How the demand for warehousing space is being pushed by online shopping

According to property research firm CBRE, the huge rise in online shopping in recent years has resulted in a vast increase in the demand for warehouse space. The success of big retailers, such as Amazon and Shop Direct, has been driving construction of new warehousing units to cope with demand from customers shopping online and businesses looking for space to handle stock to meet that need. One in five retail sales are now made via a computer or a phone – and with that figure only set to rise it’s unlikely that warehousing demand is going to tail off any time soon.

Demand has doubled

CBRE figures show that, over the past decade, the demand for warehousing space in the UK has almost doubled. Between 2007 and this year, 235 million sq ft of warehousing space  - which is the equivalent of 30 Wembley Stadiums – was leased or purchased. In the previous decade demand required just 130 million sq ft. 

Online retailers are driving demand

This considerable shift in demand is being driven largely by online retailers who now account for 60% of warehousing space. Ten years ago, only a third of warehousing space was used up by retailers so it’s easy to see where the shift in demand is coming from. Retailers such as Amazon have been swiftly expanding their delivery networks in recent years and big discount grocery stores, such as Aldi and Lidl have also had an influence on the numbers.

Online shopping shows no signs of slowing down

Figures from January of this year indicated that UK online retail sales were up 13.9% year-on-year. Despite a challenging economic climate, for both businesses and consumers, online sales continue to be strong. That’s especially so in areas such as fashion -  January figures for clothing sales showed a 16.8% increase, the largest rise since 2013. There’s no doubt that the growth in mobile commerce is having a considerable impact on the rise of online shopping, especially for retailers like Amazon – purchases via mobiles are up by more than 39%.

Focus on the East Midlands

The increased demand for warehousing space is particularly notable around the East Midlands area. This part of the UK is incredibly popular with retailers because its location means that goods located here can reach 90% of the UK’s population in England and Wales in just four hours. Given the rise in trends for swift shipping – and the imminent expansion into same day delivery services for many retailers – it’s clear why this appeals. A prime example of development to meet demand in this area is the East Midlands Gateway, a 700 acre development near Derby with planning consent for up to 6,000,000 sq ft of logistics accommodation. Its location, close to new freight railway lines as well as the East Midlands Airport – the only 24/7 airport in the UK – makes it very appealing to big retailers looking to achieve efficient logistics to meet customer need.

Given the popularity of online shopping it’s likely that the demand for warehouse space is only going to increase, a positive knock-on effect of the rise of the digital consumer.

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