Online retailing is an established yet growing industry and the property sector has had to adapt to these changes.

Due to the increase in online retailing 2016 saw a significant rise in demand for what are known as 'big boxes' - recognised by the average person as the huge storage sheds built close to the UK's motorway network for retailers' stock to be held. Approximately an extra 15 million square feet of extra space was taken up by these 'big boxes' during 2016.

“Retail changes have made investors think differently, and assess their investment choices”

Online Shopping

Retail changes have made investors think differently, and assess their investment choices. Typically attracted to the glamorous investments of the high street, they have had to face the reality of our changing approach to retailing and therefore will look elsewhere to invest. They have shifted their investment area, choosing to focus on a long term method of investing in real estate.

Indeed, developers are finding it hard to keep pace with demand and, as a result, rents have increased considerably, with developments in the Midlands around the M1 and M6 motorway networks benefiting most. Currently only about 20% of retail sales occur online, with food retailing experiencing lower figures. However, advocates of these developments feel that the market is still in its formative stages, and that it has plenty of growth left in this phase of the economic cycle.

“Advocates of these developments feel that the market is still in its formative stages, and that it has plenty of growth left”

The sector is largely dominated by major institutional investors whilst private investors will invest either via developers such as SEGRO, or through funds run by the major institutions like LGIM and Standard Life.

However there is a downside - the inflexibility of the product. The pure scale of these products means that if the storage sheds don't match what the ever-shifting retailer might want, or the development is put in the wrong place, then they will be redundant. However, one thing that developers can be sure of is that any major retail tenants will be vying for the sheds in and around the M1, M4, M5, M6 and M62, as well as on the A1. Location is of paramount importance.

Motorway
“Planners also have a significant challenge - how to disguise the sheds so that the motorway network does not become a blot on the landscape”

Industrial ShedsThe planners also have a significant challenge - how to disguise the sheds so that the motorway network does not become a blot on the landscape. These 'big boxes' are, as the names suggests, large unsightly buildings, that score zero points for looks and environmental contribution. However, investors believe that they can boost capital value and ensure that returns continue to be strong.

“The demand is typically for strong development, construction and project management staff”

So how does this affect recruitment? PSD has been involved with a number of developers and investors who are active in the sector. The demand is typically for strong development, construction and project management staff. On the investment side, asset managers, analysts and transaction specialists are in demand. We have also seen private equity businesses get involved in the sector, as they continue to look at options not just in the UK, but also in Mainland Europe.