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Economic slowdown sparks oversupply of warehousing
Page 16
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By Chris Tindall AN ECONOMIC slowdown coupled with record levels of speculative development in warehousing is resulting in a growing number of units standing empty across the country, according to a report by chartered surveyors Gerald Eve.
But now that the Government has scrapped business rates relief on empty warehouses, concerns are growing that, in the long term, warehousing availability for logistics operators may be limited.
The Gerald Eve report says there was a 5% jump. to 20%, in the total volume of space taken up by logistics operators in 2006/07. It adds that the industry has taken on some significant warehouses of over 500,000ft2 (46,45010 on behalf of clients. In addition, retailers such as Tesco, Marks & Spencer and Next took on warehouses that were more than one million ft2 (92,900m2).
South Yorkshire, Avon and Somerset, the south-west Midlands and the north-east Midlands are all hot spots for developers creating space for warehousing. The report adds that more space was built speculatively in 2007 than in any other year in the past decade, but now there are signs of overcapacity in some areas, particularly in Merseyside and Cheshire.
As a result, Gerald Eve says, operators looking to lease warehouses may enjoy favourable rates as landlords try to fill space in an attempt to avoid paying business rates tax, but this may not last forever.
-Landlords holding places will be keener to negotiate terms, lower rents, and offer greater incentives,says Sally Bruer, head of industrial research at Gerald Eve. "But long-term effects could include limited availability for occupiers."