The latest findings from a comprehensive report by Savills, in partnership with the UK Warehousing Association (UKWA), have shed light on a staggering surge in warehouse occupation by online retailers—a whopping 813% increase over the past decade!
Since 2015, the footprint of online retail warehouses has ballooned from a modest 8 million square feet to an astonishing 69 million square feet. This explosion in space is a testament to the sector’s rapid expansion, fueled by our ever-increasing appetite for online shopping. Overall, the UK’s warehouse market has grown by 61% since 2015, now boasting 690 million square feet of space, with a significant 22% of this growth occurring in just the last three years—thanks in no small part to the Covid-19 lockdowns pushing more consumers online.
Changing Faces – From High Street to Cyberspace
The picture of warehouse occupation has undergone a significant shift. While high street retailers previously dominated the scene with 84 million square feet of space, their growth has been relatively modest at 15% over the decade. In contrast, online retailers have far outpaced all others, showcasing their colossal impact on the market. However, it’s the 3PLs (third-party logistics providers) who continue to lead the pack in 2024, holding a substantial 128 million square feet of warehouse space, up 70% from before.
Clare Bottle, CEO of the UKWA, said, “As a whole, the picture of the UK warehouse market is of sustained growth, as well as continued demand and the adaptability to respond to changing social and supply trends, from online shopping to near shoring. Given the dominance of both online retailers and 3PLs, this points to a need for more warehouses built close to population centres and alongside motorway corridors to meet the ever shorter delivery demands of online customers.”
Super-Sized Storage Solutions
With the surge in demand, warehouses are not just increasing in number but also in size. The era of mega-warehouses is upon us, with buildings over 500,000 square feet still making up the majority, but the rise of 1 million square foot behemoths marking a significant trend. These giants have grown by 345% across the UK, now representing 10% of the market—a clear sign of the changing requirements of the logistics sector.
A Regional Rundown
The report also highlights fascinating regional developments. The East Midlands continues to lead as the heavyweight champion of warehouse inventory, boasting 130 million square feet of space. Other regions like the West Midlands, South East, Yorkshire, and the South West have also seen robust growth, averaging 61%. The North West, however, trails behind due to limited development land, underscoring the importance of strategic planning for future expansion.
Kevin Mofid of Savills remarks on the sector’s growth, emphasising the changing geography of logistics properties and the ongoing need for well-located land to sustain the momentum.
Looking Ahead
As the digital marketplace continues to expand, the UK’s logistics landscape is set for even more transformative changes. The drive towards online retail, coupled with the strategic reshoring of operations, paints a robust picture for the warehousing sector. Yet, the challenge of allocating enough prime land for future developments looms large, promising a dynamic journey ahead for the industry.
In essence, the UK’s warehouse sector is riding a wave of unprecedented growth, driven by the digital revolution and changing consumer behaviors. As we navigate this exciting era of expansion, the call for strategic planning and innovation has never been louder, ensuring the supply chain’s resilience in the face of ever-evolving demands. Welcome to the warehouse wonderland, where the future of logistics unfolds one square foot at a time.