Industrial and logistics


The industrial and logistics sector has seen robust demand post-pandemic. Rental growth in the sector has outperformed the majority of other mainstream asset classes, and inflation, due to a consistent demand outstripping supply. The resilience and adaptability of the sector continues to make it a key driver of economic growth and development in the UK.

The sector is going through a period of immense change and pressure, centred on issues such as access to power, future-proofing electrification and alternative fuel requirements, automation of last-mile deliveries, a growth in ultra urban logistic centres to meet the growing Q-commerce demand, alongside more traditional factors such as planning constraints and availability of suitable development land. The proposed changes to business rates for large commercial properties with a rateable value over £500,000 could also see a substantial squeeze on margins for many occupiers in the sector. As the global economy evolves, the sector will need to continue to adapt to changing consumer behaviours, technological advancements, and supply chain disruptions.

Quality is a key driver in decision making in the sector, both from an investor and an occupier viewpoint – whether in terms of location, facilities, or sustainability. Increasingly featuring at the top of the agenda for many investors and occupiers is the delivery of a sustainable industrial and logistics pipeline from the manner of construction and refurbishment of buildings, to developing technologies and systems to make operations more efficient and sustainable. The drive towards net-zero and the key role that ESG plays in the decision-making process for both investors and occupiers has been a topic of discussion for our clients, and one in which we have been consistently involved. Striking a balance between sustainability and cost pressures is going to be a challenge.

Manufacturers and industrial occupiers have found themselves having to re-evaluate their business models, and their need for and use of space for their operations (including those businesses operating on a "just in time" basis, or with international shipping requirements). Those pressures will continue to affect decision making across the sector.

With a potential e-commerce resurgence, and the rise of data centres, the demand for space may be on the increase again – although there is hope that planning reforms will help reduce development constraints. At the same time, geopolitical changes and challenges will no doubt continue to play a major role in the industrial and logistics sector over the next 12 months.

In terms of trends and highlights across the industrial and logistics market we’re seeing:

  • Investors are looking for ways that they can keep up with (and anticipate) the needs of their occupiers – in terms of estate and unit facilities, and enabling their operations (for example EV last mile vehicles, alternative fuel HGVs etc).

  • Modular construction is increasingly coming to the fore when looking at developing new space sustainably and efficiently – and layouts may change (including building upwards, where pressure on space is highest).

  • Occupiers are looking at efficient use of space within their property portfolios and potential re-purposing or rationalising of assets within their businesses. A rise in appetite for reducing the length of supply chains has had an impact on that.

  • Last-mile logistics will remain of key importance as our reliance on home deliveries looks unlikely to reduce substantially. As shop brands disappear from the high street, logistics demand will only increase.
  • There is likely to be a challenge when it comes to upgrading existing stock – can it keep pace with advancing EPC (MEES) requirements, and occupier needs, despite the obvious carbon neutrality benefits?

  • Infrastructure constrains (eg the national power grid) may stifle potential development – commitments made in this respect won’t have immediate benefits.

  • We anticipate there being a shift within leases to ensure landlords control the level of power supply to properties within the sector – particularly where there is oversupply which tenants don’t want to pay for, but which adds value to the landlord’s investment.

  • Regional disparity in rental growth is likely to persist – along with void levels and lengths – with freeports potentially becoming (given their benefits) particularly appealing.

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Our buildings and communities are being redefined and repurposed. Working with clients from across the real estate sector gives us a viewpoint on the new trends evolving. On our map we look at the important changes affecting the real estate industry today and in future and offer insight on the challenges and opportunities for our sector across a range of assets and key themes. Please click on the links in the map to discover more.

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Further reading

23 Apr 2024

Building safety: Applying for a building assessment certificate

25 Apr 2024

Building Safety: Principal Designer and Principal Contractor

27 Mar 2024

What is the Biodiversity Net Gain regime?

03 Jun 2024

Aisle be staying – Sainsbury’s defeats landlord’s redevelopment ground

23 Apr 2024

Building safety: Applying for a building assessment certificate

25 Apr 2024

Building Safety: Principal Designer and Principal Contractor

27 Mar 2024

What is the Biodiversity Net Gain regime?

03 Jun 2024

Aisle be staying – Sainsbury’s defeats landlord’s redevelopment ground