Exiting the European Union could increase demand for warehouses

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Property company Tritax, which provides warehouses for major companies such as Amazon and Next, thinks that Brexit will be good for their business if it increases demand for warehouse space.

The chairman of Tritax, Richard Jewson said that increased border controls would mean that “customers will require more warehousing domestically, further supporting our business case”.

Tritax has benefited from the growth of online shopping. In 2017 it bought 11 new sites for about £435 million and now has 46 large warehouse properties. Jewson said that the company intends to buy more warehouses in 2018. In 2017 their pre-tax profits jumped by almost 17%. They expect their growth to continue, boosted by e-commerce and a high demand for warehouses by logistics operators.

More new warehouse space needs to be built as a shortage of properties to meet demand is expected in 2018.

Small investors may not have the finance available to buy large warehouses similar in size to the ones Tritax owns, but many online retailers are looking to acquire smaller warehouses near city centres to provide a fast delivery service for high demand items. Amazon uses small warehouses to offer a one-hour service from order to delivery in some parts of London. Investors who find suitable small warehouses can finance their purchase through commercial mortgages.

Good rental yields can be achieved from warehouse property if it is in a good location either near a major population centre or within easy access to the motorway system.

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