Companies leased more warehouse space in 2021 than ever before, prompting record levels of investment in the logistics sector.
Thanks to the boom in online shopping during the pandemic, 70.1 million sq ft of industrial warehouse space, equivalent to more than 1,000 football pitches, was leased or sold last year, according to Cushman & Wakefield, the property agent. That was up nearly a third on the previous high of 53 million sq ft set in 2020 and more than double the take-up in a “normal” year before the pandemic.
“As ecommerce-led demand continues to outstrip supply, we are seeing rental levels and land values reach new highs across the UK, especially in London,” Richard Evans, Cushman & Wakefield’s head of UK logistics, said. Online retail was the main driver of letting as ecommerce businesses accounted for about a third of the total take-up last year. Multi-channel retailers seeking to grow their online presence and delivery groups were also “hugely acquisitive”, the company said.
About £17 billion of deals were transacted in 2021, another record. Investors have been buying warehouses and building new ones to try to meet demand, while they also have been attracted by the stability of warehouse rents and values when other parts of the property market have suffered.
Developers built 13.7 million sq ft of space “speculatively” in 2021, meaning that they had no tenants lined up before they started construction — almost double the 7.3 million sq ft of speculative development the year before.
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Online boom brings record investment in warehouses