Research revealed by the Real Estate Service Group shows that the amount of new space under construction from January-April 2021 was already double that completed annually in 2020. Much of the work under construction is already pre-let to retailers and distribution companies in long-term lease agreements. Investment in UK warehouses reached over £6 billion in the first 6 months of 2021 – investors from Europe, the US, Korea and China are notable contributors to this figure. Property agent Cushman & Wakefield believe that warehouse demand will overtake supply within the next year. So why are we facing a warehouse space shortage?
The first reason for the current warehouse shortage is the recent boom in online shopping. E-commerce grew by 46% year-on-year in 2020, where e-commerce sales grew by 61.4% compared with the previous December.
Online shopping has continued to evolve throughout 2021. As a result, demand is at record levels, driven by e-commerce companies, which need more space to store goods, and manufacturing and logistics businesses, who need the space to operate delivery services.
Unsurprisingly, Amazon is a large eater of available warehouse space. In 2021, the e-commerce giant accounts for more than half of the UK’s e-commerce-related warehouse usage. From January-July this year, Amazon has signed 18 letting deals, compared with 19 for the whole of 2020. A few examples of new warehouses include a 2.5m sq ft construction in Gateshead, 2.3m sq ft constructions in Swindon and Dartford, 2m sq ft constructions in Leeds and Wakefield and a 1.7m sq ft construction in Mansfield.
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