One of the major trends that we have been seeing over the past few years (obviously accelerated by the effect of lockdowns) is the rise of online shopping. Whilst not the case for everyone, and not completely eradicating the need for bricks and mortar shops, there is certainly a move towards online shopping (using the popularity of Amazon, for example, as a testament).
As our demands grow and grow, not only are we (the public) demanding a forever widening range of goods, but we are also demanding them to be delivered quickly. This is requiring a mixture of digital technology to enable us to place our orders at ease, and the physical logistics of getting your goods to you as quickly as possible.
The UK has moved away from manufacturing these products, and towards them being imported and distributed throughout the country. Where once, a few strategically placed warehouses throughout the country would suffice, the reality now is that in order for businesses to compete, we need numerous distribution centres around the country, within relatively short distances of delivery addresses.
It is important, however, to bear in mind that there was a peak in demand during the COVID-19 pandemic, and it has settled down a bit since then. With this said, there is still a huge demand for warehouse space in the UK.
Data Centres
Another need for warehouse space in the UK is through the increased demand for data centres. As the world becomes more digitalised, becoming internet-focused, and with the amount of data that we are using continuously increasing, there is a greater need for places where this data can be stored.
The space that is needed for data centres is vast, so perfectly suited for out-of-town locations (although not necessarily within easy reach of good transport links that suit distribution centres).
Warehouse Space
According to the British Property Federation (BPF), the government’s plans for a consultation in planning reform and how it can aid the logistics and freight sector, come as a relief – “after more than a decade of the government underestimating the need for new warehousing space”.
Warehouse space is currently in high demand – especially as both distribution centres and data centres use a lot of space for their needs. According to the BPF’s Assistant Policy Director, Sam Bensted, “Planning policy has underestimated the need for warehousing space for more than a decade and we are pleased the government has committed to exploring how we can create a more effective planning framework”.
Industry Consultation on Planning Reform
The British government’s Department for Levelling Up, Housing and Communities (DLUHC)and Department for Transport (DfT) are looking to consult on their planning policy in three categories – local plan-making and land availability, planning decision-taking and the applications process, and how the planning system can support policy priorities such as supply chains, decarbonisation of freight and HGV driver parking facilities and welfare. This is through their Future of Freight: a long-term plan.
It is estimated that the sector brings about £127 bn in value to the British economy, making it an important factor in the country’s infrastructure, which needs to be boosted.
In order to be able to benefit from the rising need for warehouse space – whether it be for distribution and logistics, or as data centres, we need to create more warehouse space as a matter of urgency, and this is why the planning reform is so important. The current process is slow-moving and lengthy, and a quicker process is needed.
Warehouse Planning in Conjunction with Other Sectors
Whilst there is a great need for warehouse space as quickly as possible, it is also important that warehouse and logistics planning is carried out in conjunction with other sectors – most essentially, residential. Much of this space will be used as distribution centres that will need to be close to good transport links, but also close to the places that they will be delivering to, as well as close to where the personnel who work there will be living.
It is also important to remember that it is not only goods for residential homes that are needed. Businesses and manufacturers are also ordering goods to be delivered and expecting as top class service as the residential customers.
Current Warehouse Locations
At the moment (unsurprisingly) we are seeing a greater number of warehouses for distribution in the Midlands. This is mainly due to two reasons – the land is less expensive here than in the south, and importantly, it has the best transport links to the rest of the country – by road, boat, or air.
It is likely, however, that this will change somewhat as businesses look to add extra warehouses and distribution centres, dispersed around the country. That does not mean, however, that the Midlands is likely to lose what is there already, just that they may become the ‘central warehouse’ sending goods out to satellite depots (much like the ‘hub and spoke’ model that we are currently seeing on the rise in the commercial office space sector).
Final Thoughts
The need for more warehouse space in the UK is not a new one, but it is still an issue, and this is why (especially but not uniquely) the logistics sector is welcoming the government planning consultation. Although it is true to say that demand is not as high as it was, it is still high, especially in more diverse areas.
There are, however, other challenges that face the sector. Issues such as the rise in business rates, the impact of the cost of living crisis and wage demands, and petrol costs are all important factors in the success of the industry.
Here at Boxpod, we have a range of commercial properties to buy, sell, or rent, including office space, retail units, self-storage units, and warehouses, so why not take a look to see how we can help you today?