The demand for warehouse space in the UK was exploding just a few years ago, but it has already fallen to its lowest point in 11 years as the spread of digital commerce stagnates in the post-pandemic age.
According to CoStar Group, the number of businesses leaving warehouses has surpassed the number of businesses using them for the first time in more than ten years.
Sources say, well-known warehouse tenants like ASOS, Boohoo, and Amazon have reduced capacity as a result of growth slowdowns or even reversals.
Grant Lonsdale, director, market analytics at CoStar Group said, “With cost-of-living pressures weighing on consumers, many online and bricks-and-mortar retailers, as well as the third-party logistics providers that service them, are re-evaluating their storage and distribution space requirements in a bid to optimise overheads.”
According to the report, Boohoo Group and ASOS have both reduced space. ASOS has announced the closure of three smaller warehouses this year. Earlier this year, a 290,000 square foot distribution centre in Wellingborough was shut down.
Although warehouse occupancy rates are strong right now, the trend for vacancies is going in the opposite direction and is expected to increase to 3.6 per cent from 3.1 per cent towards the end of 2022.
Furthermore, the availability of larger warehouses (250,000 square feet and up) has been rapidly increasing and is currently at 4.9 per cent, a seven-year high.
