Online Retailers Facing Warehouse Site Shortage

As online retailing grows in popularity, logistics space in urban areas is becoming so difficult to obtain that some developers are considering converting retail parks into warehouses to keep up with demand.

According to a report from Deutsche Bank, third-party logistics providers and online shops are competing for urban logistics space in areas where industrial land is also being earmarked for residential use. Some are finding that this competition from residential sites is making the price of land in these areas too high.

The demand for last-hour logistics sites is only expected to grow as people increasingly expect to have their goods delivered faster and faster, and this is prompting businesses to find new approaches to reach their customers quickly. For example, a decommissioned Dartford power station has been acquired by Tritax, who plan to convert it into a distribution center that will serve London.

According to the Deutsche Bank report, retail sites that are under-utilized, such as parking lots, business parks, supermarkets, and shopping centers, could be turned into places to store and distribute goods, and some savvy investors may well buy industrial properties with the intention of converting them.

Amazon Snapping Up More Space

In the past ten years, online retailers have increased their presence in the UK significantly. Figures from Savills show that they went from accounting for 1.5 million square feet of new space in 2008 to 12.2 million square feet in 2017. Their estimates show that there are around 2.5 years of supply left if the current rate of take-up continues.

In addition, Savills’ figures showed that Amazon took up more than five times the amount of warehousing space as their next fastest-growing competitor, Lidl, in 2017 in the UK. While Amazon increased its distribution network in the UK by 4 million square feet last year, Lidl took just 754,000 square feet. This accounted for 20 percent of all new warehouse stock throughout the year. As Amazon appears poised to enter the food market with greater vigor, its take-up could increase even further.

This blog post was based off of an article from The Telegraph. View the original here.

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