Lack of funding could cause warehouse availability crisis

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Funding constraints are making it difficult for developers to build new warehouse stock in the UK further hampering the ability of logistics companies to expand and upgrade facilities to meet modern day supply chain needs.

According to latest figures from property advisor Colliers across the UK, as a whole, new and refurbished space [over 100,000 sq ft]is due to be fully taken up in two years and total space just over three years. In London the figure has slipped below 1.5 years for the best space and is only marginally higher for all grades of warehousing. If take-up exceeds current expectations then markets could supply-demand imbalance even sooner than this.

Guy Grantham, Director of Industrial Research at Colliers International said: “The mismatch between supply and demand is only likely to become more pronounced during 2013 with so little new space coming to market. Funding constraints remain to the fore with continuing difficulties for developers seeking to make the base numbers stack up.”

These figures come despite the fact that overall industrial take up in the UK fell by six per cent year on year in 2012. The main factor behind this fall in take up has been the lack suitable product in the right location for businesses. Potential occupiers seeking top quality, modern warehouses are having to sign up to design and build schemes to guarantee a site that will meet their requirements.

Len Rosso, Head of Industrial and Logistics at Colliers explained: “With the growth in demand for multi-channel and e-tail oriented warehouses and distribution centres, there is a significant incentive for landlords to redevelop their secondary stock to meet this demand. However, due to the lack of available finance many developers are struggling to come up with the funding that this redevelopment requires.”

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