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Warehouse space rental has reached record levels in the past three months, with online retailers taking the lion鈥檚 share according to real estate advisor CBRE.

Warehouse space take-up in Q3 was more than double that in the same period last year, reaching 13.3 million sq ft, breaking the previous record, set in Q2 this year, of 12.8 million sq ft. A total of 45 deals were completed in Q3, compared with 21 in Q3 2019.

CBRE said pure online accounted for the largest proportion at a sector level, at 33%, but third party logistics operators, general retailers and food providers also saw a significant rise in activity during the quarter.

鈥淭he past six months鈥� take-up exceeds the annual total for eight of the past 10 years,鈥� said CBRE UK industrial & logistics senior director Jonathan Compton.

鈥淐oncerns around Covid-19 and Brexit have not suppressed demand, and consumers in the UK have fundamentally changed the way they shop.鈥�

CBRE research senior director Tasos Vezyridis said: 鈥淭he sudden rise in e-commerce due to the pandemic will have a lasting effect and has concentrated five years鈥� growth of online sales within just six months.

鈥淭his has altered the logistics expansion plans of retailers and accelerated their needs, pushing them to take readily available space. With supply struggling to cope with the abrupt increase in demand, we expect the industrial and logistics sector to continue to outperform the other property sectors.鈥�

Increasing demand

Nearly 100 million sq ft in additional warehouse space will be needed by 2024 to keep up with the growth of online retail, new analysis suggests.

Growth of online grocery alone could create demand for 7.1 million sq ft of warehouse space in four years, according to Knight Frank.

The real estate advisor examined five-year data for online sales and retailer warehouse space take-up to calculate that 1.36 million sq ft was needed for every 拢1bn.

Based on eMarketer forecasts of online accounting for 32% of all UK retail sales by 2024, up from the current 26.6%, an additional 92 million sq ft would be needed, according to the analysis.

The growth will put pressure on a limited supply of suitable warehouse space, a situation worsened by delays to construction during the pandemic, according to Knight Frank.
鈥淭he rise of e-commerce has been one of the fundamental drivers of demand for warehouse space over the past five years, and our analysis shows this trend is only going to accelerate as consumer behaviour continues to shift in favour of online purchasing,鈥� said Charles Binks, Knight Frank department head logistics and industrial.

鈥淭he utilisation of technology in warehouses and any future need for social distancing will impact on space requirements, but it is clear the projected rise in online sales is going to create a huge demand for warehousing over the next four years. The question is whether supply can keep pace.

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