Ecommerce sales driving dramatic boom in warehouse construction

Online retail is driving a significant boom in warehouse construction as around 40 million sq ft of new space is set to be built this year.

The dramatic rise in ecommerce sales, which rose by a whopping £34 billion last year, alongside a “chronic shortage” of quality warehouse space has led to huge demand for new developments, according to property consultancy Knight Frank.

For every £1 billion of online retail sales, an estimated 1.4 million sq ft of warehouse space is required.

With ecommerce sales in the UK due to top £150 billion by 2024, developers are scrambling to build new warehouse space, seeing the amount of new space set to be built this year doubling compared to 2020.

Last year the volume of warehouse space being leased hit record highs of over 50 million sq ft, nearly 15 million more than 2019.

READ MORE: Ecommerce boom drives UK warehouse investment to record highs

According to Knight Frank, the majority of space set to be built this year has already been leased to retailers and distribution companies.

“High levels of take-up in developments larger than 50,000 sq ft and the chronic shortage of quality space are encouraging both build-to-suit and speculative development,” Knight Frank’s research associate Claire Williams said.

“There is a need for more urban warehouse space, located close to the customer, in order to replenish stock in the required timeframes.”

In January, Savills reported that 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.

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