Online sales drives available warehouse space to record low
The record take-up of warehousing space in the UK during 2021 has seen the market for available space contracting at its fastest ever rate, as supply chain focus moves from operating “just in time” to “just in case”.
Global supply chain pressures, congestion and disruption, triggered by the pandemic and exacerbated by the increasing shortage of HGV drivers, the blockage of the Suez Canalby the Ever Given and the Yantian partial-closure are driving a strategic shift from “just in time” to “just in case” models, which is leading companies to hold more inventory and increasing demand for warehouse space.
Clare Bottle, CEO of the UK Warehousing Association, told The Chartered Institute of Procurement & Supply the cost of warehousing was “only going one way”.
“But it’s not just the capital cost, it’s also the warehousing cost and depending where you are geographically the prices are only going one way, and that’s connected to the fact that warehousing is in short supply. At the moment it’s a suppliers’ market.”
Bottle said London and the Southeast was one of the most expensive places in the world for warehousing. “
The research and advisory company Forrester is forecasting that online retail will reach 37% of all retail sales by 2025, up from 20% before the pandemic, which will put even more pressure on the availability of warehouse space and over the next 18–24 months, the key issue will be one of warehouse supply.
The availability of construction materials for new-build projects has been massively disrupted, which means that the pace of delivery for speculative developments will not be able to keep up with demand, that could cause problems for companies considering their warehousing options.
Commercial property agents, Savills, reported that In the first six months of 2021 take-up of logistics and industrial space reached 24.5m sq ft, which is up 83% on the long-term average.
This massive uptake of available space has led to a fall of more than 7.5m sq ft in supply, which now stands at 24.3m sq ft, with the lowest ever nationwide vacancy of just 4.24%.
Savills, said: “At present the record levels of take-up we have seen in recent years show no signs of slowing, with demand continuing to outpace supply quite significantly.
“Even if the entire development pipeline were to remain un-let upon completion, vacancy rates would only rise to just over 7%, well below the 12% figure that would hamper rental growth.”
Strategically located to the east of London, ePoint Medway is 378,000 sq ft of custom-created space. Dedicated to super-efficient inventory management, eCommerce fulfilment, value-added warehousing and returns processing.
