Ecommerce boom creates demand for warehouses

Warehouse deals for space equivalent to 93 Wembley stadiums are expected to be finalised before the end of 2021.

The CBRE property agency forecasts that the total of warehouse space deals in 2021 will reach at least 40 million square feet. This compares to 43 million square feet in 2020, but is well above the 2019 pre-pandemic level of 25.4 million square feet.

Most of this warehouse demand is fuelled by the growth of online sales during the pandemic. According to the Evening Standard, an Executive Director of CBRE, Tasos Vezyridis, said:

“This year we have seen double-digit rental growth in many prime markets in the UK, particularly hubs surrounding London as the impacts of the shift towards e-commerce continue to steer the market.”

There has also been a growth in very fast grocery delivery start-ups that deliver within minutes of ordering. These are mainly based around London. There are several of these start-ups that are offering heavy discounts to attract customers in a competitive market. Not all these start-ups will survive, however, and the future of ultra-fast delivery companies is uncertain. After introductory discounts, they often charge premium prices and high delivery charges compared to supermarkets, so tend to appeal only to the wealthy.

There is a shortage of warehouse space available, and finding enough staff is a challenge, but there is no lack of material handling and storage equipment. A British warehouse equipment manufacturer that makes equipment such as trolleys, shelving and packing tables is able to quickly fulfil orders for new warehouses.

Posted by Katrina
27th December 2021
Retail & Warehousing

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