Friday, September 24, 2021

UK needs 18m sq ft of distribution space to meet online retail demand

The UK is facing a dire shortfall of space for online distribution locations, needing 18 million sq ft to meet demand.

Online retail growth has led to an unprecedented demand for parcel delivery and logistics companies. 

According to a new report from Addleshaw Goddard, the country are set to build just 3.5 million sq ft of the 18 million needed next year.

Returns of online items have also increased the need for space and is estimated to have cost retailers £60 billion last year.

Large supermarkets and companies such as Amazon who offer short-term delivery options have the most demand for space, focusing on distribution centres in urban areas near highly-populated cities.   

READ MORE: Arcadia warehouse workers threaten strike action on Cyber Monday

With online sales set to rise to 20 per cent of total sales by 2020, the report urges councils to set aside land especially for distribution centres.

Nationwide vacancy rates are at an all-time low as brands like Amazon have aggressively acquired the prime locations.

Addleshaw Goddard partner Jonathan Powling said: “A lack of new development and an overhang of inactivity since the recession have caused growing supply-demand imbalance. 

“This is pushing up rents and making industrial far more attractive to institutional investors. 

“E-commerce growth and an increased global flow of goods are big drivers of change, but if we fail to deliver new employment space, then the stark reality is that some retailers will not be able to expand their online operations and others will be forced to significantly raise delivery charges to meet the increased costs of warehousing. This will ultimately affect consumer choice and value.”

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