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Is a 'shed' bubble emerging in the property sector?

Investing in 'sheds' or warehouses has proved profitable in recent years, but is the sector at risk of overheating?
Is a 'shed' bubble emerging in the property sector?

Last year, the real estate warehouse market broke almost every record going. According to data from consultancy Savills, property investors spent an unprecedented £18.37bn snapping up warehouse assets last year.

Savills also calculates that the amount of newly leased warehouse space – or take-up, as it is known in the industry – hit an all-time high of 55.1mn sq ft surpassing the previous record, which was set just one year earlier in 2020, of 51.6m sq ft. By contrast, the vacancy rate – the amount of available warehouse space as percentage of the total amount of warehouse space – hit an all-time low of just 2.9 per cent.

The sky-high take-up and rock-bottom vacancy rate is being driven by the UK’s continued dependence on online shopping. Ecommerce companies, and logistics companies servicing ecommerce, as well as the supermarkets and traditional retailers attempting to shift to online currently represent the bulk of warehouse take-up. Then came the pandemic, which turbocharged this rush to online shopping.

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