Jason Rockett (pictured), managing director of industrial and logistics property company, Potter Space, shares his view on the small to mid-box (sub-100k sq. ft.) property market in light of the company’s new research report, ‘BIG Things in SMALL Boxes’, conducted in collaboration with Savills.
An increasing lack of land is blocking growth for businesses in the small to mid-box (sub 100k sq. ft.) warehousing sector, our latest report has revealed. The stagnation in development has been shown to be holding back job creation and is costing the economy £480 million in Gross Value Added (GVA) per year.
The second edition of our annual industry benchmarking report, BIG things in SMALL boxes, commissioned in collaboration with Savills, aims to lift the lid on the challenges faced by the small to mid-box segment of the market and highlight potential solutions.
It has revealed that the biggest challenge facing the small to mid-box logistics property sector is that of ‘suppressed demand’. This is where demand for space far outstrips the supply of units and land available, with the average figure of suppressed demand currently at 38 per cent across England. It is this lack of supply that is stifling growth in the I&L sector with a significant loss of opportunity for the UK economy.
Among the worst affected areas are Nottingham and Derbyshire (51 per cent), Birmingham (57 per cent) and Leicestershire (101 per cent). While the Midlands is undoubtably an area of focus for the industry, being home to the logistics ‘Golden Triangle’, there are also improvements to be made in areas such as Stoke and Stafford, where suppressed demand currently sits at 50 per cent, and Crawley in the South East, where demand has been suppressed by 166 per cent.
The growing need for space within the small to mid-box sector is undeniable, but there are numerous barriers to the rapid increase of development of smaller premises, often due to decisions made by local planning authorities to provide land to big-box schemes and residential developments. Change is needed now to unlock the supressed demand across the sector and ensure that it continues to grow – generating jobs and wealth for local communities.
To combat these issues, there needs to be a coordinated approach from Government and local authorities to identify opportunities for small to mid-box development alongside other sectors. This will lead to an opportunity for collaboration between a mix of developers.
Co-location of small box schemes alongside big box is a large part of the solution. The responsibility for making this happen lies with local authorities who must think outside the box and seek to understand the benefits that mixed schemes can offer to local economies, workforces, businesses and consumers. Local authorities should take a positive approach to planning to unlock economic benefits and local planners should consider land that is unsuited to bigger warehouses as opportunities for smaller facilities, including areas close to residential developments, beside motorway junctions or railway tracks. Collaboration is key to ensuring that millions of pounds in GVA is unlocked.
