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Thinking about investing in warehousing? Read this

Warehousing has been a boom market for commercial property investors but with the end of lockdown restrictions in sight, their attractiveness is being questioned. Should investors change their strategy, and if so, how?

Over the last 12-14 months, demand for warehousing facilities has surged as people have turned to online shopping as a result of the Covid-19 pandemic. The change is consumer behaviour has been extraordinary and retailers have been scrambling for extra space to cope with the increase in online activity. As a result, the warehouse space has been a key focus for commercial property investors.

However, as we go into the second half of 2021 and we expect to see an end to lockdown restrictions, there are doubts over the longer-term performance of the warehousing sector. Unsurprisingly, as physical stores reopen, customers have returned, using their feet rather than their devices to shop.

The big question is, how will this return to a degree of normality affect the performance of the warehousing sector?

Is the value of warehousing here to stay?

Tellingly, real estate group CBRE is bullish about what to expect from the space, claiming that thousands of new warehouses will be needed across the country to meet demand related to the upturn in online shopping. The message is clear: our new shopping habits aren’t going to change.

At the same time, new data from the Office for National Statistics show some initial shrinking in the share of online shopping. Identifying a trend here is difficult, but it is not unreasonable to look at this as simply a stabilisation or a blip caused by the novelty of shops opening again. All eyes will be on these figures going forward.

So, what is the best course of action for commercial property investors?

How warehousing looks for commercial property investors

Looking at the trends, it seems that warehousing facilities remain a good investment. The new reality and popularity of online shopping looks set to stay, not least as consumers continue to enjoy its convenience and the pandemic remains an ongoing concern.

Notably, in an increasingly competitive marketplace, faster delivery times are becoming more and more important. This is making warehousing facilities located in or near town and city centres more valuable. If commercial property investors want to fine tune their plans for the warehousing space, this is a development to consider.

Investing in warehousing and commercial property finance options

The commercial property investment landscape has changed dramatically since the beginning of 2020 and as the development of the warehousing space suggests, this evolution is ongoing. Warehousing facilities offer investors good returns but careful planning is essential.

Also vital is having access to the right finance facilities. In a market characterised by flux, where flexibility and decisiveness are critical to securing a good deal, it is important to work with a commercial loan and mortgage lender that can provide access to all the available funding options, including the services of alternative lenders.

To find out more about A&T Business Associates services for commercial property investors, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.

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