Is the UK Logistics Sector About to Collapse in Q4 2025? Shocking Predictions Inside!

UK Occupational Market Shows Signs of Resilience

The UK occupational market is signaling a steady recovery as both occupier confidence and demand begin to stabilize. Recent data reveals that the availability rate of commercial space has decreased to 7.6% in the fourth quarter of 2025, suggesting that the peak of supply may have been reached in the second quarter of that year. This downward trend in availability, combined with solid demand and a drop in speculative development, points to a tightening market likely to continue into 2026.

In terms of space absorption, or "take-up," the UK saw 12.2 million square feet leased in Q4, which marks an 8% decline from Q3 but is a notable 15% increase compared to the pre-COVID quarterly average over the past decade. Annual take-up for 2025 slightly surpassed that of 2024, indicating ongoing recovery trends that have been strengthening since 2023. The demand is characterized as both considered and strategic, with notable contributions from logistics and e-commerce sectors, alongside new entrants from overseas and defence-related manufacturers.

On the rental front, prime annual rental growth has stabilized at a cyclical low of 3.2% in Q4 2025. Despite this stabilization, a significant disparity remains between prime and secondary rents, with rental increases largely focused on new completions. Factors such as fit-out quality and the availability of power are now critical differentiators in the market, with strong grid connections being valued almost as highly as effective transport links by many occupiers.

Speculative development has seen a decline, with only 11 million square feet completed in 2025, the lowest point since 2017. This reduction continues to support prime headline rents, although it also comes with substantial incentives for tenants. The landscape of industrial investment has predominantly featured large portfolio transactions, particularly mergers and acquisitions (M&A) and recapitalizations, while single asset activity remains subdued, primarily involving smaller, last-mile units. Positive investor sentiment following the Autumn Budget has contributed to pricing stability in Q4.

Looking ahead, deferred year-end sales and residual portfolio stock are expected to foster a modest increase in single asset transaction activity in 2026. However, capital allocation targeting logistics remains highly selective, implying that while conditions are improving, caution persists among investors.

This snapshot of the UK occupational market highlights a landscape of cautious optimism. The mix of declining availability, solid demand from key sectors, and stabilization in rental growth suggests a market that is beginning to find its footing in the aftermath of significant disruptions. As 2026 approaches, stakeholders across various industries will be keeping a close eye on these developments, which may offer opportunities for strategic expansion and investment.