The latest look at the shortage of warehouse space in the UK
With a rising population, a growing economy and the inexorable march of eCommerce, property agents Savills say the UK is ‘an under warehoused country’. And that is in normal times – with the latest Brexit deadline just weeks away, times are far from normal.
The struggles continue…
The latest Brexit survey from the Chartered Institute of Procurement and Supply reports that 43% of UK supply chain managers are stockpiling goods and raw materials to mitigate the impact of a hard Brexit. Some will have accommodated this within existing facilities, others signed contracts for temporary space in advance of the original March deadline, but 5% of firms surveyed are struggling to find suitable warehousing.
Meanwhile, the UK government is continuing to acquire space to safeguard critical supplies, such as medicines, and we are fast approaching the peak period for warehousing as firms stock up for Black Friday and Christmas.
According to the United Kingdom Warehousing Association, the vacancy rate for larger warehouses is 6.8%, (just 2.2% inside the M25), and the market is even tighter for food grade and temperature-controlled space. A decade ago the national vacancy rate was 23%. Anywhere under 10% is very much a sellers’ market.
However, space alone is not the only consideration. The sector always faces labour shortages at this time of year, likely to be exacerbated if workers from EU countries feel unsettled. Locations are likely to be less than optimal, leading to increased transport requirements. Yet there is already a big shortage of drivers and any increase in transit times due to border delays will effectively take capacity out of the system.
Post Brexit issues
Many are assuming that serious disruption will be limited to just a few months but if not, companies – particularly the 12% of the CIPS survey that operate essentially stockless, JIT models – may have to rethink their whole strategy around inventory and warehousing.
Besides, although companies may have secured space for their own forecast needs, how confident are they that critical suppliers have been successful? Many of the businesses that could ‘stop the line’ may be small companies with limited ready cash to stockpile inventory or enter into expensive leases. Customer companies may need to think creatively about how stock is held and financed.
Although some businesses are failing to locate the needed space, others may find they have committed to more than they need. There is a secondary market for excess capacity, but companies will need to understand what is allowed under their lease or licence – there is a difference and many companies currently contracting for space may be relative novices in the commercial property game.
So, beyond the immediate Brexit firefighting, companies have some serious decisions to make and actions to take, not just around securing suitable space but also around labour, transport, inventory policies and the impacts on the whole supply chain model.
How we can help…
Bis Henderson Space is well placed to help. We have many years’ experience in planning and scoping warehousing needs, in locating and securing space in the short or long term, for sole or shared use, and in negotiating the necessary flexibility in leases and contracts. To discuss your needs for space after Brexit, contact us today.
A word from Steve Purvis, Operations Director, Bis Henderson Space...
Labour shortages in the Logistics Sector have been apparent for some time but the profession is waking up to a growing lack of suitable warehousing space. The current shortage was there before Bexit reared it head and will be there afterwards in some form, the only real questions is to what extent. At Bis Henderson Space we are extremely well connected so when we hear talk about there being no space available we know that this isn’t entirely true. Space is available but there is certainly less than there used to be meaning that good advice and support in sourcing services is more important than ever.