The latest report from Savills, co-authored with the UK Warehousing Association (UKWA), highlights that the UK’s warehouse sector has noticed the most significant occupation increase by online retailers. Occupying a space that has soared from 8 million sq ft to 69 million sq ft since 2015, the industry has seen an exceptional increase of 813%.
In 2015, Savills and UKWA began creating a thorough database that cataloged Great Britain’s warehouse units exceeding 100,000 sq ft. Since then, the UK’s warehouse market has increased by 61%, now occupying a massive 690 million sq ft. Moreover, the sector has witnessed a 22% growth just within the last three years, heavily prompted by the Covid-19 lockdowns.
A decade ago, high street retailers were the leading warehouse occupiers, accounting for 84 million sq ft. However, their collective footprint has seen a moderate increase of only 15%. Although online retailers have seen the most significant surge, third-party logistics (3PLs) remain the leading occupier group in 2024, with warehouse space occupation growing by 70% to 128 million sq ft.
Clare Bottle, UKWA’s CEO, points to a consistent growth story of the UK warehouse market underpinning continued demand, adaptability to shifting social and supply trends such as online shopping and the transition to domestic sourcing. The dominance of online retailers and 3PLs indicates a need for additional warehouses near populated areas and major transportation channels, responding to online customers’ increasing demands for quicker deliveries.
The growth has also resulted in an evolution of average warehouse sizes. There is a noticeable trend towards larger warehouses since 2015. Currently, warehouses under 500,000 sq ft account for most units at 65%. However, there’s been a substantial increase in 1 million sq ft units, with development soaring by 345% throughout the UK. These units, amounting to 63.5 million sq ft, claim 10% of the market, a significant increase from just 3% a decade ago.
Geographical distribution of warehouses has also changed. The East Midlands- the region with the largest warehouse inventory in 2015- continues to dominate with warehouse space increasing by 66%, presently accounting for 130 million sq ft. Other key markets, such as the West Midlands, South East, Yorkshire, and the South West, have witnessed an average growth of 61%. The outlier, the North West, saw an increase of merely 41%, primarily due to the paucity of development land hindering future growth.
Kevin Mofid, Savills’ Head of Industrial & Logistics Research, stated that the expansion of the UK logistics property market aligns with expectations considering its significance to manufacturing and retail supply chains. The changes are not only in size but also in geography. Regionally, the golden triangle continues to extend eastward, with warehouse space in the East of England increasing by a noteworthy 104% over the past decade. With online retail on an upward trajectory and companies considering domestic sourcing, the market still promises substantial prospects. However, the allocation of adequately located land to meet future demand remains questionable.
