UK could run out of warehouse space within a year, experts warn

The amount of available warehouse space has fallen below 50m sq ft according to property experts Cushman & Wakefield – the lowest level since the property agent started tracking such data back in 2009. 

Cushman said the remaining free space is roughly equal to the amount that has been taken up by businesses during the first nine months of the year alone.

Huge levels of demand are being driven by online retailers like Amazon, as well as manufacturing and logistics businesses, as European operators seek to establish bases closer to their UK customers.

The explosion of online shopping during national lockdowns has also fuelled demand. Ecommerce accounted for 25.9% of retail sales last month, according to the Office for National Statistics, compared to 19% in February 2020. During the peak of the pandemic, in January this year, online penetration hit 37.1%.

Amazon alone has taken millions of square feet, while the likes of Asos and The Hut Group have also expanded.

Bruno Berretta, who leads logistics research at Cushman & Wakefield, told the Financial Times that developers had been “fairly quick to respond to the shortage” of warehouse space, but warned: “When you look at how quickly development is being taken up, there’s probably not enough.”

He said that post and parcel companies were taking an average of 6m sq ft per year between 2015 and 2019 - but that figure has soared to 15m sq ft a year since then.

Beretta added: “European companies want to be closer to their customers [in the UK] now. Supply chains have been re-engineered along borders. You need a more local presence.”

Beretta cautioned that, in the short term, high demand for warehousing would likely result in rising costs for companies taking the space. He said this was likely to trickle down into higher prices for consumers at the shelf edge and warned: “If anything, availability will get worse before it gets better.”