Race for space: Store shortage hits retailers
The UK is witnessing a shortage of supply of warehouse space after a surge in demand for logistics sites in 2021, according to new research.
Experts at real estate advisory firm Colliers said the take-up for large industrial distribution warehouses increased to record annual levels.
Around 50.7m sq ft of large distribution warehouses were snapped up in 2021, representing a 3.6 per cent increase on the previous year.
It reported that the soaring demand for warehouse locations has been accelerated by the pandemic-fuelled growth in online retail.
The Office for National Statistics said last month that UK online retail sales increased to 30.1 per cent of all sales in November, surging from 21.6 per cent against the same month in 2019, before the pandemic struck.
Len Rosso, head of Colliers’ industrial and logistics team, said: “The latest ONS figures point to the fact that consumer shopping behaviour has really changed over the years.
“Rents will certainly rise, pushed by a landlord-favourable supply and demand imbalance, increasing land values and inflationary pressures on construction costs.”
The research also highlighted that there was 11.1m sq ft of speculatively built supply of sites over 100,000 sq ft completed in 2021. Around 75 per cent of this speculatively developed space has either already been let or is under offer, Colliers said.
It added that there is only around 18.1m sq ft of available industrial space left for firms, representing a record low in supply.
Andrea Ferranti, head of industrial and logistics research at Colliers, said: “High levels of occupational activity and demand for new warehouses, due to the unceasing expansion of occupiers’ supply chains, will remain elevated throughout 2022.
“High levels of occupational activity and demand for new warehouses, due to the unceasing expansion of occupiers’ supply chains to keep up with e-commerce sales and online deliveries, will remain elevated throughout 2022.
“Despite demand remaining elevated relatively to historical standards, companies will continue to struggle to find space and it’s all about survival of the fittest and who will be able to expand operations in this challenging business environment.”
(Reporting by Henry Saker-Clark, PA)