If planners have their way, a 40,000 square metre-sized corner of Weekley Hall Wood, part of an ancient forest near Kettering in Northamptonshire, will soon be tarmacked over and replaced with a giant warehouse. The reason? The next-day delivery boom.
E-commerce now accounts for one in every four pounds spent in the retail sector – up nine percentage points since May 2019. But all that stuff has to be stored somewhere before it arrives in cardboard boxes at our door. And that somewhere is the “golden triangle” – a vast patch of land between Northamptonshire, Tamworth and Nottingham.
Logistics companies and online retail giants choose the area because it’s possible to get to more than 90 per cent of the UK population within a four-hour drive of anywhere within the triangle. It’s the reason why Asda was the first company to take up residence in what’s now called Magna Park Lutterworth, a 550-acre logistics park with 771,155 square metres of warehouse space, in the late 1980s. Since then, it’s become one of the main logistics hubs in the UK.
But, as our predilection for online shopping increases, the golden triangle is getting bigger – not just in the density of warehouse space within the area, but also the area itself. “It’s spreading north, it’s spreading south, it’s spreading east, and really it’s more of a diamond now,” says Kevin Mofid of Savills, the real estate agency, who monitors warehouse capacity across the UK. The golden triangle – or diamond – now stretches down to Milton Keynes, as far east as Peterborough, and touches Derby or even south Yorkshire at its northern tip. Yet while the warehouse space scatters further afield, it’s in its core where the biggest changes are happening.
In 2015, the golden triangle was home to 13.4 million square metres of warehouse space, or just over 1,875 football fields. In a report to be released this week, Savills now believe it has expanded to 18.5 million, an extra 715 football fields-worth. And it’ll expand further. Magna Park Lutterworth has planning permission to expand its warehouse capacity 60 per cent from its current size. Once expanded, it’ll cover an area equivalent to 208 football fields.
The reasons behind its expansion, and that of the golden triangle in general, is the result of the online retail boom, which, year-on-year, requires companies to store more options and inventory – which requires bigger and bigger warehouses. Online shopping warehouses require around three times the logistics footprint of physical shops. In the last six years, the size of the average warehouse in the UK has increased from 20,160 square metres to around 31,590 square metres.
Demand has also increased because of several supply shocks in recent years. Brexit, and the fears of chaos at the borders, disrupting global trade, resulted in many companies buying up warehouse space in order to hold more stock than usual in the last three or four years. Panic buying triggered by the fear of food shortages during the early stages of the pandemic caused companies to invest further in more warehouses. Issues with shipping in the last 18 months, including port closures to combat Covid-19, and the disruption to the Suez canal, an important trade route, focused minds further. “All these macro factors are conspiring at the same time,” Mofid says. “People want to hold more inventory. It’s changing the model from a ‘just-in-time’ to ‘just-in-case’.”
And ‘just-in-case’ means more warehouses in an area already blanketed by the hallmarks of the e-commerce boom. The people who live and work inside the triangle-diamond are increasingly worried about the impact the changes are having on their community – and now they’re beginning to fight back. “We are central, we are close to road links, and that’s why ultimately we seem to get more than our fair share of warehouses,” says Ash Davies, a Conservative councillor on Rothwell Town Council, which sits on the eastern edge of the golden shape-of-varying-edges. “With e-commerce and retail and all the online shops, the demand is ever-increasing.” Davies is a realist – “clearly they’ve got to store their stuff somewhere,” he says – but he wants the development to be done in a way that looks after the community and the spaces they use. Northamptonshire can’t simply become a giant logistics parking lot for the rest of the country.
Davies first noticed warehouses becoming an issue in the mid-2000s – coinciding with the rise of Amazon. “It’s driven by consumer behaviour,” he says. “Consumers are switching to online for convenience and Covid-secure reasons.” The impact is being keenly felt on those who live there, though.
