Demand for warehouse construction soars

The demand for online shopping more than doubled the value of warehouse construction projects last year.

The warehouse and logistics industry was worth £5.59 billion in 2021, according to the Office for National Statistics (ONS). This represents a record since the ONS began measuring the value of the sector in 1985. It also eclipsed the value of the sector by £2.29 billion in 2020, having jumped nearly 150%.

Specialist contractors in the industrial sector flourished last year, with Winvic predicting that the warehouse boom would nearly double its revenue in the year ending January 31, 2021. That would take its revenue to around £1 billion.

The contractor has landed a £58m job to develop a 600,000sqft warehouse for Segro in Kettering, and a £45m warehousing project in Northampton for Newlands Development, measuring 820,000sqft in total.

Construction Products Association economics director Noble Francis said the construction sector was benefiting from “a long-term trend towards warehouses and a more recent major structural shift towards warehouses as well”.

The trend of online shopping over the past 15 years led to the initial surge in demand, he said. Data from the ONS suggests that the value of the sector started to rise in 2012, before the huge jump in value between 2020 and 2021.

“The most recent change happened from the beginning [COVID] lockdown in March 2020, and with a higher proportion of office workers spending more time working from home than before the pandemic – and retail having been closed for parts of the past two years – there has been an increase in demand for online shopping and hence industrial warehousing space,” he added.

“Furthermore, the global supply chain issues that many manufacturers have faced over the past couple of years mean that many companies have been looking to increase warehouse space for inventory to cope with any further supply problem.

Francis predicted the boom would continue into 2023.

Property development and construction company Henry Boot’s financial performance in 2021 was also supported by strong demand, which saw it acquire land in Welwyn Garden City, Rainham and Manchester during the year.

In October, a joint venture led by the Berkeley Group agreed to develop the first multi-storey warehouse in the UK, again for Segro. The six-storey warehouse (pictured) is planned for west London.

Entrepreneurs based or active in the UK have also been joined by global players in the warehousing industry in recent years. In 2020, global logistics firm Prologis said it would invest around £1.5 billion in the development of zero-carbon warehouses in England.

Alice F. Ponder