The UK has been experiencing an increasingly short supply of warehousing space, which is a worry for the British supply chain. This warehouse shortage is in part due to an increase in demand from ecommerce retailers, and a gradual rise in UK manufacturing.
Speculative development has reduced by 75% in the last decade. There is of course a finite amount of space in the country, and the housing shortage means that British industry must compete for any spare land. The downturn in UK manufacturing around the turn of the century saw many industrial units becoming available, but now it appears that developers can’t build warehouse units fast enough.
10% of all warehouse demand comes from the UK’s largest online retailer, Amazon. By the end of 2016 there are set to be 12 Amazon warehouses in the United Kingdom, known as Fulfilment Centres. Giant supermarket chain Tesco is also focusing more on the domestic market since pulling out of overseas projects. A lot of storage units and distribution centres are concentrated in the Midlands, an area known as the Golden Triangle. Pressure on availability may mean that premises close to the major motorways become too expensive.
This warehouse shortage will undoubtedly push up the price of unit rents and development land, which could ultimately affect prices down the line. One trend that is increasing is the height at which goods are being stored. Warehouse racking is increasingly being modified to accommodate multiple storeys of pallet locations.
Should warehousing be converted to enable multiple level racking? This would maximise the usable space in a given unit instead of using up more land. The outlay for extra racking and machinery required to service the upper-tier storage space is dwarfed by the prospective millions that a new warehouse would cost.
For now, every piece of warehousing space and developable land that becomes available will be hotly contested, but we could soon see existing units turned into double decker warehouses.