Warehouse demand surges in second quarter

The COVID-19 pandemic has changed the shopping habits of many people. Instead of buying from shops, they now order online. This has fuelled a high demand for warehouse space.

According to property organisation CBRE, during the second quarter of 2020, a record number of leased and new warehouse construction deals were made.

The Office for National Statistics reported that ten years ago, 6.7% of retails sales were from eCommerce. In February 2020, before the coronavirus outbreak, this percentage had increased to 19 %. In May 2020, during the lockdown, it grew to 33% – nearly a third of all retail sales. This proportion of e-commerce sales will decrease now that retail stores are open, but analysts predict that online sales will not return to pre-pandemic rates.

The CBRE estimates that for every extra £1 billion in online revenue, 900,000 square feet of warehouse space is required.

Many fashion retailers needed extra storage space for the stock they could not sell during the pandemic, as new season stock – ordered before the coronavirus outbreak – arrived at warehouses already full with unsold products.

Private investors, pension funds and private equity firms have been heavily investing in logistics companies. Adrian Benedict, of investment firm Fidelity, said:

“There’s a flood of capital from retail to logistics.”

Warehouse equipment is needed for every new warehouse opened or existing warehouse extended. This is good news for the garment rail manufacturer and storage rack supplier who makes the equipment required to store items sold online.

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