Growth in online retail sales driving spiralling demand for warehousing

Online retail sales exceeded £20bn last November and December for the first time, bolstering demand for warehousing space to cope with quick turnaround deliveries, according to real estate specialist Colliers International.

It said that in the year to the end of September 2019, 55% of overall industrial lettings for warehouses over 100,000sq ft were for bespoke design and build hubs, to cater for the growth in fast shipping, boosted by online shopping.

Colliers said provisional activity in the fourth quarter of 2019 suggested that this trend would persist this year.

Len Rosso, head of industrial and logistics at Colliers International said: “Over the last five years, demand has increased among retailers and third party logistics providers looking to secure bespoke larger warehouses.

Read more

• Brexit or not, warehousing capacity is on the increase
• Lack of warehousing in Scotland sees rents soar three times the UK average
• Wincanton launches VAST new warehousing initiative

“Online customers have become accustomed to fast shipping, and more sophisticated parcel courier services offering last-mile, same day and next day delivery, forcing retailers and parcel couriers to invest significantly in future-proofing their supply chain operations.

“To meet this online demand, retail occupiers are now willing to pay a premium to fulfil their logistics requirements so they can be ready to cope with the rush resulting from peak periods.”

Last summer, property experts said retailers and 3PLs were pressing ahead with plans to upgrade their networks and taking more space – and Brexit was not the primary factor.

Richard Sullivan, national head of industrial & logistics at Savills, said: “We believe that Brexit has had little impact thus far on occupier demand and activity and there are instead far more important factors driving the market, such as structural change in the retail sector.”