A rapid growth in online sales has fuelled demand for warehouses.
Large retail store chains like Toys R Us and Maplin have gone into administration, which is expected to result in the closure of their stores, many of them in out-of-town centre retail parks. This could result in online retailers converting some of these stores into warehouses.
E-retail giant Amazon is notable for its huge warehouse fulfilment centres, but it has also opened a number of small warehouses that supply people living in city areas with high-demand goods delivered within an hour of ordering.
Deutsche Bank has published a report on this subject, and predicts the growth of these “last hour” warehouses. Matthias Naumann, head of alternatives strategy at Deutsche Bank, said:
“One of the major goals for operators is to serve quicker. Online retailers will increasingly look to be close to their catchment areas.”
He added that underutilised retail assets such as shopping centres, retail parks and supermarkets can be converted for the storage and distribution of goods.
Although new warehouse space is being developed, Savills estate agents predicts that within two and a half years, there will be no more warehouses left to fulfil demand, and this is when the conversion of existing commercial property could be useful.
Investors who have commercial mortgages on empty retail properties that are costing them money could find that they will be in high demand from online retailers. Some investors may purchase other types of commercial property with the intention to convert them to warehouse space.