London warehouses falling behind ecommerce demand

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The city of London is failing to keep up with demand from online retailers for warehouse space, a new study suggests.

According to real estate adviser, Colliers International, the supply of industrial floor space in London is currently around 6.1m ft2, allowing for just eight months’ supply at current levels of take-up. In 2010, there was 15.5m ft2 available.

The average annual take-up of industrial space in the capital has reached 7m ft2, with smaller urban warehouses accounting for a third of demand, reports The Telegraph.

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More than 1.3m ft2 of additional industrial floor space, equivalent to an area ten times the size of Trafalgar Square, is now required each year in Greater London to keep up with online retail demand.

“London has been losing industrial land at an alarming rate of 260 acres per year, despite online retail being a massive growth sector and the supporting infrastructure providing nearly one in ten of London jobs,” said Len Rosso, head of industrial and logistics at Colliers International.

Much of the uptake of smaller units is from retailers seeking to reduce delivery times, such as Amazon. However, there has been a lack of new development coming into the system, often because land is being sold for residential development rather than commercial, Colliers found.

In the past two year months alone, around 60 to 70% of commercial sites brought to market have been sold to residential use, the agency said.

As a result, the amount of vacant industrial property in the capital has fallen from 9% of the total stock to just 3.5% since 2010.

Colliers said one solution would be to allow industrial and residential development in the same place, in order to use the land available more efficiently.

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