Online retail drives UK warehouse construction boom, with 40 million square feet of space to be developed

Warehouses are booming in the UK this year, with plans to build around 40 million square feet of new storage space to keep up with the fast-growing online economy .

A sharp rise in UK e-commerce sales, which grew by a staggering £34bn last year, combined with a “chronic shortage” of prime warehouse space has led to huge demand for new developments, according to property consultancy Knight Frank .

For every £1 billion of online retail sales, an estimated 1.4 million square feet of warehouse space is needed. According to the latest data from CBRE , for every £1 billion spent online , nearly 900,000 square feet of warehouse space is needed to handle logistics.

By 2024, e-commerce sales in the UK will reach £150 billion , which means that the UK is in urgent need of a large amount of warehousing space.

Developers in the UK are currently scrambling to build new warehouse space, with the amount of new space expected to be built this year doubling compared to 2020.

It is reported that the amount of warehouse space leased last year set a new historical record of more than 50 million square feet , an increase of nearly 15 million square feet from 2019.

According to Knight Frank, most of the space to be built this year has already been leased to retailers and distribution companies. Clark Williams, research associate at Knight Frank, said: "Developments over 50,000 square feet are being heavily taken up, while the chronic shortage of high-quality space is encouraging build-to-suit and speculative development."

The online shopping boom has driven investment in warehouses to record highs as retailers scramble to expand their last-mile delivery services . “ There is a need to increase space in urban warehouses close to customers so that inventory can be replenished within a specified time frame and consumers can be better served, ” said Clark Williams.

Savills reported in January that investment in distribution warehouses surged 25% last year to a record £4.7bn, beating the previous record set in 2014 by £500m.

Online Retail

U.K.

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