If confirmation of the growing value of warehousing investment is needed, it can be found in recent strategy development at Amazon and John Lewis. Warehouse space is very much hot property.

The pandemic has turned the commercial property market on its head, not least by accelerating the trend for online shopping. As a result, demand is rocketing for warehousing and other logistics sites – every billion of online sales needs around 1.4 million square feet of warehousing according to Knight Frank – and the sector has emerged as a trailblazer for market renewal.

Who is driving the demand for warehousing space?

Unsurprisingly, major retailers and supermarkets are at the forefront of the trend for warehousing investment, benefiting from scale and flexibility and the resources to react to sharp downturns in traditional revenue streams.

Notably, John Lewis has announced plans to lease a mega-warehousing site in Milton Keynes, at an estimated one million square feet, which will help it manage its growing online trade. This follows the signing of a three-year lease on a 300,000-square feet distribution site in Leicestershire.

Another big mover is Amazon, which has already signed almost 20 letting deals on warehousing property in 2021. Another 20-year lease deal, worth an estimated £97 million, is set to see the retail behemoth surpass its 2020 spending level.

Tellingly, according to Knight Frank, 37 million square feet of warehousing is set to be constructed in 2021, a marked increase on the 23 million square feet recorded in 2020 and 21 million square feet in 2019. In terms of investment in warehousing, spending reached a record £6 billion in the first six months of 2021, compared with £2.7 billion in H1 2020.

Beyond the retail giants – who else is fuelling growth in warehousing?

The likes of John Lewis and Amazon are undoubtedly major drivers behind the boom in warehousing property, but huge retailers not the only key players. Industrial space is also in demand as distribution sites for mid-sized fast-moving consumer goods firms, as logistics sites for delivery companies and as corporate data centres.

The signs coming from the market are clear – warehousing is a sector to target. And this is not the only retail-related property sector that investors should be looking at. Interestingly, the decision to invest in warehousing facilities by John Lewis comes in the wake of the unveiling of plans to build residential property on its retail, supermarket and distribution sites. This is another key commercial property trend set to define the market in 2021.

How property investment finance is evolving

Also shaping what looks like an era-defining year in commercial property market development is how investors are accessing capital. With the market rebounding and still evolving, it is vital that investors can be decisive, flexible and quick. This is why it is important to have a commercial loan and mortgage lender that provides access to all the available funding options, including the services of alternative lenders.

To find out more about A&T Business Associates services for commercial property investors, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.