Warehousing rents and employment

It’s often been assumed that there was a direct link between the demand for warehouse space and job bouyancy in the warehousing sector – however the pandemic has de-linked these two processes and recent statistics from the UK and USA show that while rents and vacancies might be bottoming out, demand for warehouse personnel has increased.


In America, transport (logistics) and warehousing are ranked amongst the fastest-growing sectors for the next ten years. Projections from the US Bureau of Labor Statistics say that retail trade and manufacturing are likely to experience the greatest job losses. The UK is likely to develop similar patterns, with self-employment increasing, especially into areas that have traditionally been structured as permanent salaried employment. This is most likely to happen in logistics with experienced HGV and last mile drivers preferring to manage their work on a self employed basis and possibly organising activity through one or more agencies.


These changes are being driven by the growth of the digital economy, which is increasing activity in logistics, warehousing and fulfilment at the same time as it’s reducing investment in retail trade, which is the sector predicted to lose most jobs in the next decade in both the USA and the UK. Other burgeoning sectors include energy. According to the National Grid, 42.5% electricity in 2022 was derived from fossil fuels, while 36% came from ‘renewable sources’: biomass, hydroelectricity,  nucle

warehousing rent and employment

ar, wind and solar. Electric vehicle battery manufacture is going to be a major manufacturing sector, not just because of cars and public transport but because warehousing is driving high demand for electric forklifts and autonomous vehicles. As a result, increased demand for warehouse space is being driven not just by retailers but by the need to manag

e new forms of demand and different ways of doing business – one of the biggest infrastructure imperatives at present is the need to fit charging points both inside and outside warehousing space – inside for electric forklifts, and outside for electric vans.


Warehouse demand drops at the mega scale


Paradoxically, the demand for warehouse space itself has hit a ten year low. Giants of the warehousing world, such as Amazon, Asos and Boohoo have been downsizing their warehouse occupancy and  Sainsbury has ‘already shuttered’ two Argos warehouses in the UK and in a shock move pulled out of Republic of Ireland operations entirely. Other brands have taken to subletting warehouse space, including Hotel Chocolat, showing that the freezing effect of the cost of living crisis is hitting retail at all levels, from economy to luxury. The combination of a reducing occupier demand with higher rates of construction activity suggests that vacancy rates will continue to rise, especially in the large and mega warehouse territories, where unless imaginative warehouse division processes take place, the sheer scale of large warehouse space – 250,000 square feet and above – is not appealing to most of the sector. Currently vacancy rates are 4.69% nationally which is a five year high, whilst the vacancy rate for large warehouses is 4.9%, a seven year high. Wales has the highest vacancy rate of all, at 7.85%.


Warehouse staff in high demand


At the same time, a report from the Office for National Statistics (ONS) shows a marked increase in demand for warehouse staff over the past 12 months. At the end of 2022, the demand had increased by 43.2% when set against pre-pandemic staffing levels. In parallel with its warehouse vacancy rates, the North East had a vacancy rate of 3.71% and the largest local demand for staff in procurement and warehouse management where demand rose by 98.1% over the year to the end of December 2022. While statistics haven’t been released for this year as yet, anecdotal evidence suggests that demand has continued to remain high. Management is the greatest area of demand, with a reduction in pick and pack vacancies being matched by the increase in automated warehouse processes that have taken some lower skilled roles out of the marketplace. A survey revealed that 58% of warehouse businesses expected to use temporary staff to supplement their permanent employees in 2023.


24 hour warehousing has also impacted the nature of warehouse employment – while the traditional model of shift work moved long ago to include a 24/7 operation, there is increased demand for a flexible workforce that can accommodate surges in demand or provide the necessary cover to manage peak order periods.


Warehousing and logistics


Logistics companies are also finding a gap between demand and available workforce. Over the summer of 2023, 30 UK prisons across England and Wales held Unlocking Retail and Logisticsevents which were designed to help UK businesses find staff for what is estimated to be a million vacancies in the UK, through employing qualified prison leavers, many of them on licence or day release.


At present the logistics sector employs around 1.25 million people and while at present only one in four of the logistics employees in the UK is female, this is expected to changed rapidly in the next five years. Additional government initiatives include the recent announcement that the

Department for Transport (DfT) will split the current driver Certificate of Professional Competence  (CPC) into two separate certificates; a new national qualification (N-DCPC) which will qualify drivers who work only within the UK, and an international one (I-DCPC) which will qualify drivers for journeys both in the UK and overseas.




So, even as the direct relationship between demand for warehousing and increased demand for staff is no longer directly correlative, the wider interlinkages show that warehouse rental creates a need for experienced personnel and e-commerce initiatives increase the requirement for a more flexible workforce, much of it part-time, that can help businesses to manage manufacturing, stock and deliveries in a time-sensitive fashion.

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