WHITE PAPER: eCommerce growth outpaces rate of warehouse development

June 22, 2015 by Admin
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Developers cannot build warehouses quick enough to meet online retail demand.

This will mean warehouse rents rising – and a chronic shortage of supply - unless developers change how they build.

That is the conclusion of a white paper into the logistics needs of the e-commerce sector prepared by Colliers International, Total Logistics, UMC Architects and KAM Project Consultant.

Internet sales volumes are anticipated to grow by 15% year on year within the UK for the foreseeable future with leading retailers already predicting stronger growth including Asos up 21%, John Lewis up 23%, and Amazon up 39%.  

The white paper says that in order to house stock and distribute goods, warehouses need to increase in volume but it takes an average 12-18 months to develop, procure and deliver a new 100,000 sq ft space meaning by the time it’s constructed, it already is at capacity and cannot meet demand.

Already large-scale Grade A warehouses of more than 100,000 sq ft are extremely constrained with less than a 10-month supply currently available throughout the UK according to Colliers research.

E-commerce businesses are seeing annual growth rates of 30%, and many can expect to need 50% more warehousing in five years' time.

Martin Brickell, Total Logistics Director, says that a viable solution would be to design warehouses today with flexible, future-proofing expansion facilities such as higher eaves to add mezzanine levels, sprinkler and utility expansion pipes and additional land to extend on.

Brickell said: “In order to retain occupiers for longer periods it is important for developers to help tenants meet their business needs meaning the traditional approach to building a square shed is gone and strategic development is the future.

“Flexible warehouse designs need to be incorporated into new warehouses from today in order to see the life of the asset extend in future years to meet rising volumes and consumer demand. While there may be additional development costs today to implement these provisions, it is a worthwhile investment and a less expensive alternative to building completely new warehouses. It will also help secure tenancies for longer periods if occupiers know there space can be expanded as their business grows.”

The Think Tank’s research also surmised the furniture and home retailers will see significant growth while all manufactures are increasingly moving into the Business to Consumer sector.

Click the link below to download Colliers' White Paper.

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