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Shortage of warehouse space to lead to price rises

A new report suggests that online prices could be set to increase as a result of a shortage of warehouse space.

The research, from law firm Addleshaw Goddard, reports that the UK needs more than 18m sq ft of new warehouse space a year, but currently only 3.5m sq ft is set to be built. A shortage of space in warehouses could lead to rising rents, pushing up prices for retailers.

City-based distribution centres are said to be the most in demand, as they are increasingly used by retailers to facilitate services such as one-hour delivery.

Kevin Mofid, director of UK commercial research at Savills, told City AM: “In the long term, consumers could be set to see prices rise from online retailers. Record high levels of occupier take-up, record low levels of warehouse supply and a falling development pipeline are all creating a perfect storm in keeping vacancy rates low, which in turn will see rents rise.”

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