The demand for UK logistics and industrial warehouse space which has been fuelled by the growth in online retail has increased. The 2021 figures show an increase for warehouses over 50,000 sq. ft in size, as 70.1 million sq. ft or sold for own occupation, according to new figures from Cushman & Wakefield.

In comparison, in 2020, the figures were nearly a third up of 53 million sq. ft and more than double the amount of space transacted during a ‘normal’ year pre-pandemic.  Currently, the demand is focused on good quality floorspace, with over 40 million sq. ft of new space taken by occupiers in 2021.

 Online retail was the main driver of lettings, as e-commerce operators committed to 20.5 million sq. ft in 2021 - accounting for 33% of total take-up of logistics space. Many multi-channel retailers also took warehouses to serve both their online and store-based retail networks.  Logistics providers were also acquisitive in 2021, taking 13.6 million sq. ft, or 22% of the 2021 total.

In response to the exceptional occupier demand, developers delivered 13.7 million sq. ft of speculative development, almost double 2020’s volume of 7.3 million sq. ft. The development pipeline for 2022 is even bigger, with over 15 million sq. ft of space under construction.

The research shows that developers are continuing the trend of building smaller units of 50,000 to 200,000 sq. ft. These include, for example, Birkenhead and Ellesmere Port in the North West and Peterlee in the North East.

Richard Evans, Head of UK Logistics & Industrial at Cushman & Wakefield, said: “As e-commerce-led demand continues to outstrip supply we are seeing rental levels and land values reach news highs across the UK, especially in London. A recent increase in speculative development is welcome but more will likely be needed to keep up with current levels of demand given how constrained supply is currently.”

Evans’ observations are in line with the greater demand for UK Logistics Space, as emphasised by the growth in online retail.