None left to buy?
Remaining in the single market without any restrictions or border controls would be something of a miracle for the UK Government. Consequently, the free flow of goods between the UK and the rest of Europe is likely to change.
Our population of 64 million represents a very large market for manufacturers so will they start to rebuild plants in the UK or accept and pay the additional cost Brexit and borders brings?
As demand for UK-manufactured goods increases so will the demand for warehousing, as finished goods will need to be stored prior to dispatch.
Even where goods are imported, full border controls will cause delays in movement of goods and longer lead times. This will necessitate warehousing carrying higher stock levels because UK retailers won’t accept lower availability which would make them uncompetitive, leading to lost sales. Warehouses that are already close to capacity may therefore need extending or duplicating.
Unfortunately, there’s a shortage of good quality warehousing across the country, as well as a short supply of development land. Many Local Planning Authorities still appear to be reluctant to authorise the development of new warehousing.
Perhaps the Government will consider the development of distribution parks at the more strategically important locations post-Brexit, which will also support such plans as the Northern Powerhouse.
In addition to Brexit driving a need for more UK Manufacturing, demand for logistics space is extremely driven by the growth in online shopping and new technology.
An Addleshaw Goddard report says “As of August 2016, according to the Office of National Statistics, online sales constituted 14.3 per cent of UK retail, and are projected by the Centre for Retail Research’s Retail Futures 2018 report to grow to a 21.5 per cent share of retail sales by the end of the decade.”
Prologis and Aberdeen Asset Management research in 2015 reveals that, three times as much warehousing space is required for online fulfilment compared with store-based fulfilment, and for every €1 billion spent online, an additional 775,000 sq ft of warehousing space is needed.
Colliers International has estimated that 18 million sq ft of new industrial will need to be built annually.
Many of the sites remaining for development, that are conveniently located by motorways present other problems, like poor utility connections or high brown field remediation costs.
Not only does the UK planning system restrict development on green belt – opposition by locals compounds the issue.
Under the current planning system, allocation of sites takes five years or more and it costs around £1 million per 1 million sq ft to secure outline planning. Add to that the dramatic increase in land prices.
Alex Verbeek, at IDI Gazeley says: “We are experiencing an imbalance between supply and demand far greater than has ever been seen before. Where planning and developer sentiment allows it is more cost effective to take a taller building than to take a larger unit to make maximum use of cubic capacity.”
Whatever happens, any factory or warehouse occupier requiring a larger unit will have to invest in bespoke building or become smarter in their use of existing facilities, through redevelopment of existing sites.
One company, with 50 years of experience in the construction sector, is ready to help. “An honest, guiding hand is what’s needed when weighing up the feasibility and cost of building or modifying existing plant” says ACR Managing Director Simon Robinson “We have a vast amount of expertise to offer in that respect and can really help you get the most out of the space available.” he added.
For some time now, ACR have been putting their building wisdom into planning the development of double-storey warehousing to provide a great solution given the shortage of available land for new development. Also, taller warehousing where mezzanine floors can be installed.
“Although none of us can accurately predict what Brexit will mean to UK business, it’s imperative that ‘UK Ltd’ starts planning to navigate any problems we may face and we’re on hand to help manufacturing and warehousing do just that” said Simon Robinson.
Graeme Wheatley of ITT Industries Ltd recently expressed his gratitude and appreciation to ACR after working with them on two major building refurbishments and modifications. He pointed out that the jobs were required to be completed in a very limited timescale and within tight budgets. He was not disappointed and speaks of “a very high standard of workmanship and quality” backed up by “an excellent facilities management programme, ensuring that the building and all its internal fixtures are fully maintained and kept within UK legislation”.
Simon Robinson added “Anyone hoping to deliver to the market without competition should start talking to us now”.
For more information go to www.acr.org.uk or call 01744 621669 – we work across the UK and Ireland.