Britain could run out of warehouses within a year

Britain could run out of warehouse space within a year, according to Cushman & Wakefield. Available warehouse space in the UK has fallen below 50m sq ft, the lowest level since Cushman started tracking the sector in 2009. That is roughly the same amount of space already taken up by businesses in the first nine months of this year, it pointed out. Take up of space for 2021 is set to overtake 2020’s 53m sq ft record, it said, with 48.9m sq ft secured in the first nine months of the year. Online retailers, with 43% of Q3 take-up, and third-party logistics operators, continue to lead demand. as e-commerce continues to expand. The agent said that just 12m sq ft was in the pipeline for the next quarter, but demand is expected to far exceed that. In Q3 alone just over 16m sq ft was snapped up, marking the sixth consecutive quarter when take up was above 13m sq ft. Richard Evans, head of UK logistics & industrial, said: “Demand continues to outstrip new supply with rental growth accelerating as a result, particularly in London.” And Bruno Berretta, UK retail, logistics & industrial research lead at Cushman, said there was a risk the UK could run out of available space within a year, with more demand expected from some new sectors. “While e-commerce remains the main driver of activity, it is interesting to see demand emerging from ‘new’ sectors such as electric/smart vehicle manufacturing and vertical farming,” he said. “While their overall property requirements are relatively small so far, a greater focus on the ESG agenda going forward coupled with supply chain re-orientation post-Brexit could see this new breed of occupiers becoming increasingly prominent in the not-too-distant future.” This year is also expected to break records for investment as well, with £10.7bn having been transacted during the first nine months of the year. That is on a par with the record annual volume registered in 2017. Activity has been dominated by overseas investors, primarily US private equity companies, which have undertaken 63% of transactions so far in 2021. Ed Cornwell, UK logistics & industrial capital markets partner at Cushman & Wakefield, said: “We continue to see relentless investor demand for UK logistics. We are currently tracking more than £22bn in capital wanting to enter the sector which equates to approximately four years’ worth of transactions pre-Covid.”