The UK and Europe will need 300m sq ft of warehouse space to keep up with fast-growing e-commerce sales over the next four years, according to CBRE.
Online sales are expected to increase by £215bn by 2025, following a sharp increase in e-commerce during the pandemic. This will require an extra 298m sq ft of industrial warehouse space across the continent and the UK to meet demand.
The predictions will come as a boon to investors who have already bet on the industrial real estate sector, which has enjoyed dramatic growth in the past 18 months. Britain is expected to need 60m sq ft more of space – equivalent to nearly one-sixth of existing warehouses in the country.
The UK currently has the third highest e-commerce penetration ratio globally at 24%, after South Korea (36%) and mainland China (27%). It is expected to remain one of the largest e-commerce markets; by 2025, e-commerce penetration in the UK is forecast to be 32%.
Across Europe, that compares with the Netherlands and the Czech Republic, which have expected e-commerce penetration rates of 26% and 20% respectively by 2025. South Korea will still have the world’s highest e-commerce penetration by that point, at 43%.
Globally, e-commerce sales are expected to increase by $1.5tn in the next five years, requiring an additional 1.5bn sq ft of e-commerce-related logistics space.
Tasos Vezyridis, head of industrials research at CBRE, said: “The European market is relatively polarised in terms of e-commerce penetration. There are a number of markets, including the UK, Germany, Sweden and the Netherlands which have many of the drivers already in place to facilitate high levels of e-commerce and this was accelerated during the pandemic.
“However, we believe many of the less established markets such as Portugal, Italy and Spain will see higher growth over the next five years and will start to catch up with the already dominant nations, resulting in growing demand for logistics space in these markets and across Europe.”
Separately, new findings from Savills show that online retailers have increased their warehousing footprint by 615% in the past six years.
Online retailers account for 60m sq ft of warehousing space in the UK. Amazon along took up 12.6m sq ft last year. Although high street retailers continued to account for more warehousing space than etailers, their total footprint increased by just 5% in the past six years, up from 84m sq ft in 2015.
Third-party logistics operators occupy the lion’s share of UK warehousing, taking up 106m sq ft.
While the amount of warehouse space in Britain has grown by 32% to 566m sq ft during the period, vacancy rates stand at 5.4%. This compared with 7.5% in 2015.
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