Amazon and other online giants changing the game in UK commercial real estate

Posted on 6 December, 2017 by Bailey Clarke

With the rise of online retail giants such as Amazon and eBay people have changed how they shop with many now utilising online vendors on a regular basis. Online retail is making shopping more convenient for customers and in turn causing a huge demand for storage premises in the UK. Because of this growing demand, investors are moving into the UK market and getting involved in the flourishing commercial real estate marketplace.

MOSCOW, RUSSIA - DEC 14,2011: Interior of new warehouse on December 14, 2011 in Moscow, Russia. One of the largest modern warehouses in the Moscow region, which reaches about 10,000 square meters

Retailers are having to react as well, with many looking for more storage space to cope with the rise in online shoppers and the growing demand for items to be delivered quickly. It is common for buyers to expect every one of their orders to be delivered just a few days after ordering, especially at busy periods of the year like Christmas. This new customer expectation is putting the pressure on retailers to have available storage space throughout the country to ensure delivery demands can be met. Retailers are employing tactics like utilising bigger storage units in rural areas and smaller units in the larger cities like London to reduce costs.

Though this is a great turn around for the industry, investors are the real winners and could be seeing double figure returns with the new demand. Unfortunately, the same can’t be said for the opposite side of the commercial market with offices still suffering. With the UK having very high employment levels there is becoming less demand for office space as most of the demand is already satisfied. In addition, with most office space being concentrated in London and Brexit hanging above us, uncertainty with how Britain will work with other countries in Europe after 2019 is leaving many unsure of which direction to move.

With these changes in the industry, it could compound an unsettled feeling in the office sector, but it could also be the start of something new and exciting in the commercial real estate market.

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