Here at Boxpod, we have noticed that 2021 has been a booming year for commercial warehouse rentals. This has led to high rental growth with increasing demand all over the UK. There are a number of reasons why we believe that this has happened – from changes in consumer buying choices to the COVID-19 pandemic forcing businesses to go online.

Whilst it looks like we are over the hump of the pandemic, some aspects of it look like they are here to stay for a while – and, it seems, that one of these is related to how we buy things. Although much of our buying has gone online, we are seeing the high street push back with businesses adapting themselves to attract their customers in through their doors. But we are also seeing many businesses adopting a more hybrid online/offline model, or, indeed, moving to function entirely online.

This is having an impact on the commercial property market in many ways – increasing demand for warehouse rentals and changing the look of retail units to create a different high street shopping experience.

Whilst not being the only reason why we are experiencing a surge in demand in commercial warehouse space to rent, it is a big one.

Continued Trends

Like much that has happened in the past couple of years, the migration to online business was not unexpected, but, perhaps, it was not thought that it would happen so soon. The pandemic appears to have accelerated this commercial evolution, and it is likely that we will see this continued into next year and far beyond.

One example of this is the rise in the number of people doing their food shopping online. This saw a massive surge during the lockdowns, and for many people, they have not turned back. In 2022, we are unlikely to see this change except, perhaps, for more people moving to online food shopping.

Another area that is fuelling demand for commercial warehouses is the digital arena. With increasing amounts of digital content and massive growth in the need for digital storage, we are seeing a huge rise in the need for digital facilities such as data centres. Data centres are places where, essentially, the internet is stored. They require huge areas of warehouse space as well as high amounts of energy to keep them working – but are integral to the economic and leisure activity of the country.

In addition to this, we have seen media giants investing in spaces for content creation in the UK. Netflix, for example, signed a deal for a massive studio complex in the north of London in 2021.

This all means that the future of warehouse rental is looking promising, with growing demand.

Obstacles to the Growth of Commercial Warehouses

In addition to this great amount of growth in the demand for commercial warehouse space, there is potential for a few obstacles that could slow the pace of this growth down a little.

The decline in the supply of labour and trade tariffs that impede the products and raw materials that can easily and quickly get into the country means that things are getting tougher for e-commerce based in the UK. Add to this the shortage of HGV drivers, and things perhaps are not quite as easy as they could be. The whole model of many e-commerce businesses (producing or storing products in local warehouses which can then be quickly distributed to customers at short notice) is likely to be affected.

It should be noted, however, that the increased availability of technology such as robotics, artificial intelligence, and automation means that the need for certain types of labour may not be such an issue for some companies.

If you add to this the increase in demand for warehouse space, this shows that the next year is unlikely to have its challenges, but ultimately, ones that can be overcome.

Location, Location, Location

One big consideration that should be made when thinking about the future of commercial warehouses in 2022 is that not all warehouses are the same, in that, one of the most important factors to finding the right warehouse for an e-commerce business especially, is that it must be located in the right place.

This decision is not just about where your warehouse is compared to the staff that you want to be able to attend. E-commerce businesses rely on the fact that they can deliver to their customers within a very narrow timescale, so, instead of having one very large warehouse in one place in the country, it is much more effective for a business to have several smaller ones in strategic locations around the country. Even better if they are somewhere that has good access to transport networks.

Sustainability

Another factor that can affect the popularity of a warehouse is its sustainability. The world of business is increasingly looking for eco-friendly options in their commercial property as they look to ingrain ‘green’ practices across their business model and processes. This means that if they can show how serious they are about their green responsibilities.

Warehouses with features such as solar panels or other renewable energy sources, LED lighting, cool-roof solutions, or the use of green construction materials can all be useful in making warehouses more attractive for businesses to rent.

Final Thoughts

There is no doubt that demand for commercial warehouse space has rocketed over the past couple of years, and the reality is that this is only likely to increase. With the changes in some of the buying habits of British consumers, along with an ever-increasing need for data space and online content, it is impossible to imagine that demand is not going to continue to rise in 2022.

Despite the potential challenges that these businesses may be facing, the industry as a whole is looking very healthy, and this is likely to drive up demand for warehouse space in the coming year – especially those commercial properties that are located in strategically favourable places.

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