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Big box market struggles to keep up with “insatiable” demand for online retailers

Big box market struggles to keep up with “insatiable” demand for online retailers

The UK big box warehouse market is struggling to keep up with “insatiable” demand for online retailers, a leading consultant is claiming.

According to Savills, online retailers now account for one third of the 34m sq ft plus UK big box warehouse market.
Online retailers’ dominance compares with the heyday of the supermarket chains, who only managed to take a quarter of the market in their best year, 2011.

Savills say the supply of existing warehouse space has fallen by 71% since 2009 and now stands at just 27 million sq ft, enough for just over 14 months.

Kevin Mofid, head of logistics  research at Savills, said: “Up to 45% of current logistics demand is from retailers, with Amazon, for example, accounting for just over a quarter of total take-up in 2016 to date. If we drill down further still, this represents 82% of take-up specifically by online retailers. Availability of land for employment use remains critically low across the UK and with land continuing to be allocated for higher value uses such as residential, the industry is struggling to keep up with demand.”
 
Long term, Savills calculates that at the end of 2016 only 1,600 acres (647 hectares) of land remains available and primed for development in the South East, where demand for last mile distribution sites are at its highest. As a result, there remains just over five years worth of deliverable stock in the region.
 
Richard Sullivan, national head of industrial & logistics at Savills, adds: “The sector remains incredibly resilient in the face of economic and political uncertainty, due in part to the phenomenal growth of online retail. Although it appears to be dominating the industrial and logistics landscape, demand still remains high from a diverse range of occupiers and as a result take-up has hit unprecedented highs. In order to maintain this momentum into 2017 and beyond, it is now crucial that we tackle the supply issue and policy makers recognise the need to allocate more land for industrial and logistics, whether that be in a pure or mixed-use sense.”

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