Warehouse Automation: Are Occupiers Favouring a Hybrid Solution?

The global growth in industrial robotics across all sectors has accelerated over the last decade, with a 13% year-on-year growth in the supply of industrial robots since 2014. Increasing investment is fuelling warehouse automation market growth, leading to a forecasted market value of $51 billion by 2030, a CAGR of 23%.

Automated technologies reduce costs, improve accuracy, efficiency, and allow occupiers to redeploy their workforce to complete more complex tasks. Improving productivity is becoming increasingly critical for logistics occupiers as e-commerce penetration continues to grow, with consumers demanding shorter delivery times.

Findings from the recent CBRE European Logistics Occupier Survey showed that 80% of occupiers felt warehouse robotics were the top technology disruptor to logistics supply chains, up 20% from the previous year. Occupiers also highlighted that the capacity to implement automated technology is a critical feature when selecting a new warehouse building.

Figure 1: Technologies which will have a major impact on logistics supply chains in the next three years

Source: CBRE and Analytiqa (CBRE European Logistics Occupier Survey 2022)

It is evident that warehouse robotics and automation are high up on logistic occupiers’ agendas, however are they seeking to adopt a fully automated solution or a more hybrid model?

The level of automation built into the current UK stock ranges widely from entry level specification, with technologies such as conveyors and warehouse management systems, to an advanced level with automated mobile robots, robotic picking, and high-speed sortation. Although these technologies are at the top of occupiers’ agendas, our latest CBRE UK Logistics Market Trends Update shows that automation penetration is still relatively low. Approximately 60% of warehouses use entry level or base automation, and only 1-2% of warehouses currently operate using an advanced fully automated specification.

Figure 2: Level of warehouse automation in the UK 2021*

Source: CBRE Research, L.E.K Research
*Estimated % of total UK warehouse stock at each level of automation

One reason for this is that advanced automation solutions are the most cost effective in much larger warehouses with greater eaves heights, rather than in smaller big box units – making up a greater percentage of the UK’s stock – which experience higher operational costs per square foot.

Moreover, although business processes are evolving with new technologies, occupiers continue to value skilled human input and consider people as the key to efficient and effective operations. Labour availability and skillsets were voted as the second most decisive factor for occupiers when selecting a general location for a new warehouse, only placing behind real estate availability. A hybrid automated solution can create a safer and more productive work environment for employees, whilst allowing time and resources for staff to carry out tasks which will drive business growth. This is particularly important with recent labour shortages, as the UK experiences fewer unemployed people than job vacancies for the first time since records began.

As the automation market grows, developers are future proofing their buildings by factoring in additional energy capacity to ensure they can keep up with technological advancements. There is a greater focus on green energy solutions, as occupiers are increasingly concerned about the escalation of energy costs. Such trends are likely to be accelerated as more environmental legislation is introduced into the sector.