📋 Tender Overview
New housing estimates for rural areas coupled with the rising consumer demand for online retail even before Covid-19 means there is potentially a massive shortage of warehouse space to support households demands for same daynext day delivery. Once dubbed the poor relation the industrial and warehousing sectors star is now in the ascendancy with increasing potential in more rural areas according to Spotlight Rural Logistics the latest sector research from Savills. A growing population that is increasingly turning to online retail is putting pressure on existing warehouse space and the predicted growth trajectory for online sales suggests many rural local authorities are forecast to have a significant shortfall of available warehouse space.Following the outbreak of Covid-19 Savills research is projecting a rise in the amount of new housing completions in rural areas with an additional 356000 units needed by 2025. If built these additional homes would create a need for a further 24.6 million sq ft of warehouse space in the same period based upon each household needing 69 sq ft of warehouse space to support it according to What Warehousing Where A report commissioned by the BPF.Kevin Mofid head of industrial and logistics research comments A logistics or parcel company will always look to occupy warehousing in traditional locations that has been built with the intended use in mind. However as we have seen in more urban areas when supply is chronically low and demand is high tenants are prepared to alter their operational requirements. In rural areas this could mean the release of land for new industrial development or the repurposing of existing structures on agricultural land an option that has the greatest potential when located near major roads and highways.Looking at the current levels of warehouse availability in the top 20 local authorities that are expected to see rural housing demand increase it shows at its highest that there is a shortfall of almost five million sq ft. This presents an opportunity for rural landowners who either have existing agricultural buildings no longer suited to agriculture that could be re-purposed or who have land in the right locations that could be brought forward for the development of new warehousing space.Andrew Teanby associate director Savills rural research says Increasingly expanding farmers are finding that they have accumulated a portfolio of buildings that are structurally sound but no longer fit for purpose as modern farm machinery is much larger. For example a former grain store could be suitable for conversion within permitted development rights. Location will always be key but the spectrum of operators needs is quite broad presenting an opportunity for some rural landowners.Add-in the rise in demand for rural properties since May combined with the consequential rise in online sales due to the coronavirus pandemic and it is clear the volume of rural logistics space has the potential to come under significant pressure. According to Prologis the worlds largest warehouse developer for every 1 million spent online a further 770000 sq ft of warehouse space is needed. Put into context as of June 2020 online retail accounted for 33 of all retail sales. If over the next 12 months this growth level is maintained an additional 14.9 million sq ft of space will be needed to service demand which may spread into more rural and semi-rural locations.Research from Savills looking at buyers of residential property showed that average households moving from urban to rural locations are younger than existing rural ones average age 40 versus current rural resident at 52. They are likely to have greater expectations for their online shopping service including same day delivery that is rarely available in rural locations. Currently there is more of a two tier delivery system with data from Metapack the delivery management software provider suggesting that 70 of parcels delivered in the UK are going to just 7.5 of the country with those living in rural areas often excluded from next or even same-day delivery.Online retailers and delivery companies who have already recruited more staff and purchased additional vehicles are now looking at acquiring further warehouse space and should this trend continue will be forced to look at more innovative solutions. Farms and estates with good access to the road network that can offer high levels of security may well be suited to providing the last mile delivery to service the growing consumer base needs.
