Online retailers most active occupier sector so far this year

By Liza Helps, Property Editor, Logistics Matters

TAKE UP of industrial & logistics space (units of 100,000 sq ft+) reached circa 14.7 million ft2 in the first half of 2025. At first glance 3PLs accounted for 41% of take-up, followed by manufacturers at 21%, online retailers at 10% and the remainder spread out across a range of sectors including wholesale, high street retail and food production.

However, Savills noted that while 3PLs appear to be taking the most space, this is predominantly on behalf of online retailers like Amazon, and 3PLs such as Super Smart who continue to support the growth of Chinese e-commerce in the UK. “Online retailers are, therefore, more active than the figures suggest.”

Take-up overall is down 9% compared to the dame time last year but  it is a 13% increase on H2 2024 standing the rest of the year in good stead to surpass the 29.1 million ft2 transacted at year end.

The market for existing space (second hand and new speculative development) remains robust with take-up of 11.94 million ft2, 28% higher than H2 2024.

However, the level of build-to-suit (BTS) continued to fall with just 2.77 million ft2 signed in H1 2025. This is the lowest figure since the first half of 2013, with the ongoing decline largely due to the availability of existing buildings and the cost and capex associated with construction and fitting out bespoke units, which often incorporate an element of automation. 

What’s more, as much as 51% was for take-up of units of 300,000 sq ft and above, up from 41% in the second half of 2024. This has mostly been driven by 3PLs, such as GXO, ID Logistics and DHL, as they primarily help online retailers increase speed to market as they struggle with the viability of building bespoke BTS units.  Logistics Matters reported in May that ID Logistics had taken Logicor’s 556,000 ft2 Sherburn 550 warehouse in Yorkshire earlier this year to serve an Amazon contract.

Savills director in the industrial & logistics occupier advisory team Tom Shaw, said: “Plenty has happened in the first half of 2025 to impact occupier decision making. Whilst there was initial concern over tariffs, to date the direct impact on the market has been limited but will continue to present in occupier decision making for the foreseeable future.

“Ultimately, however, occupiers remain committed to improving their supply chains, with requirement levels rising over the last two quarters.”

Supply has risen and now stands at 63.93 million sq ft, reflecting a vacancy rate of 7.90%. Of this, 61% is considered either speculative development or second hand Grade A. This increase can be attributed to the combination of speculative completions in the first half of 2025, the rise of second hand supply and lower take-up levels in some locations. 

Nationwide vacancy rate have risen over all but some regions have started to see a decline. This includes the south west where vacancy is now 6.52%, and the east of England at 5.71%, falling from 7.37% a year prior. This is largely due to strong take-up in these regions.

In H1 2025, circa 10.3 million sq ft of speculative units completed, with approximately 9.14 million sq ft still in the development pipeline.

Shaw noted: “Although, it is a stretch to say that it is now an occupiers market, we do expect to see continued movement on quoting rents, lease terms and incentives, which will drive further activity in the second half of the year.”

Savills national head of industrial & logistics Toby Green, said: “Even with continued geopolitical uncertainty, activity remains strong with improved enquiry levels in the first half of the year, along with a strong under offer pipeline include several significant BTS deals.

“There does, however, remain a high level of supply, which means occupiers now have more choices than at any point in the last decade. One exception, though, is for units above 500,000 sq ft, where there remains a strong case to bring forward speculative units where there is increasing demand, but supply remains constrained. 

“Looking ahead, the larger occupiers are increasingly favouring freehold deals as a solution for their highly bespoke requirements, and with more freeholds available, we expect to see an increase the number of BTS, land and turnkey deals in H2 2025.”