eComm and social distancing could alter warehouse profile

Len Rosso, head of industrial and logistics at Colliers said: “With social distancing measures potentially lasting until the end of the year, this could have a further impact on supply chains and as a result, retailers and supermarkets in particular will potentially be seeking out larger footprints of warehouse space to store their goods.

“With increased social distancing, shops have a lower run-rate of customers through the store.”

This leaves excess stock if ordering levels are kept the same. Options are: secure extra warehouse space to store the stock; sell it by another channel (online), or scale back orders. Perhaps retailers will opt for a mix of all three?

Rosso continued: “The current circumstance has only intensified the increase in customers shopping online and the logistics sector has witnessed a number of clothing and grocery related requirements in the market as a result of the pandemic due to companies stockpiling their products.

“In addition, some companies which have struggled with supply chain problems during the pandemic will certainly be looking to upgrade their logistics space post COVID-19 to ensure there are no future issues.

“Many clothing retailers would have hoped to have sold their spring summer space by now. However, we are seeing summer stock coming over from China, Turkey and other manufacturing hubs and as a result, there has been a big uptick in short-term storage space for around 6-12 months.

“Yet, it must be noted that the continued growth in online only trading within these sectors is limited by the supply-side response. Whether occupiers have the physical ability to scale up with the current land and property supply side constraints in many core locations remains to be seen.”