Steve Esler used to work in the warehousing sector, working for a software developer who provided automated picking and packing systems of the kind that fill up the trucks and lorries that now crawl along the roads near Brambleside in Kettering, where he’s lived for the last 23 years. “Frankly, it’s chaos,” he says. The A14 often comes to a standstill because of the number of trucks, with some spilling their loads – “not a week goes by without a truck doing that in Corby or Kettering,” he claims. (Recent spills on Northamptonshire roads include cases of energy drinks, jugs of hand sanitiser, and an awful lot of offal.) “It’s pretty unpleasant driving around here,” he says. “The residents of Kettering, Corby and the surrounding areas are getting fed up.”
Esler is one of the organisers of a 16,000-strong petition against a planned warehouse site that would result in the destruction of a local wood and wildflower meadow. He admits there are benefits to the warehouse boom in the golden triangle – including impacts on house prices and employment – but also drawbacks when it comes to air quality and the climate. “It’s snuck up on us,” he says. Twenty-five years ago, there were warehouses tucked away in industrial estates; then ten or 15 years ago, things started to accelerate. “Over the last five years there’s been a real boom in warehousing,” he says. “Demand for distribution and storage centres went through the roof. It’s understandable, but there comes a point where you have to think we’re putting too many of these up.”
He lists off the planned and part-built developments – a 232,000 square metre warehouse in Kettering, another 279,000 million square metre one in Corby – with weariness. “It seems like all the green spaces we love and enjoy around the area seem to be disappearing,” he says. While that may sound nimbyist, it’s something Davies agrees with, worrying that development is taking place on greenfield, rather than brownfield, land.
Both Davies and Esler take umbrage with the rise in speculative warehouse building – cavernous sites being constructed without a specific tenant in mind – because they often clear out green space without ever being usefully put to work. Esler claims four or five warehouses near the A14 were built two years ago without being filled. (In fact, two of the sites at Crossfire 14 have recently been taken up, and the warehouse vacancy rate across the East Midlands currently stands at just over five per cent – which, under normal circumstances, would be expected to trigger rental growth, according to Savills.) “They’ve been built to meet demand from investors in Europe, the Middle East and the United States to achieve returns on their cash,” says Samir Dani, professor of operations management and deputy director of Keele Business School. Texas-based investment firm Hines has bought at least five warehouses in the golden triangle in less than a year, while American pension investor Blackstone is also a big buyer.
“The crucial thing is the infrastructure keeps pace with growth, and any developments have a good business plan behind them so we aren’t left with lots of empty warehouses built for speculative letting,” Davies says. He welcomes companies with a long-term plan to bolster jobs. “The unfavourable side comes from when they’re left empty, really, and there’s no clear demand for them.” North Northamptonshire Council, which covers the area including Kettering and Corby, did not respond to a request for comment.
Forecasts from analysts Forrester predict that online shopping will account for 37 per cent of all retail in the UK by 2025, up from its present level of around 28 per cent. “If that happens, we’re going to need six million square metres of warehouse space, just for online retailers,” says Mofid. In a typical year, one-third of new warehouse space is built in the golden triangle. That would be another two million square metres (or the size of 29,499 average UK homes) in the next four years. “But, given where takeup is and demand is, there’s every reason to think we’ll need more space,” Mofid says.
That could come in a number of different ways. It could mean the golden triangle expanding further still, or more dense development in the current area earmarked as the logistics hub of the UK. “We’re a long way from this yet, but at some point you will reach a situation where it becomes commercially viable to build multi-storey warehouses, or even underground,” Mofid says. He predicts that, in the next ten or 20 years, there will be “a commercial discussion about intensifying the land that already exists.”
But if you think that’s all someone else’s problem, think again. The golden triangle is just a bellwether for issues the rest of the country is likely to face. A push for decarbonisation and to reduce road miles and become net zero is pushing distribution centres outside the golden triangle. The warehouses, it turns out, are on the move – and they’re coming to a town near you. And they’re coming quicker because you love Amazon Prime’s next-day delivery too much, according to CBRE. Two-thirds of online retailers across Europe told the real estate firm they were planning on expanding their logistics operations outside traditional hubs.
And all this means that demand for warehouses closer to home will increase. “The golden triangle is not the end of the road,” Dani says. “It will mushroom out into other places.”
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This article was originally published by WIRED UK
