UK Industrial Marketbeat Reports

For the data behind the commentary, download the full Q4 2024 UK Industrial Report.

2024 in Review

The Logistics and Industrial market showed resilience in 2024, with take-up slightly surpassing 2023 levels and nearing the long-term average. The first half of the year saw strong occupational demand, building on a robust Q4 2023. Despite a slowdown in leasing volumes during the second half, the market maintained a solid demand for modern warehousing, with over 32 million sq ft taken up for the second consecutive year. Supply increased but remained consistent with 2019 levels. The investment market was subdued due to broader economic conditions, though activity picked up in the final quarter, offering a positive outlook.

What to Expect in 2025

Economic growth is expected to be modest in early 2025, with a phase of sustained moderate growth anticipated later. Inflation is likely to stay near target levels, potentially leading to further base rate cuts. Improved consumer market conditions should gradually boost occupier demand, despite ongoing economic uncertainty. Supply levels are expected to remain stable, with continued refurbishment of older buildings and speculative development modernizing the sector. The new Government's industrial strategy and reforms to the national planning policy framework may drive new demand, though increased business rates and national insurance contributions pose risks.

Take up

The occupational market began recovering in 2024, with total take-up reaching 32.7 million sq ft, a slight increase from 2023. The first half of the year saw 20 million sq ft taken up, driven by two large deals, while the second half saw a more typical distribution of 12.6 million sq ft. Q4 2024 recorded a 2.5% increase in take-up from Q3, with 47 transactions. Key occupier groups, particularly retailers, contributed to the recovery, improving market sentiment.

Supply

Total availability at the end of 2024 was 68.5 million sq ft, a 6.4% increase in Q4. Despite this rise, supply levels were only 3% higher than at the end of 2023 and aligned with 2010-2015 levels. The increase was due to more Grade B space and existing Grade A space returning to the market. The volume of second-hand space remained high, with over 8 million sq ft available. Grade C space continued to decline due to redevelopment and refurbishment. Supply challenges persist, limiting occupier choice in many regions.

Development

The development pipeline moderated in 2024, with fewer new starts. After a strong response to the pandemic, development activity returned to normal levels, with concerns about rising void periods. Total completions fell to 10.7 million sq ft in 2024, following high levels of speculative development in 2022 and 2023.