Inventory boom amid online shopping frenzy as construction bill hits highest since 1985


Monday, April 11, 2022 5:03 p.m

The UK is in the midst of an inventory boom after stormy demand for e-commerce businesses accelerated during the pandemic.

The Office for National Statistics (ONS) announced on Monday that the UK’s transport, logistics and warehousing sector has almost doubled since 2011. This makes it the fastest growing sector in the country, surpassing information and communications. Logistics companies have also grown eight times faster than retail as a whole.

The Covid lockdowns further accelerated the online shopping trend, with increased demand for online services and goods.

Online shopping, which accounts for a larger percentage of retail sales, has contributed to a dramatic surge in new warehouse construction projects, the ONS said Monday.

New orders for the construction of warehouses amounted to £5.6 billion in 202. That was more than any year since 1985.

The East Midlands accounted for a fifth of spending in 2021, while other storage spending hotspots were Yorkshire and The Humber (16 per cent), East of England (13 per cent) and the West Midlands (13 per cent).

The ONS calculated a “golden logistics triangle” which is within a four-hour drive for 90 per cent of the UK population. This area covers approximately 289 square miles in the West Midlands.

Last week, cityA.M. exclusively reveals that logistics warehouse users brace for a dramatic rate hike, particularly in London.

Rent growth means business rates payable from April 2023 will increase by an average of 18.7 percent, according to a forecast by Colliers.

Interest rates in the capital are expected to rise by 50.2 percent on average, and by 32.5 percent in the southwest.

A London entity with a current RV of approximately £500,000 will, after revaluation, find that the fee bill will increase from £266,000 per year to £399,630 per year.

Colliers estimates that Amazon’s largest distribution center in Tilbury, which currently pays an annual fee bill of around £3.625m, will see its annual bill rise to £4.745m. This corresponds to an increase of 30 percent.

John Webber, Head of Business Rates at Colliers, said cityA.M.: “For those occupying a large number of properties in the sector, like Amazon or even retailers like Next or John Lewis, these increases will add up, particularly for operators with prime locations in London and the South East, as well as those in the South West. This will have a significant impact on their overhead costs from 2023 onwards.

“We advise our customers to fully understand the likely impact of business rate repricing in 2023 and prepare now to avoid unexpected cost increases.”


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