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Food producers take up record volumes of UK warehouse space

Food manufacturers are leasing a record number of square feet of warehouse space in the UK as part of an industry-wide effort to forestall supply chain disruptions such as the fruit and vegetable shortages that occurred earlier this year and left supermarket shelves empty.

According to Savills, the demand from food manufacturers for shed space surged by 58 percent to a record 4.3 million square feet in the previous year, despite the fact that their efforts to prevent that breakdown were unsuccessful. According to the real estate group, this was the highest level of participation seen since the company began keeping records in 2007.

As concerns grow about the availability of food, food companies have been purchasing warehouses to serve many functions, including as slaughterhouses, indoor farms, and storage facilities. Many grocery stores were obliged to implement a rationing system for vegetables in the month of March due to a shortage of supplies, which was largely caused by the cold weather that was experienced in continental Europe and Africa.

Concerns regarding the availability of food have arisen in a number of nations as a result of climate change and the conflict in Ukraine, which has disrupted grain supplies from eastern Europe. Nevertheless, Kevin Mofid, a logistics property researcher at Savills, stated that he had a "strong suspicion" that efforts to employ suppliers located closer to home had been "far more evident" in the United Kingdom, where trading with Europe had been made more difficult by Brexit. The European Union provides the United Kingdom with over seventy percent of its food and animals.

According to Mofid, "more paperwork [has generated] delays in a time-sensitive supply chain... therefore you need to add one extra step."

He went on to say that the decision made by food manufacturers is also an illustration of how some businesses now want to manufacture more locally as a result of the impact that the Covid-19 outbreak has on supply chains.

According to Paul Frowde, general director of European sales at Mission Produce, the company wants to use the facility in Dartford to ripen avocados imported from South America. Frowde stated that this will assist boost food supply in the United Kingdom.

He continued by saying, "The rather interesting shortages of peppers and cucumbers in the UK have brought [food security] to the forefront of people's minds."

An analyst at Shore Capital by the name of Clive Black stated that rapidly expanding merchants such as supermarkets Aldi and Lidl, as well as Amazon's food sector, have been eager to purchase more distribution centres.

According to him, the rising demand for space may be a "knee-jerk reaction" to current concerns regarding food security, or it may signal a "realisation that outside of the EU, the UK needs a more stable logistics basis."

According to Savills, notable warehouse agreements have included the purchase of a distribution centre in Rochdale by US-listed avocado company Mission Produce and the purchase of a facility in Rochdale by pork producer Danish Crown. Both of these deals involved warehouses.

The move by food producers goes against the general trend for the need for warehouse space, which fell by 13 percent to 48 million square feet in the previous year. This decline was caused by declines in consumer spending, which forced merchants to cut back on storage.


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