UK to run out of warehouse space in a year experts warn
Leading commercial property agents, quoted in the FT this week, report that the UK could run out of warehouse space within a year, as supply chain disruption and acceleration of online sales sends demand for space to record levels.
The stock of available warehouse space has fallen below 50 million square feet, which is close to the same amount of space secured in the first nine months of 2021, suggesting there may be less than a year’s supply available.
Demand for warehouses is being driven by eCommerce, manufacturing and logistics businesses, that are depleting the stock of available warehouse space and raising the risk of the UK running out of available space.
Even though developers have been quick to respond to demand, newly developed space is being taken up fast, keeping available stock low and declining.
Brexit is also a contributory factor, with European companies wanting a more local presence in the UK.
eCommerce, post and parcel providers took an average of 6m square feet p.a. between 2015 and 2019, rocketing to over 15m square feet p.a. in 2020 and 2021
The rise in online shopping, after the shuttering of high streets during coronavirus lockdowns, is a significant factor, increasing demand for warehouse space.
The proportion of UK retail spend taking place online rose from 19.1% in February 2020, ahead of the first coronavirus lockdown, to a peak of 37.1% in January, bringing forward by three years the date when the UK’s online sales are expected to overtake in-store sales.
Research by Retail Economics predicts that UK retailers will be the first across some of Europe’s biggest retail markets – including Germany, France and the Netherlands – to make the shift, with 52% of all transactions set to occur online next year.
The pandemic, meanwhile, has highlighted the fragility of supply chains built for maximum efficiency, encouraging manufacturers and retailers to seek more storage space.
Supply chain disruption is also hampering developers’ efforts to build more warehouse space by pushing up the price of building materials and slowing their completion.
In the near term, the impact of high demand for warehouse space will be rising costs for those needing storage.
This was likely to trickle down into price increases for consumers, with agents cautioning that there was no quick fix to the imbalance between warehouse space and demand, suggesting that, if anything, availability will get worse before it gets better.
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.
