Manufacturing investment to cause warehouse ripple effect – Savills

For every £1bn of UK manufacturing investment, an additional 175,000 sq ft of warehouse space will be required, according to a new report from Savills.

The company believes demand for storage and distribution capacity is set to soar if companies look to on-shore facilities as a result of the ongoing Covid-19 pandemic.

The country has attracted up to £148bn of private manufacturing investment in the past five years, creating the needs for as much as 26 million sq ft of warehouse space.

Savills is now predicting a ripple effect that could lead to additional requirements for up to 15.4 million sq ft by the end of 2022.

Based on this forecast, the company has suggested that should demand rise by a further 20 per cent, then the amount of space needed is likely to be closer to 18.5 million sq ft.

Kevin Mofid, head of industrial research at Savills, said: “A lot has been said about the rise of e-commerce and the impact it has had on industrial and logistics take-up here in the UK, but manufacturing is set to play a significant role moving forward especially in light of recent global macro events.

“Taking into consideration current vacancy levels, the shortage of available space is likely to intensify as retailers continue to stockpile and online retailers expand placing upward pressure on rents.”

Richard Sullivan, national head of industrial and logistics at Savills, added: “Historically, the UK was an important centre for industrial and manufacturing and for certain sectors and markets continues to be so.

“However, the last six months has demonstrated short comings in supply chains which need to be addressed and, coupled with the prospect of Brexit at the end of the year, we anticipate increased demand for industrial and manufacturing related demand.”