Prologis sees soaring UK internet sales driving warehouse demand

Soaring internet retail sales in the UK will significantly boost the amount of warehouse space required, according to a report released by Denver-based distribution facilities group Prologis. The report, entitled ‘Internet Retailing: Opportunities and Challenges for the UK’s Distribution Property Markets’, looks at the impact of internet sales on distribution strategies.

The report notes that as a result of improvements in security and reliability along with better customer service and delivery schedules from retailers, online sales in the UK grew 370% from 2002 to 2006 and are expected to nearly double to £ 37 bn (EUR 50 bn) by 2011.

‘As Internet sales continue to grow, retailers will need to think very carefully about their strategies for managing home delivery, and, in turn, their warehousing requirements,’ said Leonard Sahling, first vice president of research for Prologis, in a statement. ‘The success of any retailer’s e-commerce strategy will depend on how effectively it can deliver the right goods, on time, to customers. As such, we expect to see an increase in demand for warehouse space near major urban centers that offer good road connections and access to strong labor pools.’

The report projects the greatest potential beneficiaries of growth in online sales are likely to be warehousing and light assembly centers ranging from 10,000 sq ft to 50,000 sq ft (929 m² to 4,645 m2) and local distribution platforms of less than 20,000 sq ft in major catchments.

The report was commissioned by Prologis and authored by Sally Bruer, an associate in the research department of Gerald Eve Chartered Surveyors in London.