Home cooking builds appetite for warehouse space

Meal kit providers, businesses delivering easy to follow recipes along with all relevant ingredients direct to consumers’ doorstep, have contributed to the record surge in demand for warehouse space seen in 2020. This year they have more than doubled their warehouse capacity, taking close to 735,000 sq ft by the end of September. Prior to 2020, these businesses occupied less than half of that, with only around 350,000 sq ft of warehouse space in the UK.

Overall take-up of UK warehouse units over 100,000 sq ft achieved a record high for the second consecutive quarter this year. 13.5m sq ft of units was leased, up 73% year-on-year.

Before 2020, most meal kit businesses operated out of smaller units and dark kitchens, with only meal-kit subscription service HelloFresh operating from a single unit over 100,000 sq ft. 2020 has propelled meal kits into the mainstream, with several large logistics deals from the fast-growing meal kit market completing between July and September.

During the autumn, HelloFresh signed for its second production facility in the UK taking an additional 230,384 sq ft at Goodman’s Bermuda Park development in Nuneaton, West Midlands. It came as the company revealed it delivered 162 million meals globally in Q3 as its active customer base reached an all-time-high of five million.

Rival recipe box provider Gousto, which was founded in 2012, saw revenues hit £83m during the first six months of 2020, already exceeding its sales for the whole of 2019. Gousto recently reported that it doubled its monthly meal deliveries from 2.5m to 5m over lockdown. The business attained tech unicorn status in November after raising £25m in a new funding round and the company has now achieved a valuation of over $1bn. The company aims to have put over 400 million meals on UK tables by 2025.

As part of the company’s growth, it signed for two warehouse units in the second half of 2020, taking 196,178 sq ft at Chillbox a refurbished cold store facility in West Thurrock, Essex. It also leased a 307,807 sq ft distribution centre at Mountpark Warrington Omega Il.

Ben Wiley, Head of Industrial & Logistics Agency at BNP Paribas Real Estate said:

“The pandemic has acted as an accelerator and boosted demand for meal kit services, triggered by consumers spending more time at home rather than going out due to the restrictions. Already pre-COVID this concept was gaining momentum due to a trend of increased interest in nutritious meals and consumers’ lack of time.

To meet this rapidly growing demand efficient temperature-controlled warehouse space, smart warehouse technology and easy access to labour are key for meal kit providers.”

Josh Holmes, Senior Retail & Logistics Analyst, at BNP Paribas Real Estate said:

“As consumers embrace e-commerce and dining at home, meal kits tick a lot of boxes in terms of convenience, healthy living and the fun-factor. We expect to see further warehouse demand from meal kit providers and other food delivery subscription services, especially as major grocery chains look to join the fast-growing trend by launching their own recipe box offerings.”