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Record demand for warehouse space in the UK

The UK warehouse market is set to have its best year since records began, with take-up surpassing the 34m sq ft of space transacted in 2014, thanks largely to the continued growth of online retailers.

Fresh research from Savills shows that online retailers now account for up to a third of the market for units measuring at least 100,000 sq ft, more than any other occupier segment ever.

To put this into perspective, the next best performing sector were the grocers, accounting for up to a quarter of the market back in 2011.

As a result, the supply of existing warehouse space has fallen by 71% since 2009 and now stands at just 27m sq ft, which equates to just over 14 months worth of supply. For this reason, the availability of consented land, ready for warehouse development, will become increasingly important if online retailers are to continue building their supply chains.

Amazon accounted for more than a quarter of all warehouse space rented in the UK this year, as the online giant continues to ramp up its operations.

Such was Amazon’s dominance in the market that it was behind 82% of deals done with online retailers in 2016, the research from Savills found.

Kevin Mofid, head of logistics research at Savills, said: “Up to 45% of current logistics demand is from retailers, with Amazon, for example, accounting for just over a quarter of total take-up in 2016 to date. If we drill down further still, this represents 82% of take-up specifically by online retailers.

“Availability of land for employment use remains critically low across the UK and with land continuing to be allocated for higher value uses such as residential, the industry is struggling to keep up with demand.”

Long term, Savills calculates that at the end of 2016 only 1,600 acres (647 hectares) of land remains available and primed for development in the South East, where demand for last mile distribution sites are at its highest. As a result, there remains just over five years worth of deliverable stock in the region.

Richard Sullivan, national head of industrial & logistics at Savills, added: “The sector remains incredibly resilient in the face of economic and political uncertainty, due in part to the phenomenal growth of online retail. Although it appears to be dominating the industrial and logistics landscape, demand still remains high from a diverse range of occupiers and as a result take-up has hit unprecedented highs.

“In order to maintain this momentum into 2017 and beyond, it is now crucial that we tackle the supply issue and policy makers recognise the need to allocate more land for industrial and logistics, whether that be in a pure or mixed-use sense.”

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