Demand for warehouse space thriving owing to rise in online shopping, the pandemic and Brexit
The Office for National Statistics (“ONS”) recently published a report showing that in 2021, the number of UK business premises classified as storage and transport was 21% higher than in 2019, and a massive 88% higher than in 2011.
The increase since 2019 is especially notable given that the number of business units across all industries rose by only 1% over the same period of time.
Reasons for this increase include but are not limited to:
- The growth of online shopping as a percentage of retail sales following the pandemic;
- The rise in new orders for the building of warehouses; and
- The substantial increase in job adverts in the transport, logistics and warehousing industries.
The above increases may partially reflect changes which have been initiated by the global pandemic and restrictions along with supply chain changes which have been made following the UK’s exit from the EU.
It also showed that these premises are now becoming more concentrated in parts of the East of England, which may be due to the Ports located up and down the eastern coast. For example, the percentage of business units used by the transport and storage industry in Ipswich has risen from 4.6% in 2011 to 11.8% in 2021, putting it within the top 15 counties across the Midlands and East of England. Arguably, this can be attributed in part to the A12 and A14 providing good access routes across the East of England from the container port of Felixstowe and the short sea ports of Ipswich, King’s Lynn and Lowestoft.
The ONS report has been critiqued by the UK Warehousing Association (UKWA) with their Chief Executive Clare Bottle saying, “While we welcome increased interest in our industry from the government, we have some concerns around the integrity of the data.”
Clare Bottle went on to comment on the definition of ‘transport, logistics and warehousing’ used by ONS in the report, as it included businesses which are usually categorised in that sector such as passenger transport operations. As well as noting the significant omissions in the report’s finding as “Warehousing for companies like Amazon, Tesco and DHL will not have been considered in this report, so clearly the overall picture will be distorted.”
However, despite these anomalies UKWA noted that the ONS report did corroborate the findings of the British Property Federation (BFP) as set out in their recently published report, with them both showing that this sector is critical to the governments levelling up agenda.
As a result of the increased demand, land prices are rising and there is sustained rental growth, meaning that in order to sustain this level of demand more warehouses and commercial units will need to be built in the coming years.
If you would like to read both the ONS report and the BFP report you can find them here:
https://bpf.org.uk/our-work/research-and-briefings/levelling-up-the-logic-of-logistics/
If you are a land developer looking to purchase land for commercial property development, an owner of a commercial unit looking to rent it out, or someone wishing to take out a lease of a commercial unit please do get in touch with our commercial property team on 01206 835316 or email [email protected]