The Industrial Shed Market Just Got A Shot Of Pure Adrenaline

When smart economists first recognised COVID-19 as a genuine threat, they didn’t immediately imagine economic armageddon. Instead, they entertained the idea of a rapid shift in the structure of production. In their view, we were going to see a reallocation of resources away from interpersonal interactions, and towards something impersonal. 

In many ways, that’s precisely what happened in the industrial shed market. Before the crisis, demand was humming along at a regular pace. But then, once the pandemic hit, it shot through the roof as more businesses attempted to open facilities out of town. Prominent tenants included supermarkets and grocery stores. But there were others too – firms that needed to switch to online distribution fast. 

Data suggests that the uptake of industrial sheds rose a staggering 128 per cent in the first half of 2020, dramatically exceeding the industry’s capacity to bring on new supply. Total industrial shed usage went up considerably, with the most substantial capacity utilisation in history in the UK. 

We’ve also seen a dramatic rise in the demand for ancillary firms. Industrial painting and decorating services are currently experiencing a boom as new tenants customise their units. 

Commercial property vendor and industry expert Savills says that the strong takeup of industrial space is a continuation of trends that were already underway before the pandemic took hold. Total utilisation reached a peak in 2019 of 7.26 million square feet, up from 4.24 million a year before. 

According to representatives from the firm, the industry is trying to accommodate more enquiries brought about by the structural effects of COVID-19 on the economy. The volume of deals continues to rise, with large clients committing to make increasingly sizeable commitments. Kelloggs just agreed to a purchase of 525,000 square feet. Delivery outfit Hermes asked firms in the sector for a massive 290,000 additional square feet to support its operations in the north-west. 

Logistics Also Saw A Boom In Orders

Logistics, as a whole, saw a massive increase in demand for space. Hull’s quayside area saw a significant increase in demand, partly thanks to the need for international products, and partly because of the government’s plan to transform it into a freeport. Immingham and Goole also saw upticks in warehouse requirements, with both towns supplying major cities in Yorkshire with consumer products. 

The Midlands saw something similar. Reacting to crisis-induced demand, Amazon requested 550,000 square feet at a cross docked warehouse near Nottingham. And budget grocer Aldi has committed to a 1.3 million-square-foot development in Coalville and Market Bosworth in Leicestershire. 

High Demand Across The Entire Country

The industrial shed market, therefore, is experiencing a boom as it has never seen before. Record enquiry levels mean that shed operators are finding it difficult to process the sheer volume of inquiries. Activity in the East Midlands, for instance, increased by more than 15 per cent compared to the same period last years. Vacancy rates remain spectacularly low, with the idle unit rate standing at just 6.5 per cent on average across the country.