Warehouse Space Needed: How the Rise in Ecom During the Pandemic Has Affected Demand

The pandemic has seen an unmistakable surge in ecommerce. With companies and individuals alike having to adapt to a climate where face-to-face trade is prohibited, demand for warehouse space is something that perhaps has gone under the radar.

New research shows that warehouse space for rent is becoming an absolute necessity as restrictions on businesses continue. But, just how many companies are looking for warehouse space, what are the figures, and how can you secure this increasingly hot commodity? Read on to find out.

 

Warehouse Space for Rent

Research from estate agents Knight Frank estimates that a staggering 40 million square feet of new warehouse space is scheduled for completion in 2021. For context, this compares to the 20 million square feet completed last year.

A significant amount of this space has already been acquired by retailers and distribution companies looking to get ahead of the curve following the spike in ecommerce growth. Warehouse take up exceeded 50 million square feet last year, compared to 34 million square feet in 2019.

The expansion of delivery services seems to be at the heart of companies looking for warehouse space. The issue, however, is that the level of high-quality warehouse space needed has diminished, hence the doubling of development efforts.

 

Companies Looking for Warehouse Space

The amount of warehouse space for rent currently available, standing at 46 million square feet, in simple terms may seem quite a lot. The reality, however, is that much of this space is second hand, does not meet the correct specification logistically or geographically.

The research shows that the warehouse space needed in comparison to what is available is the driving factor behind the high development projections. Warehouse space for rent larger than 50,000 square feet, in urban environments, that are close to customers and allow easy stock replenishment are the golden ticket in ecommerce.

Knight Frank also note that this is the beginning of a seemingly endless rise to rental growth. The demand for warehouse space will continue over the next five years, going hand in hand with longer lease lengths.

 

Need Advice on Warehouse Finance?

So, what should you do if you require warehouse space? Well, you have a few options.

If you are a growing company and do not require a huge building but would like the perks that come with a supersized location, consider shared warehouse space. Sharing a warehouse with similar or partner brands can help with cost savings, without compromising on location or benefits.

For larger companies, if you don’t have the capital to purchase a warehouse space outright, you can rent, or consider commercial finance. Occupier mortgages can help you purchase a property that your business will operate out of, whereas commercial development finance can provide the funds you need to construct a warehouse to your specific needs.

Whatever your circumstances, if you are looking for more information on commercial finance options for your business, our brokers are always on hand to help in any way they can. Contact us today to chat warehouse finance.

 

 

Article By Luke Egan

June 29th, 2021

Luke heads up our specialist property finance team where his focus is to drive our transactions valued between £100k and £5m.

Luke and his team manage enquiries from initial enquiry through to redemption. Luke also sits on the internal credit committee with Ben and Tom.

Luke joined Pure back in 2014 following a successful role in the Barclays property finance team that lasted over 8 years.

See more articles by Luke