Online retail growth driving demand for new warehouse space
A new study has found that the growth of online shopping could drive demand for 92 million square feet of warehouse space across the UK by 2024.
Global real estate advisor Knight Frank analysed five years worth of data for online sales, take-up of warehouse space and retailers’ warehousing networks and is now predicting that 1.36 million square feet of warehouse space will be required for every billion pounds of online retail sales.
Knight Frank’s model suggests that the spike in online sales in 2020 alone will create demand for an additional 30 million square feet of space.
However, its current data reveals that there is low availability of industrial space across the UK, with a vacancy rate of just 5.6% According to Knight Frank’s figures, the vacancy rate in Greater London is below 3% and is also low in the South East, Manchester, Birmingham and Bristol.
Knight Frank has also highlighted how the building of new warehouses is being slowed due to a scarcity of land and delays to planning and construction throughout the Covid-19 pandemic.
Charles Binks, department head logistics and industrial at Knight Frank, said: “Supply is already very constrained in and around London and major cities, with the availability of land a major challenge for developers. As online sales accelerate, we may see new industrial formats emerge as supply-chains adapt. We expect that some space will need to be converted or repurposed from existing uses to meet the estimated 92 million square feet in the UK will need to service the forecast growth in online sales and home deliveries over the next four years.”
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