Longer term problems - not Brexit - lie behind demand for warehousing space, says expert
PUBLISHED: 06:04 31 December 2018
Pent-up demand for storage space is being driven by longer term issues of supply, rather than Brexit, a Suffolk property expert believes.
Peter Elsom, of Elsom Spettigue Associates in Woodbridge, said storage space was in demand - but not at any price.
The fallout from the credit crunch of 2007/08 meant many warehousing locations had made way for far more lucrative housing development schemes, choking off supply.
Brexit is being blamed for an increased demand for storage as businesses look to stockpile raw materials or products because of fears of potential hold-ups at borders if the UK slips into a ‘no deal’ Brexit.
But Mr Elsom believes the factors underpinning rising demand date back much further than the recent fallout from the European Union referendum result.
And many cash-strapped businesses were finding space at business parks on redundant farmyard sites rather than the more traditional - and costly - Ipswich locations to store goods, he suggested.
“I think if one parks the Brexit debate for the time being, the simple fact of the matter is that locally there’s not been any real new development because financially, it’s not cost-effective to build warehousing around Ipswich because of the rents they’ll achieve,” he said.
“What we are actually seeing is the shortage of new build in the recessionary years.”
This was coupled with sites being redesignated for housing, he said.
“I don’t think it’s got anything to do with Brexit,” he added. “I think one has to look beyond that and the simple fact of the matter is there has been no speculative new build in and around Ipswich.”
Added to this, hauliers taking loads from Felixstowe were likely to want to drive closer to their legal limit, taking them further inland to towns such as Peterborough and Huntingdon to drop loads, he said.
However, there was a demand around the Ipswich area driven by a shortage of stock. “Whether these people can afford to rent space, or bespoke space, is another matter.”
“People are operating on thin margins,” said Mr Elsom, who has been involved in the commercial property sector for the past 32 years. “The whole market has changed.”