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UK warehouse shortage

Jun 21, 2017
According to warehouse broker Bis Henderson Space, the market for warehousing in the United Kingdom is, if not in crisis, certainly facing some major challenges.

The company says there are a combination of factors that are creating a perfect storm, significantly impairing the ability of businesses to secure the space they need, at the specification they require, in the locations they desire and on terms that make commercial sense.

A lack of investment by developers is currently and fashionably blamed on uncertainties over ‘Brexit’ but in fact it extends back for many years to the 2009 financial crisis, and reflects far wider commercial uncertainties. Restrictions on the availability of sites, especially as government policy favours housing over commercial use, is a particular problem. It is already effectively impossible to find a new site within London’s M25 and in similar positions around other major conurbations. Where sites are available, developers may be reluctant to commit unless they can secure one or more ‘anchor tenants’ – big name companies that will commit over ten years or more, and thereby bring confidence for other potential tenants. Unfortunately, such long-term commitment is increasingly hard to find.

An October 2016 report by property agent Savills, looking at premises above 100,000 sq ft, finds that the available amount of warehouse space has fallen by 71% since 2009. And critically, the UK Warehousing Association suggests that 20% of available warehousing is ‘not fit for purpose’ for modern industries.

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