Take up for warehousing space in the UK reached record levels in the first half of 2020, with over a third of space taken up by Amazon and 11% involving deals where the lease is for less than 12 months due to the pandemic.

A total of 22.4m sq ft of warehousing was taken up in H1, 38% above 2019 levels and 66% above the long term average, according to the latest Savills Big Shed briefing.

However, Savills is warning the industry to brace itself for falls in demand as the impact of the pandemic starts to hit retail sales.

The report revealed marked differences between regions. In the East Midlands in the first half of 2020, deals for units of 100,000 sq ft and over totalled 4.75 million sq ft, up 115% on the long-term average.

Major deals in the region included Amazon’s deal to lease a 550,000 sq ft cross-docked warehouse at Panattoni Park Nottingham. The firm has signed a 20-year lease on a unit called Nottingham 550.

Another significant deal was with supermarket chain Aldi, which has committed to a 1.3 million build-to-suit development on the former Nailstone Colliery, between Coalville and Market Bosworth, in Leicestershire.

Conversely, take up in the West Midlands saw 900,315 sq ft let through six separate transactions, representing a 59% decrease below the long term H1 average and 40% below H1 2019.

The report states: “There has been a slight decline in larger requirements, unsurprising given the high level of uncertainty within the market, particularly around the automotive and aerospace sectors.”

It added that the majority of demand in H1 2020 has come from online retailers, accounting for 45% of take-up whilst 3PL’s totalled 27% and high street retailers 16%.

In London and the South East H1 2020, take-up totalled 4.56 million sq ft, a 74% increase above the long-term H1 average for the region and 16% above H1 2019. The largest deal was Amazon committing to a 2.3 million sq ft unit at Littlebrook in Kent.

Whilst in the North West take-up in H1 2020 reached 2.64 million sq ft through 12 transactions making it the second-best H1 2020 ever recorded. This is 128% above H1 2019 and 56% above the long-term H1 average.

The largest deal in H1 2020 was Kellogg’s leasing 523,500 sq ft at M6 Major St Helens.

However, almost 30% of the space transacted in H1 2020 in the region was for short-term deals and involved lease lengths of less than a year.

Despite the rise in take-up in the period, the report is predicting this will not last.

It stated: “As government support comes to an end in the autumn consumer confidence is likely to fall, and bearing in mind that almost two-thirds of demand is related to retail, it is unlikely that the current levels of take-up will be sustained even though online shopping rates are currently growing at levels not seen since 2008.”

Topics