Take-up of UK industrial and logistics units of more than 100,000 sq ft reached 27.97m sq ft in 2024 – a modest rise of 1% compared with activity recorded in 2023 and 8% above the pre-Covid average, according to Savills’ latest Big Shed Briefing.
Last year, was the fifth best ever year for take-up, excluding pandemic years, with manufacturing-related occupiers particularly active.
Manufacturing businesses accounted for 32% of total take-up followed by 3PLs (24%). The ‘other’ sector, which includes data centre occupiers, accounted for 11% and online retailers accounted for 10% of activity.
Demand for speculatively constructed units increased over the course of the year, reaching 6.97m sq ft – a rise of 27% compared with 2023. In contrast, build-to-suit (BTS) totalled 9.2m sq ft – the lowest level since 2013.
Once again, supply has risen and now stands at 58.72m sq ft across 274 separate units. Some 56% of the vacant space is considered good quality Grade A stock and 7% is under offer.
The nationwide vacancy rate has increased to 7.2% – a level not seen since the aftermath of the ‘great financial crisis’ – and at present, there is an additional 12.63m sq ft currently under construction, which will be added to total supply throughout 2025 and into 2026.
Tom Shaw, director in the industrial and logistics occupier advisory team at Savills, said: “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.”
Kevin Mofid, head of industrial and logistics research at Savills, added: “The fact that take-up last year reached just shy of 28m 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.”
