UK online sales continue to grow, but warehouse space is in short supply

The continued growth of online sales in the UK during the pandemic has led to a shortage of warehouse space across the UK , according to British real estate group CBRE.

With the development of online business, a large number of companies began to deploy their e-commerce business during the pandemic . While operating e-commerce business, retailers hope that third-party logistics companies can help alleviate supply problems, which has led to a strong demand for warehouse space and warehouse resources are beginning to face shortages.

The UK has one of the most developed e-commerce markets in the world, so by 2025 an additional 60 million square feet of spare space will be needed, equivalent to 14% of existing warehouse space.

“We think the pandemic has probably accelerated by three to five years the shift in how people consume in Europe,” James Seppala, head of real estate at Blackstone, told the Financial Times. “Online shopping requires about three times as much logistics space as physical stores , ” he added . “If you believe in the continued growth of e-commerce, then it makes sense to believe in the need for logistics space.”

However, experts from the Office for National Statistics (ONS) think otherwise , with figures published on Friday suggesting that as more shops open on the high street, there will be less demand for online retail, and therefore less need for warehouse space.

Online spending in the UK reached record levels during the coronavirus pandemic, accounting for 36.3% of total UK retail sales in January, almost double the level before the pandemic . But as physical retail reopened, online consumer spending fell to 27.3% by May, and analysts predict the trend will continue.

However, with the development of emerging industries such as the fast grocery delivery market , the storage pressure will be further increased , so a large amount of warehouse space demand is still necessary.

“Supply is struggling to keep up with demand and that will push up rents,” Tasos Vezyridis, senior director at real estate group CBRE, told the Financial Times. However, the increased demand for ultra-fast deliveries is also prompting companies to look for more efficient ways to deliver goods .

U.K.

Online Sales

Warehouse shortage