Warehouse take-up at record high as eCommerce booms

Some 13.5 million sq ft of big-box warehouse space was leased in the UK during the third quarter of the year, up by 73% on the same period in 2019, according to new research from commercial real estate group BNP Paribas.

The growth in online retail during the coronavirus pandemic is credited with much of the increase in demand. In May, the Office for National Statistics estimated eCommerce accounted for a third of total retail sales, and although this percentage has dropped as shops have reopened after the UK national lockdown, it is still significantly up year on year.

BNP Paribas’s UK Industrial & Logistics Insider report found that with one quarter still to go, 2020 warehouse take-up already stands at 34.6 million sq ft, surpassing the previous annual record set in 2016. Over ten million sq ft is believed to be under offer, meaning 2020 take-up is on track to hit 45 million sq ft.

The report said that 35% of third-quarter take-up relates to online-only retail. It noted Amazon agreed five deals during the period, including 2.3 million sq ft at Symmetry Park Swindon and 532,500 sq ft at Hinckley Park, Leicestershire. Amazon has taken 11.2 million sq ft of big-box space in 2020 so far, according to BNP Paribas.

Meanwhile, meal kit providers such as HelloFresh and Gousto have more than doubled their warehouse capacity in the third quarter, with the latter pre-letting 307,807 sq ft of space at Mountpark Warrington Omega II, and taking Chillbox, a 196,178 sq ft newly refurbished cold store facility in West Thurrock, Essex.

Josh Holmes, senior analyst for retail & logistics at BNP Paribas, commented: “Covid-19 has created lasting changes in consumer habits, accelerating requirements for logistics space.

“Occupier attention is also turning to Brexit and the ongoing trade negotiations, which may lead to more demand-side pressures as businesses look to stockpile or bring supply chains closer to home.”

The report stated that supply of existing units remains finely balanced at 33.4 million sq ft. Based on the five-year annual average take-up of 29.4 million sq ft, BNP Paribas estimated the warehouse market has circa 13 months’ worth of supply.