Getting the right location for your warehouse is crucial for manufacturers, distributors and retailers alike. Whether it’s dealing with peak periods or just facilitating a constant stream of online orders, they need stock in the right place at the right time. With that in mind, certain parts of the UK have become more popular over time – with the ‘Golden Triangle’ region particularly sought-after.
In recent years, however, retailers have started to look further afield. In this post, we discuss the value of the logistics ‘Golden Triangle‘ versus other emerging regions and whether things could be changing.
What is the Golden Triangle?
The Golden Triangle refers to an area of the East Midlands that has become renowned for its high density of distribution facilities and being home to the biggest names in retail. Spanning the area between the M1, M6 and M42 motorways, going as far west as Birmingham and stretching as far north as Nottingham, this vast area is considered prime real estate. In fact, there is an estimated 150 million square feet of warehouse space in the Midlands – more than in Greater London, Scotland and Wales combined.
Marks and Spencer £200m fulfilment centre at Castle Donington overshadows many sites in the Midlands at almost one million square feet in size. A little further south at Magna Park is home to Disney and Asda, whilst Tesco has a huge operation at Daventry International Rail Freight Terminal (DIRFT). Leading 3PL’s, couriers and manufacturers have invested heavily in the area over recent years, meaning there is a large take up of new logistics facilities and competition is high.
Why is it sought after?
Locating a distribution centre within this area ensures that businesses can enjoy easy access to the major motorways, ports, railways and airports, enabling deliveries to reach over 90% of the UK population within four hours. Naturally, that is a huge advantage to companies who ship or distribute products and want to remain competitive in today’s market.
With the growth of omnichannel retail, and heightened demands placed upon retailers, it has become even more important to deliver product as quickly as possible in order to maintain a competitive edge. Next day is no longer fast enough with the likes of Amazon, Argos and Next all now offering Same Day delivery, and having the capability to replenish stores more rapidly allows stores to maximise sales and focus on the customer experience.
Are things changing?
High demand doesn’t come without its consequences. This prime stretch of land has become almost saturated with warehouses. Demand for this location has also seen rent prices continue to increase by over 2.8% in Q1 of 2018, and with labour and energy prices also becoming a real issue, there are now more hurdles to overcome than ever when investing in the region.
It could be these factors that have led several companies to start looking elsewhere in the UK for prime warehousing locations. Is focussing distribution activity in this region still going to be a financially viable option?
New data from Savills demonstrates that the Golden Triangle is slowly losing its unchallenged status as the go-to location for big sheds, as online retail is reshaping the geography of the commercial property market. To establish a quicker and more efficient delivery service into stores and customers, firms are now starting to focus on developing their final mile delivery centres closer to other major population centres.
Amazon has recently announced plans for two new warehouses in the East and North West of England, Savills figures show Amazon took 4 million sqft in 2017 — 82% of that was outside the Midlands. Lidl is also hot on their heels, taking new warehouses located near Bristol, and more recently in Leeds.
Another area of interest is that surrounding the M40, where several major brands have taken units. While the M1 is often considered the king of logistics, over the past five years The Entertainer, Aston Martin, Hello Fresh, Amethyst and Kärcher have all chosen the M40 corridor as their location of choice.
Why? In short, it avoids the majority of the issues associated with the high demand of the Golden Triangle and the M1 mentioned above.
The M40 has comparatively low congestion, with an average of 17% fewer vehicles using the M40 than the M1. The M40 also crucially provides easy accessibility to central London via a direct route to the A40 or a transfer to the M4. With over 600,000 vehicles passing through the M40 per day, it certainly has the accessibility, and with 75% of the UK population reachable in four hours it does pose strong competition. In addition, the area has seen strong investment in new housing developments, resulting in a potential abundance of workers.
The M62 corridor in the North West of England is also seeing a great deal of investment, along with the areas surrounding Glasgow Prestwick Airport – as the location will pioneer off-site manufacturing to help build an expanded Heathrow.
Competition within the Midlands
Despite these growing trends, the Midlands is still considered the hotspot for UK logistics. According to Savills, 41% of warehouse space transacted in 2017 was in this region – an interesting figure which further demonstrates that although the Golden Triangle remains important, we’re now seeing blurring around the edges.
The West Midlands gained 5.86 million square feet of warehouse space in 2017, compared to 4.24 million for the East Midlands. It was the first year in which the west has had the higher uptake.
It seems despite the Golden Triangle still being the most desirable location for businesses, the added demand and premium cost is causing it to stretch and expand. While much larger businesses like Amazon are moving further afield with multiple mid-size warehouses to accommodate growing demand for their products across the nation, it still makes sense for most companies to hold larger sites in or around the Midlands for the time being.
Finding the best location
With the industry changing so rapidly and consumer demand for an increasingly efficient service, businesses need to manage their warehouse network and promptly assess the best locations for their sites. And there are several factors to consider – from transport times and rent costs to the availability of both warehouse space and the workforce.
Based in Northampton, at the heart of the Golden Triangle, Bis Henderson Space has developed a wide-reaching network of suppliers and customers, which enables us to access space not commonly available in sites across the UK.
Using our established network, we help our clients quickly source the additional warehouse space and operational services they need, wherever their preferred location.
If you would like to discuss expanding your warehousing portfolio please don’t hesitate to get in touch with one of our team.
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