The UK Warehouse Market Struggles To Keep Up With Insatiable Demand From Online Retailers

The UK warehouse market is set to have its best year since records began, with take-up surpassing the 34M SF transacted in 2014, according to Savills. This significant increase can largely be attributed to the continued growth of online retailers.
 
Online retailers account for up to one-third of the market, more than any other occupier segment ever. To put this into perspective, the next best performing sector was grocers, accounting for up to one-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 27M SF, which equates to just over 14 months’ supply. The availability of consented land, ready for warehouse development, will become increasingly important if online retailers are to continue building their supply chains.
 
Savills head of logistics research Kevin Mofid says that up to 45% of logistics demand is from retailers. Amazon accounts for just over one-quarter of total take-up (and 82% of leasing specifically by online retailers) in 2016 to date. 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, Kevin says.
 
Savills calculates that only 1,600 acres remain available and primed for development in the South East, where demand for last mile distribution sites is highest. As a result, there remains just over five years’ worth of deliverable stock in the region.