2020 already has the highest number of big warehouse deals on record thanks to a coronavirus-fuelled surge in e-commerce business. 

17 deals on warehouses over 500,000 sq ft have happened so far this year

Source: Shutterstock/ 1223893270

According to data from Savills, 17 deals on warehouses over 500,000 sq ft have happened so far this year compared to 14 for the whole of 2018, the second-highest year on record. 

The data, which goes back to 2007, reveals a general trend towards occupiers taking big warehouses. 2007, 2009 and 2011 saw five, one and seven warehouse deals over 500,000 sq ft respectively while 2016, 2018 and 2020 so far saw 12, 14 and 17 such deals. 

Kevin Mofid, head of industrial research at Savills, says the reason occupiers are taking larger sheds is because of a move towards online retail which requires more space as eCommerce businesses typically hold more inventory. 

Mofid predicts that the increase in deals over 500,000 sq ft means we will see more multi-storey warehouses being development. 

“There is a tipping point, probably around 1m sq ft, where the floorplate becomes inefficient, so that’s why people are going up,” he said, explaining that when floorplates become that large it can take 15 minutes or more just to walk the length of the warehouse. 

Mofid’s worry is that local authorities are not facing up to the fact that warehouse occupiers need ever-larger spaces. “Planning authorities are going to have to take notice of this,” he said. “I’ve been involved in schemes in the past where local authorities try to cap the height of the scheme at 12 metres, but eventually something has to give.”