is joint letting agent for Galaxy, a recently completed 44,129 m² (475,000 ft²) speculative distribution facility on Knowsley Industrial Park, located close to junctions 4 and 5 of the M57. Developed by Patrick Properties in partnership with LNC, the development comprises a new manufacturing/ warehouse facility of 43,264 m² (465,692 ft²) plus twostorey offices of 971 m² (10,452 ft²). For further information contact David Brooks 0161 238 6239 or Alastair Newman 0151 242 6601. n Merlin 310, Trafford Park, Manchester This is a 28,800 m² (310,000 ft²) warehouse currently under construction with completion due in February 2007. The scheme is stategically located close to Junction 9 of the M60. It is being developed by Quorum Developments and funded by Morley Fund Management. King Sturge is joint agent. For further information contact Steve Johnson 0161 238 6238. n Lymedale 414 at Lymedale Cross, Newcastle-under-Lyme Being developed by HelioSlough, this is a new speculative high-bay distribution unit of 38,461 m 2 (414,000 ft 2 ) currently under construction. King Sturge is acting as joint letting agent. The property is situated in a strategic location with direct access off the A34 providing swift access to junctions 15 and 16 of the M6. For further information contact Steve Johnson on 0161 238 6238. n OCCUPIER DEMAND The national picture In the first nine months of 2006 some 1,066,809 m² (11,483,036 ft²) was taken up in 37 new distribution units across Britain (of 10,000 m² and over). This has already overtaken the 10-year annual average of 1.0 million m² (10,763,910 ft²). We expect the level of take-up in 2006 to exceed the total for last year, which reached 1.1 million m². Take-up of new logistics facilities of 10,000 m 2 and over in GB m 2 1800000 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 1996 Source: King Sturge 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 end Q3 0 Floorspace No. of occupier transactions The amount of speculative development has continued to rise to unprecedented levels in 2006. This increase in speculative stock has correspondingly led to a rise in the amount of speculatively developed space taken up, which, at end Q3 2006, stood at 43.5% of all floorspace. This is a record figure and has almost doubled from September 2005 when it stood at 21.8%. This compares with an annual average trend of 11.6% over the past 10 years. Regions In the first three quarters of 2006, the largest percentage of take-up of units over 10,000 m² took place in the East and West Midlands, together representing 36.4% of the total floorspace transacted, which was lower than the 1996 level of 43.8%. The West Midlands take-up was 18.5% and the East Midlands was 17.9%. Following the Midlands, the next largest region was the South East/East (including London), which took a share of 29.4%, up from 14.2% in 1996. However, 10.8% of this increase can be accounted for by the IKEA transaction at Bury St Edmunds, where IKEA has secured planning consent for 114,896 m² (1,236,730 ft²). At Q3 2006 the share of take-up in Yorkshire and Humberside was 11.9%, compared to zero in 1996. Scotland had also shown a marked increase, with 1.8% of recorded transactions there in 1996, but by end Q3 2006 it stood at 8.3% of the market. There has been a notable decrease in the share of transactions of logistics facilities over 10,000 m² in the North West, which has declined from the 1996 level of 23.5% to 10.5% at September 2006. Regional take-up of new logistics facilities of 10,000 m 2 and over in GB 0.0% 23.5% 28.3% 0.0% 1.8% Source: King Sturge 1996 2006 end Q3 14.2% 15.5% 16.7% 11.9% 10.5% 3.5% 17.9% 8.3% 29.4% 18.5% 0.0% 80 70 60 50 40 30 20 10 Transactions South East/East (incl. London) South West & Wales West Midlands East Midlands Yorkshire & Humber North East North West Scotland
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