UK warehouse space could be used up within a year - report

By

Nigel TAYLOR

Published
Oct 25, 2021

The UK is fast running out of warehousing space. Booming consumer demand, especially online, has resulted in an “unprecedented squeeze” on logistics space which has now fallen to a “record low", according to new data from Cushman and Wakefield.

Available warehouse space in the UK has fallen below 50 million sq ft, the lowest level since the commercial real estate group started tracking the sector in 2009.

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.

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It added that this has “sparked a new wave of speculative development”, with 12 million sq ft in the pipeline as at Q3.

In addition, 2021 is set to make a “new record” with £10.7 billion having been transacted during the first nine months of the year. Data found that activity has been “dominated” by overseas investors, primarily US private equity companies, which have undertaken 63% of transactions so far in 2021.

Richard  Evans, head of UK Logistics and Industrial at Cushman & Wakefield, said: “Demand continues to outstrip new supply with rental growth accelerating as a result, particularly in London.

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

Alongside Amazon, major UK retailers including JD Sport Fashion and Marks & Spencer have been opening major new distribution hubs this year in the drive to improve supply and delivery options.