Fast fashion: balancing economic growth with environmental sustainability

Key takeaways

• Rapid fashion cycles are driving demand for efficient logistics infrastructure;
• Investors target ESG-compliant logistics assets as sustainability becomes a market differentiator; and
• Distribution network innovation is accelerating fulfilment to meet consumer demands.

Fuelled by consumer demand for inexpensive, trend-led clothing, the fast fashion industry is a growing market for opportunity. Key players such as Zara and H&M, alongside global disrupters like Shein and Temu, are pushing the limits of speed and scale with design-to-distribution timelines of as little as 10 days. As a result, retailers are working to build responsive supply chains using agile distribution networks and real estate infrastructure built for rapid fulfilment and constant turnover. Yet growing scrutiny over the industry’s environmental footprint is placing pressure on companies to become more sustainable, making environmentally responsible logistics a priority for the year ahead.

Real estate demand and e-commerce acceleration

As fast fashion brands strive to meet consumer demands for speed and convenience, robust logistics infrastructure is essential. Zara, for example, operates a vertically integrated supply chain, managing every stage from design to distribution to ensure rapid responses to emerging trends. This approach relies on optimised distribution networks, including:

• Centralised hubs for global intake and dispatch;
• Regional centres for efficient domestic delivery and returns; and
• Last-mile hubs to support direct-to-door fulfilment.

The integration of e-commerce in the fashion sector especially requires effective distribution of products. As of June 2025, online sales represent 26.5% of UK retail activity. With capital values for Retail Warehouses projected by Colliers to grow by 5.8% this year, logistics real estate remains a resilient and strategically positioned sector for future-facing investment.

This demand may further accelerate as current tax review challenges cross-border logistics. Currently, the de minimis threshold of import duties enables e-commerce companies, such as Shein and Temu, to ship low value parcels directly to consumers at scale while avoiding tax obligations. With the US set to close this loophole from August 29th, and the UK and EU reviewing similar policies, companies that rely on this business model may increasingly seek to review their distribution strategies and real estate use through a combination of onshoring and near-shoring strategies. This may drive a requirement for more flexible letting arrangements and multi-let warehouse solutions.

Environmental costs of fast fashion

While the fast fashion sector is projected for strong growth, recent years has seen focused attention on its significant environmental impact. The UN Environment Programme attributed up to 10% of global carbon emissions to the sector. For fast fashion brands, environmental considerations are no longer optional. Businesses are expected to meet growing legal regulatory targets, such as the UK’s commitment to achieve net-zero greenhouse gas emissions by 2050. Action towards supply chain sustainability and a circular economy addresses growing climate change risks but also promotes cost- efficient operations and responds to increasing stakeholder scrutiny for responsible business practices.

How is the sector aligning with environmental shifts?

The fast fashion industry will progressively benefit from logistics real estate that supports corporate ESG targets, from using green leases to developing carbon-neutral sites. For investors, this signals a necessity to shift in portfolio allocation toward sustainable strategies, particularly those aligned with occupier requirements for ESG-compliant, tech-enabled facilities. Key developments include:

The demand for sustainable warehouses and renewable energy integration

Energy-efficient buildings are becoming the norm, with occupiers seeking assets that meet environmental performance standards such as EPC ratings and BREEAM certifications. This allows occupiers to meet sustainability goals, while reducing operating costs in the long-term.

Warehouses and production facilities are increasingly incorporating on-site renewable energy sources. Solar lends itself particularly well to logistics distribution units owing to their large footprint and photovoltaic panels are seen as a cost-efficient solution to energy constraints for both landlords and tenants alike. Jessi Tamber, an associate at Charles Russell Speechlys LLP looks at some of the issues landlords will need to consider when permitting tenants to install photovoltaic panels. 

Increasing automation and technology to streamline operations and reduce energy usage

The deployment of innovative technology allows retailers to integrate sustainability and promote their economic growth. The market for automated warehouses is projected to grow at a 15.9% CAGR from 2025 to 2034, driven by demand for faster, cleaner fulfilment.

Transitions to ‘smart warehouse’ models, using robotic systems and AI controlled manipulators, are acting to save time and costs for businesses. A key challenge moving forward will be ensuring that energy demands of advanced logistics technologies and its increased pressure placed on data centres is sustainably met without offsetting its environmental benefit. This is just another example of the deployment of AI driving growth. To sustain this, the UK needs to build more data centres and quickly. Charles Russell Speechlys LLP recently hosted a round table with key players in the data centre industry where we discussed the need to tackle three key barriers to growth in the UK: energy availability and cost, public perception and planning complexity. You can read the full report here.

What to expect next

For the fast fashion industry, the next twelve months will demand smart, sustainable infrastructure that can maintain consumer expectations while driving towards ESG commitments. We can expect to see:

• Increasing pressure placed on fast fashion brands to show environmental accountability by legal regulation and significant stakeholders;
• Continued investment in high-spec logistics assets, particularly those with embedded ESG credentials; and
• Accelerated adoption of automation and data analytics to boost efficiency and reduce environmental impact.

Those that can strike the balance between growth and responsibility will be best positioned to lead the fashion industry in the long-term.