Large rise in demand for warehouse and logistics commercial property

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Due to the growth in online sales, warehouse property is in high demand, according to a November 2017 article.

James Carswell of stockbroker Peel Hunt says that there is a big shift from retail stores to online shopping, which has resulted in companies requiring more storage space. Customers want quick delivery times, which means that some companies are opening several regional warehouses near motorways, rather than have one central national warehouse. Some online retailers are copying Amazon’s model by having large regional warehouses and smaller ones near major cities that can offer same-day delivery to city residents.

Miles Gibson, head of UK research at CBRE real estate services, said that the logistics sector is performing:

“…very strongly… and investors are seeing double-digit returns.”

He said that the office sector could decline because of nearly full employment, which will slow down the demand for new offices, much of which is concentrated in London.

There uncertainty about the financial climate following Brexit, and how trade between the UK and Europe will work, and this is why many companies are reluctant to renew long leases. Even though rents are high for office property, Gibson feels that the rental yields from office property are lower than warehouse rents.

There are commercial mortgages available to finance the purchase of warehouses and the conversion of existing commercial property to warehouses. A mortgage broker can help investors find the best lender to raise the money needed to fund commercial property deals.

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