Can a warehouse be too big?

WAREHOUSES HAVE been getting bigger. Amazon's largest UK warehouse at Tilbury, for example, stands at 2 million square feet. In its report on warehousing for UKWA last year, Savills stated that the development of warehouses of over 1 million sq ft had risen by 345% since 2015. The research found that facilities over 1m sq ft accounted for 10% of the UK’s warehouse stock, compared to just 3% back in 2015. Average eaves height has also increased, rising from 12.2m in 2015 to 13.6m in 2023 – though this figure is still dwarfed by the heights that are common in continental Europe.

This growth in warehouse size can be explained by the dominance of two groups among today’s warehouse occupiers: third-party logistics providers and online retailers. While 3PLs remained the leading occupier group in Savills’ 2024 research, online retailers accounted for the largest rise in occupation, increasing their warehouse footprint from 8 million sq ft in 2015 to 69 million sq ft – a staggering 813% growth. More recently, the jury is out on what the slightly lower rate of growth in online retail means for the sector.

The new government has introduced its Planning and Infrastructure Bill, which aims to streamline planning policy, slash red tape and give local and national authorities the power to accelerate infrastructure projects. Will this relaxation in planning regulation make warehouses bigger still? Well, perhaps not. The trend towards shorter leases – especially for distribution centres – in the commercial property market, driven by tenants’ need to remain agile in the face of fast-evolving market conditions, make property owners reluctant to invest in developments whose size may limit the demand for them in the future. In addition, the consumer demand for ever-faster delivery of goods ordered online means that regional distribution centres that are closer to markets are often preferred over (larger) national ones.

Instead, warehouse operators may increasingly focus on optimising the use of space within the footprint of their facilities. They may, for example, deploy more automated logistics systems to increase productivity and storage efficiency. Dense storage solutions – such as AS/RS technologies – can help to optimise space utilisation, as can the addition of mezzanine floors.

Dave Berridge, secretary, AMHSA

For more information, visit www.amhsa.co.uk

If you want to find out more about automated handling systems and mezzanine solutions, speak to AMHSA to find out which of our members can help you – call Matthew Jones on 07517 610514 or visit the AMHSA website.