According to research, warehousing space has spiked in demand and the pandemic has only served to accelerate this trend.
When you click to buy online, there is a good chance that the product will start its journey in a warehouse whether it is baked beans, a laptop, furniture, or fashion. Despite the size of many warehouses, they are now becoming too small and firms are now having to expand their sites or relocate to accommodate the growing demand.
It was not too long ago that warehouses were unloved by investors, who continued to pour their money into retail and office spaces.
But things look completely different now. High streets and town centres are struggling with too much retail space and the logistics sector cannot build warehouses quick enough.
New research conducted by industry experts shows the dramatic increase in warehouse space over the last six years. Back in 2015, there was 428 million square feet of large warehouse space in the UK. This has now risen by 32% – adding the equivalent of an extra 2,396 football pitches.
The occupancy mix has also changed. In 2015, high street retailers were the dominant occupiers, but now they have been overtaken by third party logistics providers, such as DHL and Yodel, who fulfil and deliver most of our online shopping.
The biggest uptake in space comes from pureplay online retailers, firms which do not have physical stores and only sell online, such as Boohoo. These online retailers have increased their warehouse footprint by 614% in just six years.
The properties themselves are also getting bigger, with some warehousing units equating to the size of 10 football pitches. For many businesses, without the size of these properties, they would not be able to function.
Some predictions suggest that for every billion pounds spent online, an additional 775,000 sq ft of warehouse space is required to support the operations.
Evidence has also shown that as online retail has grown, the type of people required in warehousing has changed too. Now there are robotics engineers and data scientists, showing the requirements for technical excellence to gain efficiencies.
Statistics gathered by researchers who track how much warehouse space companies require showed that demand increased by 232% in the first quarter of this year, compared to the same period in 2020. This figure reflects the change in shopping habits since the first lockdown.
While these figures may seem impressive, it must be recognised how important this fast-growing sector is to the economy. Despite plans to build 250,000 new homes each year in the UK over the next five years, the fact that this will create over a million new delivery points is a huge concern. Some believe that warehousing should be incorporated into a planning policy, in the same way that GP surgeries and schools are an accepted part of infrastructure planning.
Mark Richardson, Partner at BB&J Commercial said “It is widely known that warehouse distribution is a rapidly growing sector, and that demand outstrips supply. However, seeing the figures in black and white really does give some idea as to how exponential this growth has been. It is interesting to look at the time frame over which this growth has taken place. It’s only been a short few years, and if the projected growth follows the usual ‘S- curve’ for emerging technologies and trends I would expect demand to only increase over the next several years before steadying off.”
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