Online retail sales have surged during the COVID-19 pandemic and this has led to booming demand in the North West logistics sector. Tony McDonough reports
A boom in internet shopping due to the COVID-19 pandemic has pushed demand for logistics space in the North West to record levels.
According to data published by Cushman & Wakefield, take up of logistics space in the North West in the third quarter of 2020 reached 1.41m sq ft. This takes the total in the region so far this year to 3.51m sq ft. This is up 55% on last year.
Logistics has enjoyed growth for a number of years thanks to the rise of online retailers such as Amazon. Before than pandemic around 18% of UK retail sales were made online. During lockdown this rocketed to more than 30%.
And while most high street shops have reopened from lockdown, the internet sales boom has continued, prompting a rush by retailers and distributors to build more capacity across the UK.
Across the country the third quarter of 2020 was the busiest on record with 16m sq ft of space transacted. And the Cushman & Wakefield report reveals that 40% of the new take-up is for e-commerce. This is an all-time high.
There are a number of new logistics hubs in the pipeline for the Liverpool city region. Developer Tritax is proposing to build a 1m sq ft employment park on the site of the former Cronton Colliery in Knowsley. And Peel L&P is looking to build a £155m manufacturing and logistics hub in St Helens.
Record take-up levels, combined with a slowdown in speculative development, meant there was a 11% drop in supply during the quarter with total availability falling to 66m sq ft. Supply is now below its historical average across all regions bar the Midlands and the South East, with the North West recording the sharpest year-on-year decline in availability (-39%).
Rob Taylor, partner, logistics and industrial at Cushman & Wakefield in the North West, said: “There was another strong quarter for take-up in the North West with the region continuing to demonstrate strength and resilience.
“We are now seeing deals being agreed at rental levels of £7 per sq ft and beyond in the 100,000 sq ft plus market and as these complete over the coming months we anticipate continued rental growth across the region.
“Recent developer demand for good quality, well located sites in the region shows the commitment to the sector and with further speculative development across most size ranges mooted for the region, the future in this region looks strong.
“It looks likely, notwithstanding the fear of a ‘second (COVID) spike’, that demand for online retail will remain robust and that consumer habits have changed within a much wider demographic than before, particularly amongst the older generation.”