Ecommerce boom drives UK warehouse investment to record highs

The online shopping boom has driven investment in warehouses to record highs as retailers scramble to expand their last-mile delivery facilities.

Investment in distribution warehouses skyrocketed 25 per cent last year to a record £4.7 billion, a whopping £500 million more than the record set in 2014, according to the latest data from Savills.

As successive lockdowns drove ecommerce sales to record highs, accounting for nearly half of all spend in December, investors have shifted their money from struggling shopping centres to the UK retail logistics sector.

According to CBRE, every extra £1 billion spent online requires nearly 900,000sq ft of new warehouse space to handle logistics.

READ MORE: Online retail boom sees warehouse rentals double in the UK

For perspective, online grocery spend last month alone is understood to have been £1.3 billion, requiring around 1 million sq ft of logistics space.

This logistics boom also happened almost entirely in the second half of the year, as capital markets activity largely ground to a halt during the first lockdown.

Some 75 per cent of all deals struck in 2020 came in the second half of the year, Savills said.

In October, CBRE reported that 13.3 million sq ft of warehouse space has been rented over the last three months, more than double the amount rented over the same period a year earlier.

“To put the numbers into context, the past six months’ take-up exceeds the annual total for eight of the past ten years,” CBRE’s senior director Jonathan Crompton said.

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