E-commerce growth driving record warehouse development in 2021

40 million sq ft of new warehouse space is scheduled for completion in 2021, compared to 20 million sq ft completed last year according to Knight Frank as a direct result of online growth.

Much of this new space is already committed, with retailers and distribution companies opting to satisfy their requirements through build-to-suit solutions.

Only this week  developer investor SEGRO started construction on its new 190,000 sq ft industrial park in Tottenham which is set to become the greenest development of its kind in London.

SEGRO Park Tottenham  is expected to complete in February 2022. The buildings are designed to be carbon neutral with A+ Energy Performance and BREEAM Excellent ratings. Vacant warehousing remains tight across the UK, with 46 million sq ft of space currently available, which represents 10 months’ worth of supply at current take up levels. However, most of that space is in secondhand units that either do not have the right specification or in the right location. Due to robust levels of take up, the level of availability, particularly of high-quality space, has diminished over the course of 2020 and this is driving development.

In 2020 online sales accounted for 27.9% of total retail sales, and with non-essential shops closed ecommerce penetration rates reached a record 36.3% in January 2021. Retailers and distribution firms have responded by rapidly upscaling their operations by expanding delivery services, and this saw warehouse take up exceed 50 million sq ft in 2020, compared to 34 million sq ft in 2019.

Even as shoppers return to the high street, the internet will play a larger role in the retail market than it did before the pandemic. In its latest research delivery expert ParcelHero reveals 46.7% of shoppers say they will never return to their previous level of High Street spending.

“Only retailers that embrace their website as their most important shop window and ensure their online service matches the standards of their in-store experience will survive.”

A record 36.1% of all retail sales are now happening online. That’s a 77.6% increase over February 2020. Shoppers of all ages have turned to e-commerce and now find it easier, more convenient and safer.”

Online sales rose £34 billion YoY in 2020 and is expected to grow a further £41 billion over the next four years and this growth is driving additional requirements for warehouse space.