Demand for warehouse construction soars

Demand for warehouse construction soars

Demand for online shopping drove the value of warehouse-construction projects to more than double last year.

The warehouse and logistics industry was worth £5.59bn in 2021, according to the Office for National Statistics (ONS). That represents a record high since the ONS started measuring the sector’s value in 1985. It also dwarfed the £2.29bn sector value in 2020, having jumped by nearly 150 per cent.

Contractors specialising in the industrial sector thrived last year, with Winvic predicting that the warehouse boom would cause its turnover to nearly double in the year ending 31 January 2021. That would take its turnover to about £1bn.

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

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

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

“The more recent shift has occurred since the initial [COVID] lockdown in March 2020, and with a higher proportion of office workers spending more time working from home than pre-pandemic – and with retail having been closed for some parts of the last two years – there have been surges in demand for online shopping and, consequently, industrial warehousing space,” he added.

“In addition, the global supply chain issues that many manufacturers have faced in the last two years means that many firms have been looking to increase warehouse space for stocks to deal with any further supply issues.”

Francis forecast that the boom would continue into 2023.

Property development and construction firm Henry Boot’s financial performance in 2021 was also bolstered by the high demand, which led it to acquire land in Welwyn Garden City, Rainham and Manchester over the course of the year.

In October, a joint venture led by the Berkeley Group pledged that it would develop the first multistorey warehouse in the UK, again for Segro. The six-storey warehouse (pictured) is planned for west London.

Contractors based or active in the UK have also been joined by global players in the warehousing industry over the past few years. In 2020, global logistics firm Prologis said that it would plough around £1.5bn into the development of zero-carbon warehouses in England.

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