Retailers Race For Space As Ecommerce Boom Drives Warehouse Shortage

The UK is experiencing a shortage of warehouse space after demand for logistics sites increases in 2021, new research shows.

Experts at real estate consultancy Colliers said support for large industrial distribution warehouses has increased to record annual levels.

Approximately 50.7 million square feet of large distribution warehouses were purchased in 2021, an increase of 3.6% from the previous year.

He reported that the growing demand for warehouse locations has been accelerated by the growth fueled by the online retail pandemic.

The Office for National Statistics said last month that online retail sales in the UK rose to 30.1% of all sales in November, from 21.6% from the same month in 2019 , before the pandemic strikes.

Len Rosso, Industrial and Logistics Team Leader at Colliers, said: “The latest ONS figures show that consumer buying behavior has really changed over the years.

“Rents are sure to rise, driven by an imbalance of supply and demand favorable to homeowners, rising land values ​​and inflationary pressures on construction costs.”

Retail owners have banked on the continued growth of e-commerce despite the easing of restrictions linked to the pandemic.

The research also found that there was 11.1 million square feet of supply of speculatively built sites over 100,000 square feet completed in 2021.

About 75% of that speculatively developed space has already been rented or offered for sale, Colliers said.

He added that there were only about 18.1 million square feet of industrial space available for businesses, which was a record supply.

Andrea Ferranti, Head of Industrial and Logistics Research at Colliers, said: “The logistics industry continues to benefit from strong tailwinds that are pushing online consumer spending to consistently high levels.

“High levels of business activity and demand for new warehouses, due to the relentless expansion of occupant supply chains to track e-commerce sales and online deliveries, will remain high throughout 2022.

“While demand remains high by historical standards, companies will continue to struggle to find space and it is all about the survival of the fittest who will be able to expand their operations in this difficult business environment. “

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