The boom in online shopping that the UK is experiencing has resulted in companies and retailers competing for whatever warehouse space they can get their hands on while providers do their best to try and keep up with demands.
One such company is Prologis, which owns and manages logistics parks across the country. One of its workers; Robin Woodridge has been working in the industry for 3 decades, but was still caught by surprise at the current demand for warehouse space in the UK.
Woodbridge reports that they’re working as fast as they can to build new warehouse space to meet demand, but it’s a struggle to keep up with the sudden surge of online shopping, which has resulted in space being sold even before construction is even finished.
Prologis owns Dirft, a logistics facility located off of the M1 near Northampton. It’s a massive facility; the company’s largest, in fact, and towers over the motorway, with three rail freight terminals. It’s the common starting point for a lot of online products bought in the UK, highlighting its importance.
It has hundreds of workers developing and expanding it because even with its sheer size, it’s not enough.
Woodridge, who is Prologis’ Head of Capital Deployment, says that they’re building speculatively, meaning they don’t have customers lined up when they start working, but they’re getting customers before finishing construction, which is quite rare.
Warehouses, part of the logistics subsector of real estate, are seeing an upsurge in investments due to the eCommerce boom in the UK driving up demand.
Savills recently got commissioned by the UK Warehousing Association to look into the boom in warehousing, and their data showed the dramatic growth.
In 2015, the UK had a total of 428mn ft2 of large warehouse space. By 2021, that grew by 32% to about 565mn ft2, which is an additional 2,396 football pitches worth of space.
The mix of occupants has also changed. Back in 2015, most warehouse occupants were the retailers from High Street, but over the years, third-party logistics providers like DHL, responsible for handling the deliveries of online shopping, have taken over.
Savills’ data also shows that pureplay online retailers like Boohoo; shops that don’t have brick-and-mortar stores and only sell online, have made their warehouse footprint in the UK grow by a whopping 614% in six years.
The warehouses in the UK are also growing in size, with Dirft expected to soon finish a new shed that’s the size of about ten football pitches (769,00ft2), which will become Royal Mail’s biggest parcel hub.
Woodbridge says that society can’t function without these logistics sheds, and that, for every billion pounds that eCommerce grows; the UK needs an additional 775,000 ft2 of warehouse space to properly support it.
Savills’ data says that demand for warehouse space in the UK is only continuing to grow, with a 232% growth in Q1 2021, compared to Q1 2020.
Savills Head of Industrials and Logistics Research Kevin Mofid says that this is more than just a reflection of the growth of the eCommerce market and platforms likee Amazon marketplac, but also the increased demand in the manufacturing and automotive markets in the UK.