For UK businesses looking to expand, multi-storey warehousing isn’t typically the first port of call. Generally, businesses grow by acquiring new land, new sites or just more warehouse space. But after success in other countries across the world, its demand is beginning to grow. Read on as we explore the demand for multi-storey warehousing and whether it’s necessary in the UK.
The warehousing conundrum
The rapid rise of eCommerce has led to changing customer expectations in the UK and worldwide. Long gone are the days of 3 – 5 working days as the standard delivery terms. Now, consumers want the option of next day – or even same day – delivery for their clothes, gadgets or even groceries.
With this demand for faster delivery comes the need for better networks of warehousing. Businesses can no longer get by with a single, central warehouse when goods are expected at the other end of the country later that day. As a result, many businesses are searching for warehousing in urban areas – or close to them – to facilitate a fast, efficient delivery process.
At the same time, we are still seeing the value of urban land rise. According to the Office of National Statistics we have seen the value of land increase more than fivefold since 1995 which now exceeds the value increase of the properties built on it. Along with more competition from residential developers, this has meant that speculative development has simultaneously fallen over the past decade, as fewer developers are willing to risk new projects without formal commitment from retailers and the promise of their commercial return. Understandably, this has left many businesses looking for new ways to get into urban areas – or make the most of any existing urban land.
A high-rise solution?
One solution which is big, quite literally, in Asian countries is multi-storey warehousing. Places like Hong Kong, Singapore, Bangkok, Jakarta and Tokyo have been land-constrained for far longer than UK cities. As countries such as these have shifted to a more industrialised economy, they have seen a huge expansion in their urban populations and therefore the expansion of huge ‘megacities’. The result is extremely high land prices, amid a tight supply and strong demand.
To tackle this problem, Asian cities are building up on their warehouse space rather than across. This has become commonplace in the largest areas, with an average of 12 floors in Hong Kong warehouses and 5 in Tokyo and Singapore.
Multi-storey warehousing in the UK
So, is this something we will begin to see in the UK?
2008 saw the completion of the UK’s first multi-storey warehouse, with SEGRO’s two-storey ‘X2’ construction at Heathrow.
Ten years on, it seems to be slowly gaining some traction. SEGRO is planning another, larger, two-storey development in Enfield while Gazeley’s UK-first three-storey warehouse is set to be completed by the end of 2019 in Silvertown, East London. The warehouse will comprise of over 426,000 sq. ft. of space over three levels, providing enough space for either multiple or single occupancy.
The building will be used as a ‘last mile’ logistics hub for London and surrounding areas, targeting eCommerce, distribution and logistics customers. Alex Verbeek, MD of Gazeley, understands that with a scarcity of land available in London, and an increasingly on-demand economy, distribution and logistics operations must find new and innovative ways to keep up with increasing delivery volumes.
“This type of development has never been done before in the UK. A three-storey warehouse in such a central location will be hugely valuable for Londoners who will benefit from customers being able to deliver goods in record time. London is at the forefront of the digital revolution, but these services require an equally innovative supply chain to facilitate it. We feel that G Park London Docklands will make a big contribution to the infrastructure which is essential to support London’s evolution as a leading centre for digital commerce.”
A problematic development
While they are clearly an efficient option in Asia, the advent of multi-storey warehouses might not be so simple closer to home. A big reason why multi-story warehouses work in the East is because they already have large networks of small trucks. The standard delivery truck in Japan or China can navigate a multi-level warehouse without a problem and in contrast, the larger 44t HGV’s we have in the UK are simply not designed to go up and down ramps. This could pose an additional challenge for multi-storey warehousing in the UK.
It’s not just existing infrastructure that acts as a hurdle for multi-storey warehousing. With more risk and cost involved, developers are less likely to build a multi-storey warehouse speculatively. It’s much harder to speculatively build a functional space when what is “functional” for a multi-storey warehouse remains subjective in the UK.
Owner-occupiers, on the other hand, are unlikely to take the risk with something so fundamental to their success. And rightly so. This is a new era in warehousing. The cost to build will be significant and – although this solution offers more space compared to the site footprint – it will not be without additional risk to design and ceiling height.
How about planning permission?
The concept of multi-storey warehousing has no category at present. Local businesses and residents may also have something to say when plans arise for a 60-foot warehouse imposing on the local area. That’s not even considering the impact of extra traffic and road conditions in the surroundings.
Finding a flexible solution
Despite these challenges, it seems almost inevitable that multi-storey warehouses will become a practical solution at some point. How far into the future that will be remains unclear. In the meantime, however, businesses will continue to seek flexible and cost effective warehousing solutions for both their long and short-term storage needs.
Bis Henderson Space can help you to source any additional warehouse space that you require. With a wide network of logistics partners, we can source the additional space and operational services extremely quickly – without having to consider extreme measures like multi-storey warehousing. So whether you have experienced an increased forecast, peak periods, flash promotions, new contracts or mounting container charges – don’t hesitate to contact our expert team today to discuss your options further.
Want to receive the latest news, insights and research papers from Bis Henderson Group?