Warehouses were never very popular amongst commercial property investors until about 5 years ago.  The warehouse sector was always the least glamorous but things started to change around 2018.  Since then, this sector has gone from strength to strength mainly driven by the likes of Amazon.

Although online retailing is not a new concept, this industry has grown exponentially over the past 5 years.  Amazon, Argos, Tesco, Ocado, Asos, Next and Very are just a few online retailers who serve the entire UK and require large warehouse, storage units and distribution units.

Who buys warehouses?  Basically, anyone who is a commercial property investor.  Warehouses have many advantages over the retail, office and residential property sectors:

1. In the past, industrial land has been cheap to buy.
2. Warehouses are cheap and quick to build.
3. They are now easy to let as the above, and other companies, fight for space.
4. Warehouse are easy to value for lending and rent review purposes.
5. Rents on warehouses have outpaced rents on shops and offices.  
6. The tenants who occupy warehouses are now some of the largest companies in the world which make the properties they occupy more valuable.

As a result of the above, warehouses have become the most popular type of commercial property amongst investors and developers.  There has been strong rental growth and strong capital appreciation throughout this sector.  Individuals, property companies, pension funds and institutions are now all seeking to buy warehouse investments.  This sector will continue to offer investors a safe haven for their money in spite of falling property values and the global recession.

One must be careful when looking to buy warehouses.  It is easy to get confused between warehouse and industrial units.  The former is a unit used to store goods whereas the latter is a building used for production.  Warehouses are more popular and where investors can get the best returns.

As the global recession bites, the cost of living crisis continues, inflation and interest rates continue to rise and taxes increase, online retail sales will suffer.  However, people will still need to buy food, clothes and household goods so companies like Amazon, Argos and Tesco will be able to ride this downturn and will still require warehouses.  There may be fewer people and companies buying and selling warehouses but this market will remain relatively robust and still outperform other markets.