Millions spent creating ‘dark stores’ for rapid grocery startups

Innovation

A property company is spending millions to convert shopping centres and car parks into “dark stores” to supply on-demand grocery firms.

The Guardian reports that British Land has already paid £189 million for sites with “urban logistics potential” and is looking to buy more.

As online shopping soared in popularity during lockdown, the demand for warehouses has increased with it.

This need is especially pressing for grocery startups making deliveries in around 15 minutes, like Gorillas and Getir, which need to store stock closer to customers.

READ MORE: Grocemania launches first dark store to support local retailers

British Land said it recently bought an underground car park in Finsbury Square, central London, for £20 million.

The site will be divided into smaller units for “quick commerce” groceries, and for takeaway firms like Uber Eats.

“Increasing expectation of delivery times… is creating colossal demand for space at the same time that industrial space has shrunk in London,” British Land boss Simon Carter said.

According to estate agent Knight Frank, retailers could need an extra 12 million square foot for deliveries by 2025 if online sales continue to boom.

British Land returned to profit in the six months to September, as the easing of Covid restrictions allowed it to collect most of the rent due from retail tenants.

It reported a £370 million profit after tax, up from a £730 million loss a year earlier.

Earlier this month, Beelivery’s chief operating officer claimed that “most” grocery startups would fail because they relied on a network of dark stores.

Paul Gott argued that their “asset-heavy” models would leave them struggling to turn a profit.

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