I have just read a piece of research by Potter Spaces and Savills, highlighted by Sam Merrett – Herefordshire & Worcestershire Chamber of Commerce’s Policy Executive – that I feel very nicely sums up the lack of smaller to medium size industrial spaces locally. Indeed, I had the opportunity recently to share my observations with Sir Bill Wiggin MP at a Chamber round table event, hosted by Clive Brooks at ABE Transport in Ledbury. This shortage seems particularly bad in Herefordshire where to find space in the 3,000 sq. ft to 20,000 sq. ft range seems near impossible. I have personal experience recently of two member organisations who are ‘trapped’ in units that they have outgrown: one of whom had declined any enquiries from new customers in the first half of 2023. While their capacity is good, the physical room to move and store products overnight (they are a bakery) is holding back their business growth.
The report highlights: –
- Lack of available warehouse space will cost England’s economy £480 million each year
- Demand for sub-100k sq. ft. warehouse space suppressed by average of 38%
- Co-location in smaller warehouses accounts for 16% of new floorspace in England since 2020
New research reveals a lack of land is blocking the growth of the small to mid-box (sub-100k sq. ft.) warehouse sector, holding back job creation and costing the economy £480 million in Gross Value Added (GVA) per year. With local planning focused on larger ‘Big Box’ (>100,000 sq. ft.) warehouse schemes and residential developments (68% of all new developments in terms of space, went to the ‘big box category > 100,000 sq. ft), change is needed to make the best use of available space.
The biggest challenge facing this sector is that of ‘suppressed demand’. This means that demand for space outstrips the available supply of land for development.
The Midlands has been particularly affected, above other areas. Whereas the average suppressed demand for England is 38% in the local midlands regions it sits at 50% – 100%. Macroeconomic forecasts suggest momentum for the small to mid-box market will increase around 2025 to 2026. We therefore need to build the sector out now in anticipation. If the supply deficit persists, this will further constrain availability and put upward pressure on rents, which are a real cost to businesses and their bottom line.
The small to mid-box warehouse sector currently provides 2.1 million jobs in England, with more waiting to be created. It is responsible for 31% of apprenticeship starts, with 13,000 apprenticeship roles per year beginning in small to medium enterprises (SMEs). If the undersupply of land and space is addressed, this figure could increase to a potential 18,000.
One initiative that has considerable potential involves big-box operators working more closely with those in the small to mid-box sector. The siting of a variety of sizes of warehouse together on one business park or estate, would certainly be appealing to local authorities and a wider spectrum of business types. However, that does probably not offer a solution in rural Herefordshire.
You can request a copy of the report here: https://www.potterspace.co.uk/storage/app/media/big_things_small_boxes_2023.pdf
To end, may I wish you all a pleasant Christmas and New Year and I look forward to catching up in 2024.