Next Industrial Revolution

The next industrial revolution is already under way and it is clear that we are in a period of transition, where advances in AI, data and automation are changing the world.

Much of the debate around the next industrial revolution remains focused on technological breakthroughs.

In reality, the next phase of industrial progress will be defined by how these technologies are deployed across every part of the economy and the outcomes they deliver, for both businesses and people’s daily lives.

With many people employed in sectors that involve physical interaction, from retail and construction to manufacturing, transport and public services, the next Industrial Revolution creates excitement and uncertainty, and a general lack of understanding.

As with every other industrial revolution, it will be delivered by the people and enabled by having the right types of spaces in the right places. The challenge will be to develop the technical, engineering and operational workforce needed to deploy and maintain increasingly complex technologies across the economy.

Simultaneously, our economic future has come into sharper focus in the more uncertain and politically volatile world we currently inhabit. Economic growth across Europe is elusive, supply chains are being tested, geopolitical tensions are reshaping trade and capital flows, and some countries are increasingly prioritising domestic advantage in areas such as energy and technology.

For Europe this creates a complex landscape where resilience becomes as important as efficiency. The ability to store, process and move goods and data closer to home is moving up the agenda, whether through near-shoring of supply chains or a growing focus on data sovereignty. This is where the role of industrial and logistics space comes in.

The next industrial revolution will have amazing technological advances at its core, but how effectively these are integrated into the physical workplace at a local and regional level will be the key. We require places that can support advanced production, manage increasing power demands and bring together people, infrastructure and innovation to the benefit of local communities – three ingredients that underpin good growth.

In practice, capital is mobile, and investment will flow to the locations that can deliver quickly and with certainty.

This is something we have seen over time at SEGRO. We work with large businesses and SMEs across sectors ranging from logistics and advanced manufacturing to life sciences and digital infrastructure, and across European markets competing for investment and growth.

That gives us a unique perspective on how technological change is reshaping workforce, infrastructure and investment requirements, and how increasingly these challenges are converging.

The portfolio we manage has evolved in line with the wider economy, from traditional warehousing and manufacturing space to the highly specified, technology-enabled environments now required by these sectors.

There are several practical considerations that will determine how successfully this transition is delivered.

First, flexibility in the built environment is critical. The speed of technological change means industrial space needs to be designed for a range of technological futures, some of which may not even be known yet.

Buildings must be capable of adapting over time, accommodating different technologies, processes and power requirements across their lifespan.

Access to power is also critical and can be a defining constraint on development, deployment of new technologies and the subsequent growth opportunities they enable.

The growth of artificial intelligence, automation and electrified transport is and will continue to drive significant electricity demand. In many markets, the main challenge is having the infrastructure required to get power to where it is needed, and to balance supply and demand in an increasingly complex energy system.

Generation is less of a constraint than the infrastructure required to get power to where it is needed, and to balance supply and demand in a system that is less predictable with renewables.

Where that alignment exists, investment can move quickly. Where it does not, delay becomes a drag on growth and can stifle opportunity.

Finally, the next phase of industrial development will change the nature of work, raising demand for technical, digital and engineering skills across sectors that increasingly find themselves competing for the same talent. This is a challenge that no single sector can solve alone.

At the same time, businesses are operating in a more volatile economic environment, where energy security, cost stability and sustainability are becoming central to decision making.

Industrial locations are increasingly expected to do more than simply provide space, helping businesses access skills and provide support to local communities, use energy more efficiently and operate in a more resilient and lower-carbon way.

Across Europe, the priority for policymakers must be to accelerate delivery and create the conditions for investment.

For business, the challenge is to invest ahead of demand, designing assets and operations that can adapt to changing technologies, workforce needs and energy systems.

Each phase of industrial development is moving faster than the last, and it is absolutely critical that the policy environment and infrastructure investment keeps up, and that the space exists for innovation to thrive.

As we transition to a world where people will collaborate increasingly with AI and robots, the focus has to be on unblocking barriers and enabling delivery whilst protecting workers. This means creating stronger pathways for young people into work while helping existing workers develop the skills needed to thrive in this new environment.

Ultimately, the next industrial revolution will not be won by those with the best ideas, but by those who can turn them into reality fastest.