The current nature of UK warehousing: are we in crisis?

With 60 per cent of UK warehousing deemed to be unlettable by 2030, we explore the current state of UK warehousing and whether there is a crisis in the warehousing industry or if we have hope for the future...

Warehousing is the cornerstone of the United Kingdom’s supply chain. However, despite its critical role, the industry frequently encounters news of closures, redundancies, and companies facing insolvency.

Sam Fagan, director at Fagan & Whalley, commented: “While the HGV driver shortage received extensive publicity in recent years, the warehousing crisis has remained largely out of the headlines, yet it has been just as challenging for many businesses within our industry.”

But amidst these challenges, there is cause for optimism: the potential for a significant transformation. 

Rather than a crisis, could we be on the cusp of a new era for UK warehousing?

This month at Fagan & Whalley, we delve into the challenges confronting many UK warehouses and explore how the sector can adapt to thrive in these changing times…

What are the challenges of UK warehousing?

• 60 per cent of UK warehousing will be unlettable by 2030
• 18 per cent of current storage space out of service by 2027
• 82 per cent of UK warehouses were built before 2000
• 3.3 per cent warehouse vacancy rates in 2022

The challenges facing UK warehousing are multifaceted and pressing. By 2030, it is estimated that 60 per cent of UK warehousing will be unlettable due to non-compliance with upcoming energy efficiency standards. 

Since April 2023, all leases for commercial buildings across the UK must meet at least an EPC grade E. In 2027, this requirement will climb to grade C and, ultimately, grade B by 2030. According to figures from recent studies, this would mean 18 per cent of current storage space would be unusable by 2027, and a staggering 60 per cent of warehouses would be out of commission by 2030. 

This issue is compounded by the fact that a huge 82 per cent of warehouses were constructed before the year 2000, often lacking the modern facilities and technological capabilities required to meet current logistical and efficiency demands. 

Meanwhile, newly built properties that do meet these requirements, such as our 208,000 sq. ft state-of-the-art facilities at Frontier Park, for example, are in high demand and considered hot property.

With this in mind, in 2022, the vacancy rate of warehousing facilities in the UK was just 3.3 per cent. This indicates a severe shortage of available space and limits options for businesses seeking to expand or modernise their operations. It also puts additional pressure on an already strained infrastructure.

As mentioned earlier, with only 18 per cent of current storage space expected to remain in service by 2027, the gap between available and suitable warehousing space is expected to widen, presenting both challenges and opportunities within the sector.

So what can we do?

What is the future of warehousing in the UK?

Investment is needed. There is no doubt about it. 

The demand for new and modern warehousing has never been greater. This is driven both by government regulations as well as heightened demands from consumers for greater efficiencies and technological advancements. 

Here are the key areas where we believe focus is crucial: 

1. Warehousing UK: Investment into modern facilities 

Substantial investment into upgrading existing facilities and constructing new ones that meet modern standards of energy efficiency and technological capability is critical. This includes retrofitting older warehouses to comply with the upcoming stringent energy standards, helping to avoid the risk of them becoming unlettable.

2. Warehousing UK: Embracing technological advancements 

Secondly, as previously discussed, integrating state-of-the-art technologies is crucial for enhancing operational efficiency and competitiveness, particularly in this era of rapidly increasing consumer expectations.

Innovations such as warehouse automation, advanced warehouse management systems (WMS), and real-time inventory tracking enhance warehouse efficiencies and significantly improve customer satisfaction.

Moreover, they support businesses in meeting their sustainability goals by optimising resource usage and reducing waste. Each of these advancements plays a critical role in modernising operations and aligning them with contemporary demands and environmental standards.

3. Warehousing UK: Prioritising sustainability and ESG initiatives 

With that said, with environmental regulations tightening and consumer demand for green practices on the rise, warehouses must adopt sustainable practices.

This could include installing solar panels, recycling initiatives, improving thermal insulation, and using energy-efficient lighting and HVAC systems. These changes contribute to meeting regulatory requirements and reduce operational costs in the long term.

4. Warehousing UK: Making the most of data and increasing efficiencies

Next, by harnessing the power of big data, fellow warehouses can anticipate demand patterns, streamline operations, and reduce waste. Advanced data analytics can provide insights into inventory management, enhancing supply chain transparency and improving decision-making processes. 

5. Warehousing UK: Workforce training and development

Finally, as technologies evolve, so too must our workforce. Investment in training and developing staff to handle new systems and technologies is essential. 

This not only aids in retaining a competitive edge but also ensures that employees feel valued and invested in, which often reduces turnover rates and creates a more dedicated and loyal workforce.

Conclusion: Is warehousing a growing industry?

Here at Fagan & Whalley, we are lucky enough to have invested significantly in our facilities, team members and processes, positioning us at the forefront of the UK’s warehousing industry. 

Sam Fagan, Managing Director at Fagan & Whalley, reflects on this growth, “Despite our enduring success, it’s troubling to witness the struggles faced by others in our industry. We’ve managed to progress through strategic investments and the adoption of cutting-edge technologies, an advantage not all companies share.”

Looking ahead, we remain optimistic about the future of warehousing. “As the sector continues to evolve, we hope more companies will secure the support and funding they need to modernise and futureproof their operations,” Sam Fagan adds. This evolution is crucial not only for the well-being of individual businesses but also for the strength of the UK’s supply chain. 

2024 – The Year of Warehousing

With that said, we are delighted to acknowledge the UK Warehousing Association’s decision to designate 2024 as ‘The Year of Warehousing’. This initiative aims to place the industry firmly in the spotlight and secure the recognition it truly deserves.

The figures show that warehousing and logistics contribute an impressive £163 billion in Gross Value Added (GVA) to the UK economy, marking our sector as a significant employer throughout the country. ‘The Year of Warehousing’ is, therefore, set to spotlight the millions of workers in the industry and celebrate the crucial role the sector plays in our national supply chain. 

At Fagan & Whalley, we are excited about the potential this spotlight could bring to the warehousing industry and hope it draws much-needed attention and appreciation to our workforce and their contributions. 

For more insights from Fagan & Whalley, please sign up to our monthly newsletter here or give us call on 01282 771983 for details on our BRCGS-certified UK warehousing solutions.