There are only 1,500 warehouse units in the UK that are over 100k ft2 totalling around 424m ft2 of total space. With around 22m ft2 of space currently available the shortage is becoming a pinch point in the industry.
I have been asking the question around what impact land availability is having on business strategy and the sensitivity of respondents highlights quite how important this issue is becoming. Legacy units are not fit for purpose and are often in areas that don’t provide good development potential for building to spec. This is impacting on board level decision making because growth plans cannot be supported and as such in extreme cases commercial strategy is being dictated by local planning.
Retailers (high street and food) and 3PLs currently account for around 210m ft2 whilst the ever growing dedicated e-commerce market accounts for only 8.5m ft2 of space. Given that 50% of e-commerce units are above 500k ft2 it is simple enough to predict a future problem. Businesses such as The Hut Group with their new 836k ft2 facility are leading the way with new developments, however, other businesses have been less fortunate in finding land.
Land Shortage
Planning Constraints
Lack of Investment
Retail Downturn
3PLs are all trying to locate in similar areas for many reasons so either more land has to be made available in these areas or start looking elsewhere. Centralised logistics hubs create a talent pool with strong infrastructure, as such businesses are less inclined to open a new site away from established links.
The Omega Park Development has proved highly successful with over 2.5m ft2 of space built and another 1.3m to come. There is also outline approval for 1,100 new homes to really provide a boost to the local economy with jobs available on the doorstep.
Plans for the Northern Powerhouse are generating publicity but mainly around the transport links; having attended a recent IOD event it is clear that infrastructure changes are required to support logistics growth in the region and avoid gridlock. However, that alone will not provide a solution to the space shortage.
The biggest development currently proposed is the Atlantic Gateway project; privately backed the view is to create 250,000 new jobs by 2030 through investment between Manchester and Liverpool. Peel Ports own huge swathes of land in the area and are working hard with businesses to create opportunities for new sites; Culina taking on Port Salford in the next year. There is another 2m ft2 on the cards to help deal with further supply.
Whilst lobbying the government to support North West development is a positive step the real winners in this fight are going to be the entrepreneurs who get ahead of the market by forging strategic partnerships and developing their own solutions ahead of the competition.
