Amazon battles for floor space in bid to crush High St rivals
AMAZON is snapping up UK warehouse space in an unprecedented property-buying spree, as internet retailers seek to crush their traditional rivals in a battle for supremacy.
The online behemoth acquired an estimated 4m square feet in 2017 – enough to cover 63 football pitches.
This was five times more space than its closest rival, according to research by Savills, as it increased its total warehouse space in the UK to 19.7m sq ft.
Amazon is at the forefront of the boom in online shopping, which has supercharged demand for industrial land as companies rush to keep up. In 2008 online retailers signed just 1.47m sq ft but by 2017 this has risen to 12.2m sq ft.
A report by Deutsche Bank suggests there is now so much call for storage space that traditional retail parks could be converted into warehouses.
It said: ‘Under-utilised retail assets such as certain shopping centres, retail parks, business parks, supermarket premises, inner city office space and car parks could be used for the storage and distribution of goods.’
Savills said that the trend would only accelerate as sales from events such as Black Friday, which is traditionally focused on bricksand-mortar shops, increasingly shifted online.
Kevin Mofid, head of industrial research at the estate agent, said the level of growth even exceeded the expansion of supermarkets when they were building larger, out-of-town centres.
He added: ‘ You had a point about ten years ago when the grocers, –Tesco, Sainsbury’s and so on – were very active and they took a lot of space but it was nowhere near this level.’
A stark illustration of the uncertainty over shopping centres’ future came earlier this month when billionaire Australian tycoon Sir Frank Lowy sold his Westfield empire to French rival Unibail-Rodamco for £18.5bn.
Media baron Rupert Murdoch, who is a long-time acquaintance of Lowy, said that the deal came about because ‘they can see what Amazon is doing to bricks-andmortar retail’.
Savills said the regions chosen for warehouses were also likely to change in future.
Whereas the Midlands and the South East had been favoured in the past, a lack of available sites and fewer unemployed people to hire could make those areas less attractive in future.
Instead, regions such as Yorkshire and the North East could become prime locations. Energy demands are also likely to play a crucial role when companies choose sites.
Savills estimates that a fully automated warehouse – such as those used by online groceries service Ocado or Amazon’s hightech robot facilities – can require as much power as 10,000 threebedroom homes.
It means the sites chosen will have to be in areas where big demands for energy can be met by the National Grid, which is already under strain in some places.
Richard Sullivan, Savills’ national head of industrial and logistics, added: ‘We can only expect further growth by retailers looking to take advantage of changing consumer habits. In order to cater to this, industrial landlords and developers will need to look past traditional hotspots and embrace new key locations that offer deliverability and can provide the power, labour and infrastructure that occupiers need to be able to build a successful supply chain.’
There is also speculation that Amazon’s mammoth spending spree could grow if it expands into other industries.
It already offers the Amazon Fresh service but the firm’s acquisition of Whole Foods earlier this year has fuelled speculation that it could soon seek to take on the Big Four supermarkets – Tesco, Sainsbury’s, Asda and Morrisons – to deliver groceries.
Shares in the traditional retailers all fell after the £10.7bn Whole Foods deal in the summer.