Nearshoring trend could lead to increased warehouse demand

Mike Barnes, European research associate at Savills, said: “If, in the short term, companies adopt nearshoring policies to insulate themselves from future supply chain disruption, it is likely that European manufacturing will increase, which in turn will create a ripple effect for warehouse demand.”

Take up in the European manufacturing sector has grown significantly over recent years, rising from 2 million sq m in 2012 to 4 million sq m in 2019, according to the international real estate advisor. Even though take up is expected to be slightly lower in 2020, it is anticipated to surpass 4 million sq m in 2021 again and then continue to rise.

Over the past five years, the UK has attracted £148 billion of private manufacturing investment, creating demand for 2.4 million sq m of warehouse space. This indicates that for every £1 billion of private manufacturing investment, this creates new demand for 175,000 sq ft of warehouse space.

“If the forecasts from Capital Economics are just 20% higher then an additional 13.9 million sq m of traditional warehouse space will be required across Europe by 2022,” added Barnes.