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Space shortage looms as housebuilders outbid warehousemen

[ January 15, 2019   //   ]

Warehouse developers are being frustrated by housing developments being given preference, says Neil Storey, managing director of industrial property developer, Onward Holdings.
He says that while brownfield or urban sites are being snapped up to meet the country’s need for more housing, there was around 235 million sq ft of warehouse space leased or purchased between 2007 and March 2018. And while major companies are still spending top dollar to set up distribution centres in the East Midlands, premium space comes at a premium price.
North-shoring – the buzzword for moving southern operations to the north – is boosting the need for more logistics hubs north of the East Midlands as companies see the benefits of lower operating costs, a higher availability of labour and less congestion on the roads, resulting in faster transport links.
Indeed, says Storey: “The north of England can become a logistics powerhouse and rival the East Midlands for prime warehousing sites if more land is freed up for industrial use.
“At Onward Holdings we believe that the UK logistics property market needs millions more square feet of new warehouse space in the north of England, especially in the middle size market (below 100,000sqft) which is of less interest to the big institutional players, to accommodate north-shoring and the growing demand for storage, distribution and fulfilment hubs to satisfy the need for speed to the consumer and delivering goods on a 24/7 basis.”
He adds that places like Castleford offer easy reach of the northern container ports, Doncaster Airport and the rail freight network via Wakefield Europort. Around 80% of the UK’s population is accessible in four hours, making this location ideal for bulk distribution items.
Many companies are already establishing logistics operations in the region with the likes of DHL, Amazon, e.buyer.com, Leman International Transport and Freemans.
Storey adds: “To meet this trend Onward is currently looking for land to increase its portfolio of warehouse and industrial units. We have been successful in securing some prime locations in Yorkshire for logistics facilities, but more land near to the motorway junctions needs to be allocated.”
He believes that the loss of industrial space is also a fall-out from the financial crisis of 2008 when empty warehousing fell into disrepair and sites were cleared and given consent for housing because businesses couldn’t risk building new facilities. Since then, as a result of the upturn in the economy since 2014, driven by e-commerce, growth of the discount grocery chains and third-party logistics, there has been this huge surge in demand for high quality warehousing.

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