Building slump and online retail surge may spark warehouse shortage

One of the country’s top property agencies has warned that the pause in building activity due to Covid-19 will lead to a shortage of warehouses, just as demand cranks up to cope with an expected structural shift towards online shopping.

The warning from Savills comes as news emerged over the weekend that Amazon has leased its first ecommerce warehouse in Dublin and is finalising plans to rent more space in the capital to allow for further expansion.

Savills says that 60 per cent of the 475,000sq ft new grade-A warehouse space that was planned for completion in 2020 has already been reserved or pre-let. However, the current “hiatus” on building means that just 60 per cent of what was planned will now be completed this year, leading to a shortage.

Together with further slippage in 2021 on projects that were already planned, Savills says there will be a one-third shortfall in new warehousing space between now and the end of next year.

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"The constraints arising from Covid-19 will immediately impact on the working practices on construction sites where social distancing will need to be implemented and managed, and this will invariably add to construction costs and programmes," said Peter Levins of Savills' industrial and logistics division.

Savills said there had been a reduction in the demand for warehousing space for businesses serving the hospitality sector, for example. But there would be a sharp increase in the demand for new warehouse space to stock goods for online shopping as retailers in this area are “busier than ever”.

The Sunday Times reported this weekend that Amazon has opened a 6,800sq m (73,194 sq ft) “delivery station” at Greenogue Business Park in southwest Dublin with 20 staff, the first time it has directly hired workers here to handle online orders.