Warehouse deals hit record high as UK firms look to reel in supply chains
Property deals for industrial and warehouse spaces have hit a record high this year, suggesting that businesses are reeling in their supply chains closer to home.
Take up of warehouse space is set to hit a record 66m square feet this year, according to preliminary data from Knight Frank, surpassing 2020’s record by nearly 30 per cent.
While fellow property agent CBRE pegs this year’s total take up to be around 40m square feet, its data found that businesses are on track to have taken up warehouse space the equivalent size of 93 Wembley stadiums.
The pandemic, alongside Brexit, has knocked businesses with a string of supply chain and distribution woes.
But the unprecedented demand from occupiers to secure industrial space signals the desire to develop shorter supply chains, Knight Frank explained.
E-commerce boom
It will also help companies expand their e-commerce capabilities and hold higher volumes of inventory to avoid unnecessary operational hang-ups.
The spike in uptake has also pushed down the national vacancy rate to below four per cent, Knight Frank added, with developers now expected to branch into the industrial property sector.
So far, there has been a jump of over 30 per cent in planning applications.
“The race for space continued unabated this year, with the growth in the ecommerce market, along with rising demand for advanced manufacturing facilities and other sectors such as film studios broadening the occupier base,” head of industrial and logistics at Knight Frank, Charles Binks said.
Beyond wider supply chain troubles – the shift to online and boom in e-commerce during the pandemic has largely carried this trend, exeutive director of UK & EMEA research at CBRE, Tasos Vezyridis agreed.
“This year we have seen double-digit rental growth in many prime markets in the UK, particularly hubs surrounding London as the impacts of the shift towards e-commerce continue to steer the market,” he said.