Industry

Lack of warehouse space threatens UK logistics sector

The UK logistics sector faces a critical shortage of warehouse space, according to a report published by UKWA and the property consultancy Savills, which also found the retail sector to account for 35% of UK warehouse stock.

The report, called The size and make up of the UK Warehousing Sector, found that a significant amount of space currently standing vacant is unlikely to be used again at any point in the future as it simply isn’t up to scratch. Without sufficient investment in new stock, as well as in redeveloping existing sub-prime stock, the UK risks running out of quality warehouse space.

The supply of warehouses in the UK currently stands at 32m square feet, which is a vacancy rate of 7.5%. But according Savills, 6.5m square feet of that is grade C stock, which is far less likely to be used for distribution and warehouse purposes, as it is not fit-for-purpose for current logistics requirements.

Other findings from the report included:

  • The total amount of warehouse space in the UK is 424m square feet
  • East Midlands has the highest amount of space, accounting for 18%
  • Different occupiers need to be in different locations in varying size units
  • 51% of take up has been for build-to-suit units, meaning that land will become increasingly scare in prime logistics locations.

Kevin Mofid, head of industrial research at Savills, said: “The availability of modern and fit-for-purpose warehouse space has the potential to be a real pinch point for the logistics industry in coming years. Whilst this initial white paper doesn’t quantify the amount of allocated land in pipeline many schemes that we are tracking are not necessarily deliverable in the short term.

UKWA CEO Peter Ward believes that town planning can play a crucial part in alleviating the problem. “Policy makers must not overlook a fundamental factor for UK logistics to continue to thrive and to feed and clothe our people: the warehouse itself,” he said. “This report reveals the true scope of the property challenge facing the logistics sector and UK plc.

“We call on policy makers, both nationally and locally, to acknowledge the importance of the logistics industry and to deliver policy which allows for the growth of the space required for our industry to continue delivering.“