Ecommerce stores warehouse

Britain could run out of warehouse space within a year

UK could run out of warehouse space within a year as supply chain disruption and online shopping boom push demand to record highs, real estate agent Cushman & Wakefield.

Available warehouse space in the UK has fallen below 50m², the lowest level since Cushman started tracking the industry in 2009.

That’s roughly the same amount of space businesses already took up in the first nine months of this year, Cushman said.

Demand for warehouses is being driven by Amazon-led e-commerce companies as well as manufacturing and logistics companies as they respond to trends triggered by the Covid-19 pandemic and Brexit.

The expansion of Amazon and others is eating into the stock of available warehouse space. According to estate agent Savills, the UK has warehouses covering a total of 566m², but Cushman’s figures suggest the vast majority of that space is already occupied.

Bruno Berretta, who heads logistics research at Cushman, said there was a risk the UK would run out of available space within a year.

“Even though the developers were quick enough to respond to the shortage. . . when you look at how fast development is going, there is probably not enough [warehouse space]Added Berretta.

“E-commerce and post and parcels [companies] took an average of 6m square feet [a year] between 2015 and 2019. Over the past two years, it has exceeded 15 million square feet per year: this gives an idea of ​​the extent of demand in the sector.

The increase in online shopping, following the closure of main streets during coronavirus closures, is one of the factors increasing the demand for warehouse space.

The proportion of UK retail spending online fell from 19.1% in February 2020, before the first coronavirus lockdown, to a peak of 37.1% in January, before falling back to 25.9% on last month, said the Office for National Statistics.

Amazon alone has occupied millions of square feet of warehouse space, accounting for more than half of e-commerce usage this year, Cushman said. Others, like THG, have also grown.

Another factor driving the demand for storage space are companies whose supply chains have been affected by Brexit and Covid-19.

The UK’s departure from the EU created friction for businesses on one side serving customers on the other.

“European companies want to be closer to their customers [in the UK] now, ”Berretta said. “Supply chains have been redesigned along borders. You need a more local presence.

The pandemic, for its part, has highlighted the fragility of supply chains built for maximum efficiency. And periodic shortages of everything from face masks to bricks have encouraged manufacturers and retailers to seek more storage space.

The disruption of the supply chain is also hampering developers’ efforts to build more warehouse space by raising the price of building materials and slowing their completion.

Compression is not isolated in the UK. The biggest challenge across Europe was finding places to build new warehouses on, said Emmanuel Van der Stichele, managing director of Mileway, Blackstone’s European warehouse division, which is growing to meet the new demand. .

“There are a lot of complications in the planning and operation of the economy,” he added.

In the short term, the impact of high demand for warehouse space will drive up costs for those who need storage.

This was likely to translate into price increases for consumers, said Berretta, who warned there was no silver bullet to the imbalance between warehouse space and demand.

“On the contrary, availability will get worse before it improves,” he added.

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