The UK logistics sector has been undergoing a transformation in recent years, driven by the rapid growth of e-commerce, the ongoing evolution of global supply chains, and shifting consumer demands for faster and more efficient delivery services. Amid these changes, an interesting trend has emerged: prime open storage assets are experiencing significantly stronger annual rental growth compared to the broader logistics real estate sector.

Open storage spaces—often large, versatile plots of land used for storing vehicles, equipment, containers, and other goods—are becoming increasingly sought after. Businesses across industries are seeking out these spaces for their flexibility and cost-effectiveness, resulting in higher demand and a surge in rental prices.

In this blog post, we will explore the factors driving the growth of rental rates for open storage logistics assets, examine the key sectors fueling this demand, and discuss the implications for businesses and investors in the logistics and real estate markets. We will also take a closer look at the broader trends shaping the future of logistics space in the UK.

What is Open Storage in the Logistics Sector?

Before diving into the reasons behind the growth of rental rates for open storage assets, it’s important to understand what open storage entails and how it differs from traditional warehouse and logistics facilities.

Open storage refers to large, uncovered areas of land that are used for storing various types of goods, equipment, and vehicles. These spaces are often found near ports, industrial areas, and transportation hubs, providing businesses with quick access to distribution networks and key logistical routes. Unlike enclosed warehouses, open storage spaces offer a flexible and scalable solution for businesses that need room to store bulky items, shipping containers, or vehicles, without the need for a fully enclosed structure.

Common uses for open storage spaces include:

• Storing containers, trailers, and other large transport assets.

• Housing construction materials and heavy equipment.

• Serving as storage for vehicles, including trucks and fleet management.

• Supporting last-mile delivery operations, particularly in densely populated areas where indoor space is limited.

• Providing overflow space for businesses that require temporary or seasonal storage.

Drivers of Rental Growth in Prime Open Storage Logistics

The strong rental growth in open storage assets can be attributed to a variety of factors, each reflecting the evolving demands of the modern logistics sector.

1. The E-Commerce Boom and Demand for Logistics Space

The rise of e-commerce is perhaps the most significant driver of demand for logistics space in the UK. Online shopping has transformed the way goods are purchased, packaged, and delivered, requiring businesses to expand their logistics operations to meet growing consumer expectations for fast and efficient deliveries. This surge in demand for fulfillment services has created a ripple effect throughout the logistics real estate market, with open storage spaces becoming an essential part of the supply chain.

As retailers and logistics providers scramble to secure additional space for last-mile delivery, inventory overflow, and fleet management, open storage assets provide a cost-effective and adaptable solution. Businesses can quickly set up operations on open storage plots, using the space to store goods, vehicles, or equipment before they are moved to their final destination.

This increasing demand is particularly evident in urban areas, where land availability for traditional warehouse development is limited, and open storage can offer an alternative for meeting logistics needs.

2. Flexibility and Scalability of Open Storage Solutions

One of the key advantages of open storage spaces is their flexibility. Unlike traditional warehouses, which require significant investment in building and maintenance, open storage areas can be adapted quickly to meet a range of business needs. This flexibility makes them an attractive option for businesses looking to expand or adjust their operations without committing to long-term leases or expensive building projects.

In addition to flexibility, open storage spaces offer scalability, allowing businesses to adjust the size of their operations based on seasonal demand or changes in market conditions. This makes open storage an ideal solution for businesses that experience fluctuations in their storage needs, such as retailers during peak shopping seasons or construction companies that need temporary space for equipment and materials.

3. Rising Land Values and Supply Constraints

The UK’s industrial and logistics real estate market has been experiencing steady growth, particularly in areas near key transportation hubs, ports, and urban centers. As land values continue to rise, particularly in prime locations, businesses are finding it increasingly difficult to secure affordable warehouse space. This has led many to turn to open storage assets as a more cost-effective alternative.

In addition to rising land values, there is also a growing shortage of available industrial space in certain regions of the UK. The limited supply of traditional warehouse space, combined with increased demand from sectors such as e-commerce and manufacturing, has created a competitive environment where open storage assets are becoming more valuable.

