Deep impact

IN 2015 UKWA commissioned Savills to undertake a comprehensive review and analysis of the size and make-up of the UK warehousing market. Since that time, few could have foreseen the seismic changes that would transform our society and have such huge impact on our industry.

The new report for UKWA from Savills, which compares the latest statistics to data from six years ago, reveals the urgent requirements for more warehousing and the need for fundamental change in land use planning.

Key points include a rise of 32% overall in the number of warehousing units, a trend towards bigger warehouses, with an astonishing rise of 242% for units of 1m+ sq ft and, most telling of all, a radical change in the occupier profile of warehouses. While back in 2015, high street retailers were the dominant occupiers, now the leading occupier group is 3PLs, with increased occupation levels of 42% and – no surprises here – online retailers, who have increased warehouse occupancy by a staggering 614%!

Clearly, in the last twelve months both Brexit and the global pandemic have driven and amplified the core changes. In particular, the massive acceleration of e-commerce and home delivery. As Savills notes in the 2021 UKWA report, research from Prologis indicates that for every extra £1bn spent online, a further 775,000 sq ft of warehouse space is needed to meet the new demand.

This change in shopping habits looks set to stay, and as retailers move from high street premises to online channels to serve consumer demand for home delivery, more fulfilment and distribution facilities will be needed to support the new normal.

Our sector is currently the fastest growing in the economy, and it is essential that the Government recognises this and shapes planning policy accordingly.

While we hear a great deal about building 250,000 new homes each year over the next five years, the fact that this will create a million new delivery points seems to have been largely overlooked.

It is high time for warehousing to be baked into planning policy, in the same way that GP surgeries and schools are an accepted part of infrastructure planning.

This important new report for UKWA from Savills provides a powerful evidential basis for our continued calls for land use reform and creates a clear case for putting warehousing and logistics at the heart of future planning.

Our 2015 report identified just over 1500 individual warehouse units used for storage and distribution, which accounted for almost 428m sq ft of warehouse space. Since 2015 this figure has risen by 32% and now stands at 566m sq ft, a rise of 138m sq ft over six years.

The trend for larger warehouse units has seen the average sized unit increase from 217,000 sq ft in 2015 to 340,000 sq ft in 2020. In the corresponding period, the average eaves height of warehouses has increased from 11m to 14m.

Second hand warehouses

Since 2015 Savills has tracked 66m sq ft of new leases or sales for second hand warehouses. Savills has compared the previous occupier of a unit with the incoming occupier, and while these transactions do not add to the total stock level it is interesting to note trends in the occupier mix that demonstrate how warehouse facilities are being used.

Following a number of high profile administrations such as Debenhams, Mothercare and Arcadia it comes as little surprise that High Street retailers saw the largest net decline of space in the second hand market with their footprint decreasing by 10m sq ft over 6 years. Grocery retailers also saw the amount of space occupied decline by 3.5m sq ft over the same period.

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Following wider structural trends, online retailers have gained the most space in the second-hand market, accounting for a net change gain of almost 8m sq ft. Combined with the parcel and wholesale sectors, this rises to a net position of 12m sq ft of additional secondhand space let to companies operating in and around online retail.

The manufacturing and automotive sectors also saw the amount of second-hand space occupied decrease by 10m sq ft. However, it would seem manufacturing companies are actually “trading up” and moving from older premises to more modern facilities, as the numbers for their overall footprint have increased since 2015.

Where next?

The growth of the UK warehousing sector over the last six years should be seen as a nationwide success story as the sector has been pivotal in supporting the growth from online retailers, manufacturers and logistics companies, and has supported the delivery of thousands of new jobs.

The sector will be even more in the spotlight as the global economy recovers from Covid-19 and shoppers continue to spend online, while manufacturers look to store more inventory closer to home to avoid the supply chain disruption that has been experienced in more recent times.

Research from Forrester states that by 2025 online retail will account for 35% of all retail, which means that at least 64m sq ft of additional warehouse space will be needed for that sector alone.

Coupled with the fact that warehouses are getting bigger, this means that sites capable of delivering large scale warehouse space will be developed out much quicker than historical trends suggest.

It is therefore crucial that policy makers appreciate the size and scale of the industry in its present form, but also understand that all forecasts point to continued and amplified growth, which will require more land to be allocated for this critical use.

You can download the full Report free from the UKWA website – www.ukwa.org.uk

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