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21/01/2019

Competing land uses could upset growth of logistics facilities

Words: Laura Edgar
Last mile logistics / Shutterstock_1026104380

Although the rise of online shopping has led to the growth of warehouse space, competing land uses are leaving industrial property developers frustrated, according to a warehouse and industrial developer.

Onward Holdings says this is a particular problem in the South East.

Citing research undertaken by retail estate services firm CBRE for the BBC, which found that there was around 235 million square feet of warehouse leased or purchased between 2007 and March 2018, the firm said large companies are now spending “top dollar” to set up distribution centres in the East Midlands. The region has 11 warehouses under construction and is considered the ‘Golden Triangle’ of logistics due to its geographical position and transport network.

However, premium space comes at a price with land values increasing across the country, Onward Holdings suggests that logistics firms should consider Yorkshire and the North East for warehouse units.

Moving operations further north could result in lower costs, higher availability of labour and less road congestion. The North could become a “logistics powerhouse” to rival the East Midlands if more land is freed up for industrial use.

For Onward Holdings, the UK logistics property market needs “millions more square feet” of new warehouse space in the north of England, particularly in the middle-size market (sites below 100,000 square feet). Big institutional firms are not as interested in the middle sized market but it can be used to accommodate businesses moving north and the growing demand for delivering goods on a 24 hour, seven days a week basis.

Investment in logistics facilities in the North needs to continue, the firm said. It citied Castleford in Yorkshire as an example, and as somewhere it has invested, because it is in each reach of northern container ports; Doncaster Airport; and the railway freight network via Wakefield Europort.

The housing shortage must be addressed, accepted Onward Holdings – but local authorities will miss an economic trick if they don’t allocate any new sites for primary warehousing and distribution centres.

Image credit | Shutterstock

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