By Richard Pickering, Head of Futures Strategy
Customs crunch The Brexit debate is starting to focus on a single overriding issue – the Customs Union. Theresa May (perhaps against her own private position) is committed to a path that takes the UK out of the Customs Union. To remain in would have implications for UK sovereignty and our ability to negotiate new trade deals, which would be unacceptable to a powerful group within her Cabinet. Nevertheless, the alternative, which would result in a seemingly unresolvable issue with the Irish border, has been shunned by the Lords and may well not have sufficient support in the lower house. Vultures are starting to circle around May. If she can’t push this through her position appears untenable. A leadership challenge would open up a can of worms, which would be unhelpful at a point where the negotiations need focus. Remainers might perceive a chink in the Brexit armour; however, a U-turn on Brexit at this stage feels very unlikely. This does however leave an increasingly crucial unanswered question of what’s to be done to resolve this.
Shrinking homes Although we in the property industry tend to get hooked on square footage, the average house-buyer usually makes decisions in a more complex manner. Increasingly, whether one can own a home at all is the more important consideration. Therefore, in a world of falling real incomes and increasing house prices, is the solution to build smaller homes? Micro-flats and ‘rabbit hutch’ conversions have faced significant criticism, but this might just be a case of the market mechanism providing what is demanded. A recent study by LABC Warranty reveals that the average living room has decreased in size by c.7 sq m since the 1970s. New homes also have fewer and smaller bedrooms, resulting in the modern generation of houses being the smallest since the 1930s. Affordability is surely a driver; however, the trend to staying single and childless for longer (an increase of 4 years in the past 4 decades), together with lifestyles more focused outside the home, perhaps mitigates the need for larger housing. As new models of living emerge, which prioritise community (and shared space) over family (and private space) this trend may well have further to run.
Level Up Warehouse space is on the up in more ways than one. A recent report by Oxford Martin predicted that over 2.3 billion square feet of warehousing space will be required by 2035 to service the burgeoning e-commerce market, which as a model already requires 300% more warehousing space compared with normal store-based fulfillment. As retailers such as Amazon have begun to offer same day and even same hour deliveries to their customers, the requirement to have a fulfillment centre as close to areas of population density as possible is becoming crucial to sustaining this business model. However, with large swathes of industrial land in London being lost to residential development and other competing uses, there is no longer the space to develop warehouses at the scale required. Shed developer Gazeley stepped into unchartered territory last week announcing that they will be developing the UK’s first three-storey warehouse at Silvertown. As land values rise and demand for sheds grows, so the economics push towards multi-storey logistics offerings – not uncommon elsewhere in the world. However, if drone deliveries take off in the way that Amazon’s patents predict, three storeys could quickly become ten.
St George’s Day It is perhaps fitting that the birth of the Royal Baby this week coincided with the day of England’s Patron Saint, leading Jeremy Corbyn to offer the public four new bank holidays, should he prevail at the next General Election. What greater exhibit of Englishness? Except of course St George was a Syrian who never visited these shores. Legend has it that Saint Andrew’s relics were inadvertently brought to Scotland when the monk carrying them was told to take them to the end of the earth, whereas David and Patrick were both in fact bishops of Wales and Ireland respectively. If Jeremy is looking for a fifth candidate, unlike the gentleman in question I have no doubt in recommending Saint Thomas for the role. Not only the Patron Saint of India, the apprehensive Thomas also holds the interesting portfolio of being the Patron Saint of land surveyors, architects …and politicians. He clearly has a lot to answer for. Join me in celebrating his feast on 3 July.