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Demand and vacancy rate forecast to stabilise in 2026
UK logistics markets saw resilient demand in 2025 as leasing volumes increased by 22% year-on-year.
Net absorption also posted an uptick in 2025, totalling 11.4m sq ft. We expect occupier demand to remain consistent in 2026, with occupiers still looking to expand across Europe, including the UK. Regions in the UK that recorded the strongest net absorption in 2025 also saw strong rental growth, such as the North West and Yorkshire/North East. These markets have low vacancy and under construction levels, and we expect these regions to continue to see rents increase in 2026 as supply remains tight.
In 2025, net completions outstripped net absorption, with strong levels of speculative supply being delivered to the market over the year. In addition to completions, increases in secondhand availability pushed the UK vacancy rate up to 7.1% in Q4 2025. In 2026, net absorption is forecast to match net completions, and therefore we expect the vacancy rate to gradually fall. Most of the development pipeline in the UK is pre-committed build-to-suit space. The rate of decline will be affected by demand for secondhand space, and how much secondhand space is returned to the market as occupiers move into build-to-suit units.
Strong occupier preference for newer space across the UK, with 70% of space leased in 2025 for new units.
Figure 5: UK logistics net absorption, net completions, and vacancy rate
Trends to watch
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Net absorption
In addition to take-up increasing in 2025, 12-month rolling net absorption across the UK is also higher than the level at the end of 2024, highlighting the resilience of the occupational market, despite economic uncertainty. We expect absorption to remain stable or slightly increase in 2026, as we anticipate interest rate cuts and falling inflation to boost business sentiment and consumer confidence.
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Leasing activity
Leasing activity throughout 2025 was driven by third-party logistics (3PL)/distribution, and manufacturing and construction occupiers. This trend is set to continue in the near-term as the e-commerce penetration rate has moderated and 3PLs from other regions are expanding into European markets. Demand will be complemented by steady leasing activity from retail occupiers, particularly food and other retailers.
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Logistics pipeline
The logistics development pipeline in the UK declined throughout 2025. This is set to continue in 2026 as space currently under construction completes. Most of the space under construction is for build-to-suit space, which, once completed, will increase occupied stock. However, as occupiers have been consolidating their portfolios, this could lead to more backfill vacancy.
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Vacancy rate
The UK logistics vacancy rate increased throughout 2025 to 7.1% in Q4 2025, driven predominately by rising secondhand vacancy. In line with most of the development pipeline being pre-committed, we expect the vacancy rate to remain stable or trend slightly upward in early-2026, but then fall in the medium-term, depending on how much secondhand stock is returned to the market.