This imbalance between supply and demand has pushed rental prices for open storage plots upward, particularly in London, the Midlands, and other areas with high logistics activity.

4. Infrastructure and Transportation Proximity

The strategic location of open storage sites near key transportation corridors and infrastructure plays a significant role in driving demand. Many open storage assets are located near major motorways, ports, rail terminals, and airports, providing businesses with convenient access to transport routes and facilitating the efficient movement of goods.

For companies involved in shipping, distribution, or construction, proximity to transportation hubs is essential for optimizing operations and reducing transit times. As businesses seek to streamline their logistics processes, open storage sites located near critical infrastructure become highly desirable, further driving rental growth in these areas.

Key Sectors Driving Demand for Open Storage Logistics

Several sectors are contributing to the growing demand for open storage assets, each with unique needs and operational requirements. The following industries are particularly influential in shaping the rental growth trend for prime open storage logistics:

1. Construction and Infrastructure

The construction industry is a major user of open storage spaces, utilizing these plots to store large equipment, vehicles, and building materials. As the UK continues to invest in infrastructure projects—such as road construction, rail upgrades, and housing developments—the need for temporary storage solutions near project sites has increased.

Open storage spaces provide construction companies with a cost-effective way to keep their equipment and materials on-site or nearby, ensuring that they can access what they need quickly and efficiently. As infrastructure projects continue to grow in scale, so too does the demand for open storage solutions.

2. Automotive and Fleet Management

The automotive sector, particularly fleet management companies, is another significant driver of demand for open storage. Businesses involved in vehicle leasing, fleet management, and logistics rely on open storage spaces to house large numbers of vehicles, whether for maintenance, storage, or distribution purposes.

The rise of electric vehicles (EVs) and the push for more sustainable transport options have also contributed to the need for adaptable storage spaces. As companies transition their fleets to electric or hybrid vehicles, they require additional space to accommodate vehicle charging infrastructure and other support facilities.

3. Retail and E-Commerce

Retailers, particularly those involved in e-commerce, have been expanding their logistics operations to meet consumer demand for fast and efficient deliveries. The need for additional storage space for inventory overflow, packaging, and last-mile delivery operations has led many retailers to invest in open storage spaces.

During peak shopping seasons, such as Black Friday and the holiday season, retailers often require additional storage capacity to manage increased order volumes. Open storage plots provide the flexibility and scalability needed to accommodate these seasonal fluctuations.

4. Maritime and Port-Related Industries

Ports and maritime-related industries also play a significant role in the demand for open storage logistics. Ports across the UK, including Felixstowe, Southampton, and Liverpool, rely on open storage spaces to manage the flow of containers, trailers, and other large assets. These areas are crucial for staging goods before they are transported to their final destination, whether by road, rail, or sea.

As global trade continues to recover from disruptions caused by the COVID-19 pandemic, the demand for open storage at port locations has increased. These spaces are essential for managing the growing volume of containers and ensuring that ports can handle peak shipping periods efficiently.

Implications for Investors and Businesses

The strong rental growth in prime open storage logistics assets presents opportunities for both investors and businesses. For investors, open storage provides an attractive option for diversifying their property portfolios, particularly in regions with high logistics activity and land value appreciation.

For businesses, securing open storage space offers a flexible and cost-effective solution for managing logistics operations, particularly as traditional warehouse space becomes more limited and expensive. The scalability and adaptability of open storage assets make them ideal for businesses across various sectors, from construction to e-commerce.

Conclusion

As the demand for logistics space in the UK continues to rise, prime open storage assets are emerging as a valuable and flexible solution for businesses across multiple industries. The growing rental rates for these spaces reflect their importance in meeting the evolving needs of modern supply chains, particularly in sectors such as e-commerce, construction, and automotive logistics.

While the logistics sector faces challenges such as rising land values and space shortages, open storage provides a cost-effective alternative that enables businesses to scale their operations, reduce congestion, and streamline logistics processes. As the UK’s logistics landscape continues to evolve, open storage assets are likely to remain a key component of the industry’s growth strategy.