If you thought that it was only house prices that have increased thanks to a shortage of property, then think again. According to BNP Paribas Real Estate, a serious shortage of warehouse and shed storage is strangling the UK storage facility market. The Midlands and the South East are the areas suffering the most from lack of adequate supply, and as a result rents for large distribution warehouses are set to increase by 2.1% this year.
The imbalance between supply and demand means that Midlands warehouse rents are now on average £6 per square foot, and South East rents rising on a weekly basis.
The shortage is now so acute that the number of Grade A warehouses over 500,000 square feet in the UK can be counted on your fingers. Omnichannel retailing is thought to be driving demand, as large companies with a strong online presence need increased localised storage capacity for the fulfilment of online orders.
However, planning permission for suitable sites can still take years to go through, holding up much needed developments. Moreover, recent research from the Independent Transport Commission (ITC) has found that government that have little understanding of the impact of the shortage on the freight logistics industry.
Although pressure on land use in the UK is increasing, lack of warehousing drives up bottom line costs for business. As the economy continues to gather pace and the need for more distribution centres grows, it’s a situation that needs addressing for supply chains to continue to run smoothly.