‘We’re barely at the start of a tech revolution’

Ben Segelman is a man with a mission. The new capital markets lead for the property team in DHL’s Supply Chain business has been tasked with stepping up its acquisition and development programme, not only in the UK and Ireland but across mainland Europe as well as the Middle East and Africa. Segelman is at least starting from a good position. DHL Supply Chain is already one of the industry’s largest logistics property developers and warehouse operators. The company, part of the broader Deutsche Post DHL Group, runs a portfolio of 134.5m sq ft in 1,300 locations across more than 55 countries, operating as a third-party logistics provider for clients. But he also knows that competition for the best assets and development opportunities is growing rapidly. Segelman, who started the new job in July, will hope that his previous job as head of logistics at Round Hill Capital – where he helped set up its European logistics and light industrial platforms – will stand him in good stead.  Segelman speaks to EG about the new role, DHL Supply Chain’s targets for expansion, and the ways in which technology is changing productivity in a logistics business. What does your new role involve, and what is your strategy for the portfolio? What we are looking at is the wholesale development of warehouse space for our businesses. I’m here to help provide solutions for space in a number of different ways: through developing new space, acquiring land for built-to-suit or speculative development, or selectively buying standing assets that can allow the business to grow. We have sizeable firepower – hundreds of millions of pounds – to deploy in any year. How has the criteria for sheds changed? We’ve undertaken audits of the real estate we occupy across the UK to identify gaps and inefficiencies. Through its agglomeration of various businesses over the years, such as UK Mail, Exel and DHL itself, some of the leases that DHL inherited are now old – functionally, we’re talking pre-2000 builds, and even some post-2000 ones where requirements for space have since changed. Eaves heights were perhaps sub-12m, for example, and now requirements can be very much above that. Various clients have requirements for other aspects now – being closer to hubs with large populations, for example. There’s more consideration now for what drives that location, the design and the practical use of the space. That said, you have to be mindful of the institutional nature of what is being built. No one wants to buy an asset that is too bespoke or functionally inoperable for another, future occupier. What we’re asking ourselves is, how can a building be used 10 or 20 years down the line? Can it be adapted from the simple structure that is put in place today, for the future? Where are the challenges for expansion in the UK? We’re active across most parts of the UK, with a particular focus around hubs including the Midlands, London, Bristol, Leeds and Manchester. There is always a focus on the main hubs – London, in particular – but the ability to find the space and land is much harder [while our] sector competes with every other sector for those spaces. I don’t think that will change post-Brexit – perhaps different [sectors] will look at them, but these are locations where everyone would like to have a site that could provide something that the competition can’t. It’s tough. That’s what the capital markets [function] is now here for – thinking of different ways to dig out those opportunities that perhaps haven’t been there before, whether it’s by talking to other developers about [vacant] assets they could potentially sell, or speaking to landlords who have had assets for a number of years and need to recycle cash. It’s about thinking differently to find those opportunities. What learnings can real estate take from trends seen in overseas logistics markets? Growing consumerism, blurring sector boundaries, demanding emerging markets, and the increasing need for lean, risk-controlled approaches in complex marketplaces are the major supply chain drivers that can be seen across markets. The UK is a shining light in terms of construction quality, the certifications given to the developments that are built, and just for the pure variety. Germany and France have also been leading on these. Other countries such as Italy and Spain are catching up – those are really seeing the benefits of investment now flowing into those regions. Two years ago, yields were mid-6%, now they’re the mid-5% or better for the same sort of product. Investors are believing in the growth of demand and the real estate sitting behind it. Given how quickly tech is advancing, how is DHL future-proofing its sheds? Data capture and usage has always been critical to our business and it has increased massively in recent years. There has been a 15% increase in productivity with augmented reality technology in our warehouses. Smartglasses provide visual displays of order-picking instructions and item locations. We employ drones to improve security across our sites as well as to strengthen our offer to customers, and this will grow significantly. DHL is also using robotics more widely. New technology plays such an important part in improving operations, removing costs and improving customer service. We’re barely at the start of this revolution. To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette