Market sizing the UK Cold Chain Presentation of findings 23 rd October 2020
Agenda Savills Context Presentation of findings Next steps 1 2 3 4
ACQUISITIONS, RESIDENTIAL ENERGY & LEASE SALES & MIXED USE POWER ADVISORY LEASING Savills BUILDING FUNDING CORPORTAE CONSULTANCY & DEVELOPMENT REAL ESTATE PROJECT & INVESTMENT Wider Logistics MANAGEMENT Working Group RESEARCH & PROPERTY RETAIL PLANNING MARKET RATING MANAGEMENT LOGISTICS ANALYSIS
Best ever year for take- up surpassing 2016’s total 45 • Take-up in 2020 has totalled 38.6 million sq ft, 3.6% above 2016, 40 the previous highest record. 35 • In 2020, 54% of take- 30 up has been built-to- Sq ft (millions) suit, 26% of space transacted has been 25 second hand and 19% has been speculatively developed space. 20 • In 2020, 29% of the 15 total take-up has been from Amazon. 10 • 5.5m sq ft (14% of 5 take-up) of deals are for lease lengths under 5 years of which 2.8m 0 sq ft (7% of take-up) is 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 for lease lengths 12 months or less Q1 Q2 Q3 Q4 3 year rolling average
3PL’s were dominant in 2019, online retailers are leading in 2020 2019 2020 • In 2020, 36% of space 3PL 40% transacted has been from online retailers. 35% Other Automotive 3PL’s have accounted 30% for 21% of space 25% transacted followed by 20% Grocery Retailers and High Street Retailers 15% Wholesale Food Production accounting for 11% of 10% take-up each. 5% • 16.7 million sq ft of 0% cold storage space is under construction or being fitted out Parcel Grocery Retail Online retail High St Retail Manufacturing 5
When vacancy falls……rents rise! 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 North West East Midlands West Midlands Yorkshire & The Humber South East Inner M25 South West East of England UK
A red hot property sector
Working with the Cold Chain Federation Exam Question: How much cold storage space is there in the UK? Where is it? Who occupies it?
Definitions Third Party storage – ‘Public’ cold stores operated by independent third party logistics providers. These warehouses serve a range of chilled and frozen customers from farmers to retailers. Retail and Food service – ‘Private’ cold stores operated by major retailers and food service providers, eg. Regional Distribution Centres and other delivery hubs Processing and manufacturing – ‘Private’ facilities associated with the manufacturer or processing of temperature controlled products. Eg. meat and fish processing, or convenience food manufacture Farming and Producers – ‘Private’ facilities on farms associated with the storage of fresh produce after picking. Eg. fruit and vegetables Other – Vacant facilities or specialist warehouses.
Headlines 678 units over 50,000 sq ft 134m sq ft
Cold storage warehouses by region 25 • Our sample has Scotland Wales 2% identified 678 units Northern 2% North East Ireland over 50,000 sq ft with 3% 20 0% a significant portion given to cold storage Yorkshire & The Sq ft (millions) • This equates to 134m Inner M25 15 Humber 6% sq ft of warehousing 15% West of which there is 48m Midlands sq ft given over to 10% 10 North West cold storage 13% • East of Yorkshire is the region England that has most cold 5 11% storage with 20.4m sq South East ft, equating to 15% of East 13% Midlands the total proportion 0 South 12% West 13%
Cold storage by region and size 25 • By unit count the most prevalent size band is the 100,000 20 to 200,000 sq ft category with 265 units or 39% Sq ft (millions) • The SE has 15 proportionally more units over 500,000 sq ft than any other 10 region where 10% of the stock falls into this category 5 0 East East of Inner North North Northern Scotland South South Wales West Yorkshire Midlands England M25 East West Ireland East West Midlands & The Humber 50-100,000 100-199,999 200-299,999 300-399,999 400-499,999 500+
Cold storage units by region and unit type 100% • By unit count 42% of the units are 90% classified as 80% processing & manufacturing 70% facilities. • However by 60% floorspace 63% of the 50% space is either retailer or 3PL distribution 40% • In London and the SE 30% 60% of the floor space is retailed to 20% retailer distribution where as in the East 10% of England 63% of the 0% floor space is related East East of Inner North North Northern Scotland South South Wales West Yorkshire to processing & Midlands England M25 East West Ireland East West Midlands & The manufacturing Humber 3PL storage Farming/Producers Other/Unknown Processing & Manufacturing Retail & Food Service
Cold storage units by size and unit type 100% • In the 500,000 sq ft + category over 70% of 90% the units are occupied by retailers 80% • In the smaller size 70% bands the dominant occupiers are 60% processing & manufacturing 50% occupiers 40% 30% 20% 10% 0% 50-100,000 100-199,999 200-299,999 300-399,999 400-499,999 500+ 3PL storage Farming/Producers Other/Unknown Processing & Manufacturing Retail & Food Service
The 3PL sector in focus • Of the 678 units identified in the UK 181 are occupied by companies in the 3PL sector, accounting for 31.5m sq ft • Yorkshire being the region with the most units (34) and also the highest floorspace (6.7m sq ft). • Other regions with a high concentration of 3PL occupied units are the West Midlands with 27 units (15% of the total), the South East with 23 units (13% of the total) and the East Midlands with 19 units (10% of the total). • The majority of space occupied by 3PL’s is in the smaller size ranges with 74% of the space occupied being under 200,000 sq ft. • Just 7% of the units occupied by 3PL’s are over 400,000 sq ft but this reflects 20% (6.2m sq ft) of the entire floorspace occupied by 3PL’s.
Next steps • Revisit the data in 2021 to add more detail covering • Unit age • Unit height • Refrigerant in use • Maintain database with new and planned facilities • Your suggestions!
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