According to the latest report by Savills, commissioned by the UK Warehousing Association (UKWA), online retailers have increased their warehouse footprint in the UK from 8 million to 60 million sq ft (743,224 sq m to 5.57 million sq m) in the past six years, a jump of 614%. This can largely be attributed to the structural shift away from the high street witnessed by the retail sector, which has been further accelerated by the Covid-19 pandemic.
The report, titled ‘The size and make-up of the UK warehouse sector’, was first published by UKWA in 2015, following research by Savills, to create a comprehensive database of all existing warehouse units in Great Britain over 100,000 sq ft (9,290 sq m). Having seen record breaking levels of take-up during this time, Savills notes that in 2021 warehouse space has risen by as much as 32% to 566 million sq ft (52.5 million sq m) in the past six years, however vacancy rates remain at just 5.4%, compared with 7.5% in 2015.
Looking at occupier mix, Savills research shows that there has been considerable changes since the publication of the original report. In 2015 high street retailers were the dominant occupier of warehouse space accounting for 84 million sq ft (7.8 million sq m), increasing their total footprint by just 5% in the last six years.
In comparison, online retailers have seen a jump of 614%, now accounting for 60 million sq ft (5.57 million sq m). For example, Amazon took 12.6 million sq ft (1.17 million sq m) in 2020 alone. Similarly, third party logistics operators (3PLs) and parcel delivery operators have seen an increase of 42% and 51% respectively.
As a result, 3PLs are now the largest group of warehouse occupiers, accounting for 106 million sq ft (9.8 million sq m) of stock. This increase is closely linked to the rise of online retail, reflecting the growing demand for fulfilment and direct-to-door delivery.
Kevin Mofid, head of industrial & logistics research at Savills, comments: “It comes as no surprise that we have seen a considerable increase in the amount of space occupied by online retailers, 3PLs and parcel delivery operators in the past six years. Whilst the shift to online has been talked about for years, these figures exemplify what a significant impact it has had on the makeup of the UK warehouse market in a relatively short space of time. Research from industrial developer Prologis has stated that for every £1 billion spent online a further 775,000 sq ft of warehouse space is needed to meet this new demand, and as we can see from the recently updated database, despite the growth in stock vacancy rates continue to decline.”
Peter Ward, UKWA CEO, adds: “Recognising the immense changes over the last six years, not least the twin impacts of the global pandemic and the departure of the UK from the European Union, UKWA was keen to understand changes in demand for warehousing in granular detail. The updated report reveals the urgent requirement for more warehousing in the light of massively accelerated online retail, and highlights the need for a fundamental change in land use planning. The change in shopping habits looks set to stay, and as retailers move from high street premises to online channels to serve consumer demand for home delivery, more fulfilment and distribution facilities will be needed to support this new normal. With this in mind, it is high time that warehousing is accepted as part of infrastructure planning moving forward.”