Online Shopping Boom Increases Demand for Warehouse Space
Every Billion Pound Which Is Spent During Online Retail, Warehouse Space of Around 775,000 Sq. Ft Is Required for Its Support
Across the United Kingdom, a major part of the warehouses located throughout the region are owned and managed by the warehouse logistics firm Prologis, and one of their employees has given a statement saying that he has been working for the same logistic firm for the last 3 decades, but has never once before experienced the current demand situation which the country is going through. This is possibly due to the sudden surge in the trend of online shopping, which has begun in the previous year due to the sudden onset of the coronavirus pandemic.
Surge in online retail
Prologis is currently building multiple warehouses throughout the country as fast as they are able to, but are still struggling to keep up with the fast pace of booming online shopping in the past recent couple of years. And the pandemic has played a major role in the acceleration of the online shopping trend all across the world, which has made warehouses become hot property in the real estate business.
The biggest warehouse park owned by Prologis, which is known as the Drift, is located near Northampton, just off of M1. The towering sheds of warehouses on the nearby fields can easily be visualized while on the motorway. The site is very vast and has three rail cargo terminals.
When an individual clicks to buy any product during their online shopping session, there is a major chance that the product, whether it be any piece of furniture, laptop, or even a can of baked beans, would be starting its journey for arriving at your doorstep from the Drift.
Despite its huge physical structure, it is still not big enough.
Hundreds of individuals with construction jobs are bereaving away from the expansion on the site.
Prologis employee and head of the capital deployment of the company has said that they are building various buildings speculatively, by which it can be expected that the firm does not have any customer lined up for buying, and the buildings are being allowed to be completely constructed before it is sold, which is something that does not happen very often in his experience of the last 30 years.
Not a long time has passed when the warehouses used for storage purposes were usually unloved by the investing parties, who had continued to invest their money in office space or retail.
But due to the ongoing situation, things have changed and now are looking different. The town centers and High Streets are now grappling with excessive retail space, and the warehouse logistics sectors are unable to construct warehouses at a quicker pace.
Increase in warehouse industry
According to new research, which has been conducted by Saville, and has been commissioned by the United Kingdom Warehousing Association, the report has highlighted a dramatic surge in the spaces accumulated by warehouses across the country in the past six years due to more publicity regarding online shopping.
In the year 2015, there have only been 428 million square feet of spaces occupied by huge warehouses in the United Kingdom. The statistics have been reported to have risen by 32% as the exposure for online shopping has risen, which has further added an area that is equivalent to around 2,396 football pitches.
The occupancy mix has also changed. In the year 2015, the retailers of High Street had been the leading occupiers, but now they have been taken over by third-party logistics companies, including Yodel and DHL, who are fulfilling and delivering most of the packages of the online shopping.
The largest space take-up has come from the so-called pure-play retailers of online shopping, companies that do not have any physical outlet and only sell their products online, such as the United Kingdom-based fashion firm Boohoo. These kinds of online retails have been able to increase their warehouse footprint by around 614% in the time period of just the past six years.
The warehouse sheds themselves are also gradually increasing in size. At Drift, currently, a massive building is being constructed, which has the size approximately to around ten football pitches. The warehouse would be converted into the largest parcel hub for the Royal Mail and would be processing more than one million packaged goods per day, mostly from online shopping.
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