Warehouse space could run out within a year
Sustained consumer demand, especially online, driven by the COVID-related shift to product purchase, rather than services spending has resulted in an unprecedented squeeze on logistics space which has fallen to record low, according to data from commercial property experts.
The available warehouse space in the UK has fallen below 50 million sq ft, which is the lowest level since Cushman and Wakefield started tracking the sector in 2009 and close to the same amount of space already secured in 2021, suggesting there may be less than a year’s supply available.
The report found that 48.9 million sq ft of space was taken so far this year, with 2021 on track to overtake 2020’s take-up volume of 53 million sq ft. Demand was reportedly led by online retailers, accounting for 43% of Q3 up-take, as well as third-party logistics operators.
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 2021, 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 Europe’s biggest retail markets to make the shift, with 52% of all transactions set to occur online next year.
Cushman & Wakefield, told the Financial Times that developers had been fairly quick to respond to the shortage of warehouse space, but warned: “When you look at how quickly development is being taken up, there’s probably not enough.”
In the short term, high demand for warehousing is likely to result in rising costs for companies taking the space. Costs which are likely to trickle down into higher prices for consumers.
Cushman & Wakefield warned: “If anything, availability will get worse before it gets better.