Gigafactory development in the UK will require a further 50m sq ft of warehouse space to meet the needs of the manufacturing supply chain
- Time: The UK has proposed banning the sale of cars with internal combustion engines by 2030. For UK automotive manufacturing to remain competitive, the engine plants of the future, the Gigafactory, need to be located on British soil. Planning for such facilities needs ramping up if the supply of batteries is able to meet demand.
- Scale: The sites where Gigafactory development is viable are few and far between. Sites need to be vast in scale to accommodate buildings of up to 3m sq ft, have a power supply of at least 150MV, have access to a large skilled labour force, and the land has to be affordable, ruling out many traditional logistics and industrial markets.
- Ripple effect: We estimate by 2040 there will c.24m sq ft of Gigafactory space in the UK. This will create a ripple effect into the wider industrial and logistics market as suppliers look to locate their operations close to the Gigafactory developments. We estimate a further 25m sq ft of warehouse space will be needed to support the Gigafactory supply chain.
- New markets: If, as it looks likely, Gigafactory developments will predominantly be located in regions away from the core industrial and logistics markets, there will be a looming supply crunch. In South Wales, for example, the total stock of warehouse space would need to rise by 40% to accommodate the requirements of a Gigafactory supply chain. This presents an opportunity for developers to bring forward new schemes targeting such occupiers.
- Higher rents: In the USA, where a number of Gigafactories have been built, we have seen the demand for warehouse space rise whilst vacancy rates and rental levels have risen. In Reno, Nevada, where Tesla opened a Gigafactory in 2015, the vacancy rate in the wider warehouse market has fallen from 10.4% to 4.4%, and average rents have risen from £2.92 per sq ft to £4.96, a rise of 70% over six years.
Read the articles within Spotlight: Gigafactories below.