More warehousing space was let than supply added into the market in 2025

By Liza Helps, Property Editor, Logistics Matters

ACCORDING TO Savills latest Big Shed Briefing Q3 2025 saw net absorption turn positive for the first time since Q4 2022. This momentum continued into the last quarter, increasing from 2.7 million ft2 in Q3 to 3.6 million ft2 by year-end.

Overall supply has continued to move out and now stands at 64.1 million ft2 across 299 units, representing a national vacancy rate of 7.81%.

In terms of take-up research by DTRE indicates that it expects take-up of units of 100,000 ft2 + to reach in the region of 28 million ft2 which would be 6% ahead of the pre-Covid 10 year average. Savills research puts UK take-up of industrial & logistics space (units of 100,000 sq ft+) provisionally at 33.05 million ft2 in 2025, ahead of both 2023 and 2024 volumes by 16% and 13% respectively, year-on-year.

The firm also notes that this figure is 27% ahead of the long-term, pre-Covid average (2007-2019), signifying a turning point following a post-pandemic market correction.

In addition, Savills figures show that there is currently a further 6.2 million ft2 under offer for Q1 2026. 

This boost in take-up can largely be attributed to the resurgence of build-to-suit (BTS) activity, totalling 9.9 million ft2 nationally, a 7% increase on last year’s figure

 Looking at a regional breakdown, the East Midlands accounted for 32% of BTS transactions, the West Midlands 11% and the South East 10% respectively. With key deals, supported by Savills, seen at Prologis’ DIRFT scheme with the 1.3 million ft2 M&S deal and DP World’s London Gateway 880,000 ft2 deal with Tesco..

Savills head of EMEA industrial & logistics research Kevin Mofid, noted: “Although we have seen an increase in supply, fuelled by second-hand stock returning to the market, alongside 2.6 million ft2 of new speculative units completing in Q4 2025, overall the pipeline looks to be shrinking sharply. Observing the quantum of space currently under construction across the UK, it has fallen by 65% from its peak in Q2 2022. What’s more, there are also regional variations to consider, with locations such as the Midlands and North West experiencing quarterly contractions.”

From an occupier perspective, manufacturing related take-up accounted for a significant portion of the market representing 33%, an 8% increase year-on-year. 3PLs also remained active at 31.5%. In fact, Savills has seen 3PLs share grow from 6.6 million ft2 in 2024 to 10.4 million ft2 this year, an increase of 57%.

The grocery retail sector has also seen a resurgence accounting for 7.4%, with significant deals completed by M&S and Waitrose, amongst others across the South West, East Midlands and South East this year. This follows the end of a number of legacy leases with the supermarkets now looking to evolve their supply chains and invest in automation and future proofing.

Savills national head of industrial & logistics Toby Green, said: “Overall, 2025 has been decidedly more positive for the sector. We have seen the return of major corporates making long term strategic decisions, which correlates with data from our Savills occupier requirements index having seen a 12.3% lift year-on-year.

“Looking ahead, there remains a number of structural trends that will continue into 2026. For example, ESG will remain a factor, with 78% of take-up in 2025 for grade A units, against a pre-Covid average of 68%. There is also the increase in demand from defence related occupiers, plus resilient e-commerce growth. We will of course continue to face challenges, especially in relation to cost, with energy charges and a hike in minimum wage all materially impacting occupier growth strategies. However, all things considered, we believe we are through the most challenging period when it comes to rising supply and volatile take-up.”