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The Amazon Effect – how Fulfilment Centres drive  house prices, business creation and jobs

Warehouse and lorries hero.jpg

  • House prices rise by an average of 11% in the year after an Amazon Fulfilment Centre opens
  • Business numbers also increase by 11%, with jobs up 3% 
  • Distribution and warehouse numbers have increased 32% since 2015, with further growth forecast

The opening of an Amazon Fulfilment Centre has a positive impact on house prices, business creation, jobs, new build home sales and the private rented sector in its surrounding area in the year after it has launched, Paragon Bank research has revealed.

Analysis of the impact of 10 Amazon Fulfilment Centres located across the country, conducted on behalf of Paragon by Opinium, showed that on average house prices rose by 11% in the 12 months after the centre opened.

With warehousing space proliferating across the UK, the analysis demonstrates the impact they can have on local economies. It revealed the number of businesses increased by 11% and new build house sales by 16%.

On average, the number of homes in the private rented sector rose by 2% in the areas where the centre is located as landlords added more homes to cater for the workforce.

The opening of a Fulfilment Centre also had a positive impact on jobs, with an average of 3% more jobs available the year after opening and a 7% fall in unemployment.

Amazon has opened 17 Fulfilment Centres in the UK and is due to open four more - Hinkley, Dartford, Gateshead and Swindon - with each creating approximately 1,300 permanent roles and additional seasonal temporary roles. Logistics and distribution centres have grown strongly as online shopping has emerged.

A report by Savills for the UK Warehouse Association showed that the number of warehouse units has increased by 32% since 2015 and currently stands at 566 million sq ft. Separately, analysis by property group Knight Frank shows that for every £ billion of online sales approximately 1.36 million sq ft of warehouse space is required. With UK online sales forecast to rise by up to £67 billion over the next five years, we could see e-commerce drive additional requirements of 92 million sq ft.

Centre  Local Authority Opening year
Daventry Daventry 2017
Ellistown North West Leicestershire 2016
Birmingham Birmingham 2016
New Rossington Doncaster 2017
Runcorn Halton 2017
Altrincham Trafford 2016
Dunfermline Fife 2011
Tilbury Thurrock 2018
Dunstable Central Bedfordshire 2017
Banbury Cherwell 2016

Richard Rowntree, Paragon Bank Managing Director of Mortgages, said: “The growth of warehousing in the UK stimulates demand for housing in both the homeowner and rented sectors. We have certainly seen our buy-to-let customers react to this in areas such as the East Midlands, where the number of warehousing units has proliferated in recent years.

“As the pandemic has accelerated the trend towards online shopping, it is expected that greater numbers of warehousing units will be created, adding even more demand for property in those markets. Taking the Amazon Fulfilment Centres in isolation, the impact on property prices is clear and landlords will be looking at where new warehouse developments are located and how many jobs will be created as a result.”

The Amazon Fulfilment Centres analysed include Daventry, Ellistown, Birmingham, New Rossington, Runcorn, Altrincham, Dunfermline, Tilbury, Dunstable and Banbury.

In terms of house price increases, Dunstable and Altringham achieved the highest growth, increasing by 23% and 17% respectively in the 12 months after the centre opened. Not all locations recorded an increase, however, with house prices in Fife falling 4%.

Dunstable experienced the greatest increase in the number of business start-ups, which saw 16,300 start-ups in the year after the centre opened in 2016, compared to 12,440 (a 31% increase) the year before, whilst Ellistown and Runcorn enjoyed the greatest level of job creation, with both recording an 8% increase in jobs.

ENDS

For further information contact:
Michael Clarke
Head of Media Relations
Paragon
Tel: 07740090746