Constrained pipeline expected to support rental growth
The UK industrial and logistics market continued to demonstrate resilience during Q3 2026, with occupier demand remaining ahead of long-term averages despite ongoing economic uncertainty and extended decision-making timelines.
According to Colliers’ latest data, take-up of units over 100,000 sq ft reached 6.7 million sq ft during Q3, taking year-to-date (YTD) volumes to 21.8 million sq ft, slightly ahead of the pre-pandemic 10-year average.
Activity remains concentrated among a core group of occupiers and locations and continues to be driven by retail, e-commerce and fulfilment businesses, which collectively account for 78% of YTD take-up. The Midlands remains the dominant logistics market, accounting for 63% of all space transacted so far this year.
Several major deals completed during the quarter, including Super Smart Service expanding its Midlands footprint through a number of 15-year lease commitments, DIRKS Consumer Logistics pre-letting 306,000 sq ft at SEGRO Park Coventry, DHL pre-letting 450,000 sq ft at Westworks Corby, and TikTok committing to the recently completed Rugby 251 for its ecommerce platform.
However, the defining trend in the market continues to be on the supply side, where development activity has fallen sharply.
Although availability edged up slightly during the quarter, the UK vacancy rate held steady at 8.6%. Crucially, the quarterly increase has not been driven by new speculative development. Q3 speculative completions totalled less than 500,000 sq ft, marking the lowest quarterly delivery volume in nearly 10 years.
Over the past 12 months, the amount of newly built space available across the UK has fallen by 10.3%, while second-hand availability has increased by 20%. New Grade A stock now accounts for just 36% of available space, down from 43% a year ago.
Looking ahead, only 7.3 million sq ft of speculative space is currently expected to complete in 2026, representing a 45% shortfall against the five-year average, and the lowest annual delivery volume since 2018.
Deirdre O’Reilly, Head of Industrial Research UK at Colliers, said:
“The UK logistics occupier market continues to prove more resilient than the wider economic backdrop might suggest. While occupiers are taking a little longer to press the button, demand remains healthy and is well on track to deliver take-up of around 30 million sq ft this year.
“Development activity has slowed considerably, resulting in a shrinking pipeline of new Grade A logistics space coming forward. Although vacancy has risen modestly again, the proportion of new and modern space available is falling, which means occupiers are facing a more competitive environment for the highest-quality space in the right locations.”
The slowdown in development reflects a trend being seen across Europe, where industrial and logistics space under construction has declined significantly over the past year. At the same time, vacancy rates across many European markets are beginning to stabilise, supporting a more balanced outlook for the sector.
Average rental growth remains positive across the UK, with rents increasing by 4.3% year-on-year in August, while prime big-box rents rose 2.7% annually to September. However, net effective rental growth continues to be moderated by increasing incentive packages, with average rent-free periods rising from 14.8 months last year to 15.8 months in 2026.
Len Rosso, Co-Head of Industrial & Logistics at Colliers, added:
“Retailers, e-commerce businesses and fulfilment operators continue to drive demand across the logistics sector, with Chinese occupiers remaining a particularly important source of activity. These businesses remain focused on core Golden Triangle locations that offer access to the majority of the UK’s consumer population.
“With around 15 million sq ft currently under offer and the development pipeline becoming increasingly constrained, well-located logistics assets should remain well-positioned, not only supporting landlord confidence but reinforcing the importance of early decision-making for occupiers. The availability of new, high-quality space is becoming more and more limited, and that is likely to support rental growth prospects in the coming year.”
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