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Logistics space shortage could restrict economic growth
03 February 2022
A key report has highlighted a warehouse supply bottleneck, which the authors claim could undermine economic growth in the UK. The Report outlines a raft of measures to tackle the crisis,
THE REPORT argues the supply-demand dynamics of warehouse space have been distorted since 2011, with annual take-up averaging 34 million sq ft (net) over that period, 46% higher than the net delivery of new space. This chronic shortage of warehouse space has seen rents rise 61% – more than twice the rate of inflation – and the national vacancy rate stay consistently below the ‘equilibrium’ rate of 8% which the report demonstrates is the level at when demand and supply are broadly in balance.
The report, Levelling Up – The Logic of Logistics, also examines how national planning policy and increased housing targets have restricted the development of space for the logistics sector.
The report is published by the British Property Federation and Savills in partnership with the UK Warehousing Association.
It says demand for industrial and logistics space across England has been underestimated in planning policy for a decade, and future demand is likely to be at least 29% higher than past levels.
British Property Federation chief executive Melanie Leech, said: “For over a decade planning policy has underestimated the need for logistics space in and around major population centres to support the growth of e-commerce and create robust and resilient supply chains. Demand for warehouse space is currently at an unprecedented level, but future demand is likely to be significantly higher as the digital economy continues to expand, and supply chains are reconfigured post-Brexit. It is therefore imperative that we find new ways to complement the delivery of housing with modern warehouse facilities, which will support jobs and growth and help revitalise regional economies.”
The BPF has called for greater support for industrial and logistics space as critical national infrastructure within national planning guidance. Its recommendations in its Employment Land Manifesto, published in 2021 included:
• Binding targets for delivery of employment space, including logistics space, alongside housing targets.
• Introduce a presumption in favour of logistics space where sites meet certain criteria around transport connectivity and appropriate for the development of large buildings.
• Modernise Employment Land Reviews so that real time information on trends such as eCommerce growth inform allocation of land for logistics
• Ensure logistics are planned for separately to other industrial uses in Local Plans.
• Adaptation of Design Codes to be appropriate for logistics developments.
You can read the full report here - https://bit.ly/3HhF3tU
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