Warehouse boom amid online shopping frenzy as construction bill hits highest level since 1985
The UK is in the throes of a warehouse boom after roaring demand for e-commerce businesses was accelerated during the pandemic.
The Office for National Statistics (ONS) revealed on Monday that the UK’s transport, logistics and warehousing sector has almost doubled since 2011. This makes it the country’s fastest-growing sector, outpacing information and communication. Logistics firms have also grown eight times faster than retail overall.
Covid lockdowns further accelerated a trend for online shopping, with demand for online services and goods taking off.
Online shopping taking up a larger percentage of retail sales has contributed to a dramatic increase in new warehouse construction projects, the ONS said on Monday.
New orders for the construction of warehouses were worth £5.6bn in 202. This was more than in any year since 1985.
The East Midlands made up one fifth of the spending in 2021, while other hotspots for warehouse spending included Yorkshire and The Humber (16 per cent), the East of England (13 per cent), and the West Midlands (13 per cent).
The ONS calculated a ‘golden logistics triangle’ that is within a four-hour drive of 90 per cent of the British population. This area covers some 289 square miles in the West Midlands.
Last week, CityA.M. exclusively revealed that occupiers of logistic warehouses are braced for a dramatic rates hike, especially in London.
Rental growth means will see average increases of 18.7 per cent across the board on business rates payable from April 2023, according to a forecast by Colliers.
Rates in the capital are set to rise on average by 50.2 per cent, with the South West set to rise 32.5 per cent.
A unit in London, with a current rateable value (RV) of around £500,000 will find its rates bill rise from £266,000 a year to £399,630 a year, following the revaluation.
Colliers estimated that Amazon’s biggest distribution centre in Tilbury, which currently pays an annual rates bill of around £3.625m will see its annual bill rise to £4.745m. This represents an increase of 30 per cent.
John Webber, head of business rates at Colliers, told CityA.M.: “For those occupying a large number of properties in the sector, such as Amazon or even retailers such as Next or John Lewis, these rises will mount up, particularly for operators who have prime sites in London and the South East and those in the South West. This will have a significant impact on their overheads from 2023 onwards.
“We are advising our clients to fully understand the likely impact of the 2023 business rates revaluation and to prepare now to avoid any unexpected cost increases.”