Savills confirms the ‘Race for Space’ as Yorkshire’s logistics demand surpasses commercial unit supply

May 07, 2021

Savills confirms the ‘Race for Space’ as Yorkshire’s logistics demand surpasses commercial unit supply

Savills confirms the ‘Race for Space’ as Yorkshire’s logistics demand surpasses commercial unit supply

The dramatic alteration to a government-imposed home-centric lifestyle catalysed a movement that had been gaining traction for years; e-commerce. The accelerated shift towards online retail, brought about by the first national lockdown and reinforced by subsequent restrictions, has introduced permanent changes to the buying habits of sectors of the demographic whom had previously preferred in-store shopping. This now-permanent shift favouring e-commerce has vastly extended the online marketplace. New concerns for companies have arisen as they must now manage their output demand with their ability to deliver product to customers.

This new-found emphasis on e-commerce certainly placed significant infrastructural pressure on the efficacy of logistical output, with many companies struggling to facilitate the surging level of demand. The world has certainly experienced this conundrum in the past year as the closing of non-essential businesses exposed some inherent issues such as a dependency on non-regional travel and an insufficient amount of suitable storage space.

However, one UK town in particular rose to the occasion and gained recognition for its unique locational advantages and tremendous potential for industrial growth and development. It’s affirmed status as both a significant economic feeder and a key player of the UK’s Northern Powerhouse has certainly proved the inextricability between a growing demand for online shopping and the logistic requirements to deliver this to profit.

In terms of strategy, as proven in the last recessionary period, areas which have shown resilience and shown exponential growth even in periods of economic hardship are those with infallible driving factors. Doncaster’s status as an exponential key growth area has been consolidated by its vantage point regarding two main factors; industry and infrastructure.

Towards the latter half of 2020, the Associate Director of CBRE’s industrial team spoke in high regard of this area and commented that, “Yorkshire will represent around 30% of all the UK logistics take-up this year…”

The demand for logistics space in Yorkshire and the Humber skyrocketed to new heights last year with demand for large box units (100,000 + sq ft) increasing by 220% in the last decade. A demand which has given no signs of relenting through the first quarter of 2021. The connectivity of Doncaster provides an unrivalled commute for commercial transport due to its tri-modal accessibility, namely by road, rail, air, and sea and with this brings an acute infrastructural advantage. In fact, 87% of the population is within commutable distance in a four or five-hour drive thanks to its central location in the UK’s motorway network. In a strategic bid to further improve the area’s logistics capability, Doncaster has created its own inland port, iPort. The 337-acre industrial distribution park, by Junction 3 of the M18, is set to expand by an additional 6 million square foot after successfully securing planning permission. It could not be more perfectly situated for companies seeking a national distribution hub.

As more companies begin to realise this infrastructural advantage, industrial growth has increased exponentially in this area and the availability of suitable storage unit facilities have become scarce. The demand for larger unit space has risen by 75% in the past decade and the vacancy rate has now fallen below the national average. According to Statista, in the United Kingdom revenue in the e-commerce market is projected to reach £80,678 million in 2021. What’s more, revenue is expected to show an annual growth rate (CAGR 2021-2025) of 3.5%, resulting in a projected market volume of £92,464 million by 2025. With many sources predicting a further growth trajectory for the near future, the imminent need for development of more unit facilities in the Yorkshire region could not be more crucial.

Reinforcing this point further, the infrastructural advantages for logistics in this area lends itself to industrial growth which will induce a ripple effect and increase the value of the land in the entire area. This was demonstrated by Yorkshire’s key role in the e-commerce uptake last year accounting for approximately 30% of logistics nationally, as the Halifax House Price Index reported an appreciation to the value of property in the area by 8.8%. This significant increase in value outperformed the national average and placed in the top 10 areas for house price growth in 2020.

The sustainable key growth of this area is one of many reasons as to why Doncaster has become one of the UK’s most sought-after locations for commercial unit space by industry-leading companies.

 

Article referenced, accessed 03/05/2021, https://www.savills.co.uk/blog/article/311831/commercial-property/the-race-for-space-in-the-yorkshire-industrial-market.aspx

 

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