According to Savills latest Big Shed Briefing, UK take-up of industrial & logistics space (units of 100,000 sq ft+) reached 27.97 million sq ft in 2024, a modest rise of 1% compared with 2023 and 8% above the pre-covid average. Overall 2024 was still the fifth best year ever for take-up outside of the pandemic era, demonstrating a strong level of base demand despite continued economic and geo-political uncertainty.
From an occupier perspective, Savills figures show that manufacturing related occupiers remained the most active accounting for 32% of take-up. This shows businesses are continuing to consider near-shoring and firming up their supply chains. This was followed by 3PLs at 24%, the “other” sector at 11%, which would incorporate uses such as data centres, and online retail accounting for 10%.
Looking at the breakdown of space transacted, Savills notes that demand for speculatively constructed units increased over the course of the year reaching 6.97 million sq ft, a rise of 27% compared to 2023. In contrast, build-to-suit (BTS) totalled 9.2 million sq ft, the lowest level since 2013, accounting for 33% of the market. Whilst there are still significant BTS requirements, it remains difficult to convert such requirements into transactions due to ongoing uncertainty in capital markets and the capex associated with fitting out such units.
Tom Shaw, director in the industrial & logistics occupier advisory team at Savills, comments: “2024 saw a rise in bespoke requirements from manufacturers, healthcare and data centre operators, as well as retailers including supermarkets. This supports the idea that the sector remains resilient and occupiers are continuing to improve and review their supply chains. First and foremost, location remains paramount, but investment in the right product, whether that be size or specification is also key. This is alongside ESG, which is rising to the forefront of decision making and will see businesses look for ‘best in class’ space to please not just their investors, but also their customers.
“However, 2025 will not be without its challenges. Policy changes such as the rise in national insurance will require reconsideration of strategy, with a reduction in staff numbers potentially leading to greater levels of warehouse automation and AI. Attention could also turn towards freeports as occupiers look to maximise their incentives. We also anticipate an increase in owner occupier freehold requirements as the bespoke nature of many of these projects will need more long-term investment. Ultimately, though, this will be dictated by the occupier appetite for risk and also the confidence in the future availability of utilities and the ability to obtain planning consent.”
Once again supply has risen and now stands at 58.72 million sq ft across 274 separate units. Of this, 56% of the vacant space is considered good quality Grade A stock and 7% is already under offer. This increase can be attributed to the combination of speculative completions in 2024, the rise of second hand supply and lower take-up levels.
This has seen the nationwide vacancy rate increase to 7.2%, a level not seen since the aftermath of the GFC. This rise is the result of an increase of supply in the North West and the Midlands. However, there remains considerable variation across the UK, with the South East, South West, Scotland, Wales and Yorkshire all witnessing quarter-on-quarter decreases.
At present, there is also an additional 12.63 million currently under construction, which will be added to total supply throughout 2025 and into 2026.
Kevin Mofid, head of industrial & logistics research at Savills, adds: “The fact that take-up last year reached just shy of 28 million sq ft, the fifth best year on record outside of the pandemic period, shows that the base level of demand in the market has risen when compared to the pre-Covid 19 era. With our requirements index rising in the last quarter of 2024, we are optimistic that 2025 has the potential to be even better, particularly if we start to see increased leasing velocity in the BTS segment of the market.”