Online retailers under pressure due to lack of warehouse space

Online retailers across the UK will come under “sustained pressure” before the end of the decade because of a shortage of logistics warehouse space, according to a new report by property consultancy Lambert Smith Hampton.

The property firm states that demand for industrial space will exceed the country’s available supply by 25 million square foot by 2020, even if current levels of construction continue, which could have effect online and multichannel retailers severely.

Its annual Industrial and Logistics Market Report also found that the total amount of industrial and logistics space in the UK fell to 200 million square foot in 2015, down from a peak of 360 million square foot in 2012, as take-up reached 96.4 million square foot, marginally above its recent average.

With the relative lack of logistics warehouse units, prime rents has increased by 3.9 percent on average, with Liverpool recording the largest increase of any single location at 16.7 percent.

Steve Williams, national head of industrial and logistics at Lambert Smith Hampton, said: “E-commerce in the UK is not just growing rapidly, but it’s also evolving as retailers attempt to satisfy consumer demand ever more quickly and efficiently. This is resulting in unprecedented demand for strategically located logistics warehouse space across many parts of the country.

“Unless developers start building warehouses at a rate that we haven’t witnessed during the 20 years I’ve been working in the sector, or major occupiers such as Amazon are prepared to wait 12 months for delivery by building it themselves, we could run out of logistics space before the end of the decade.”

Williams added: ”That has serious implications for internet retailing.”