IN Brief:
- H1 take-up reached 13m ft², 14% above the corresponding period in 2025.
- 3PLs generated 53% of activity, while retail accounted for another 22%.
- Only nine large available warehouses remained in the Midlands at midyear.
UK Grade A big-box warehouse take-up reached 13m ft² during the first half of 2026, exceeding the five-year H1 average despite subdued property-investment activity.
Analysis from Avison Young shows that leasing activity was 14% higher than in the first half of 2025 and 7.6% above the five-year average.
Third-party logistics providers accounted for 53% of take-up, reinforcing their position as the dominant source of demand for large units. Retail occupiers represented another 22%, supported by continuing investment in regional fulfilment, ecommerce, and store replenishment.
The Midlands generated 8.9m ft² of activity, with the East Midlands alone accounting for 5.8m ft², or 44% of national take-up. A further 3.1m ft² was recorded in the West Midlands.
Major transactions included Bleckmann Logistics taking 761,000ft² at Magna Park North, ID Logistics securing 673,000ft² in Rugby, CEVA Logistics taking 508,000ft² at Infinity Park in Derby, and Marks & Spencer occupying 437,000ft² at Fradley Park in Lichfield.
National Grade A availability remained broadly stable at 59.3m ft², declining by approximately 1%. That total is heavily concentrated in smaller properties, which account for 88% of available buildings.
Supply tightened more sharply across the Midlands, where available space fell by 1.8m ft² between the first and second quarters. Only nine large-scale warehouses remained available at the end of the half year.
Large requirements cannot be divided easily
An occupier seeking 500,000ft² cannot replace a single building with several dispersed 100,000ft² units without adding inventory duplication, transport legs, management overhead, and systems complexity. Total national availability can therefore appear comfortable while businesses with the largest requirements face limited practical choice.
The imbalance helps explain why activity remains concentrated around established logistics corridors. The Midlands combines motorway access, national delivery reach, labour pools, carriers, and specialist suppliers, making it difficult to relocate a requirement without changing the wider operating model.
CEVA’s 508,000ft² Derby operation demonstrates the scale now required for multichannel fulfilment, where storage must sit alongside automation, returns, transport interfaces, and peak labour rather than functioning as simple reserve capacity.
Planning and construction lead times create a lag between occupier demand and available supply. Even where suitable land has been identified, large schemes require road access, environmental assessment, planning consent, utilities, and grid connections before building work can begin.
Power has become a more prominent constraint as warehouses add automation, refrigeration, battery charging, and onsite energy systems. A property may provide enough floor area while remaining operationally unsuitable because the local network cannot deliver the required electrical capacity.
Investment volumes were weaker than occupier activity, totalling approximately £750m during the first half. That figure was 11% below H1 2025 and 12% below the rolling five-year H1 average.
The divergence reflects caution around pricing, interest rates, construction costs, covenant quality, and future values rather than a collapse in warehouse demand. Occupiers still require buildings to service contracts and reshape networks, while investors remain selective about the price and risk attached to delivering them.
Insufficient speculative development could leave the market short of large units during the second half and into 2027. Developers need enough confidence in rents and financing to begin construction before occupiers commit, yet waiting for a signed lease can make delivery too slow for the requirement.
Build-to-suit development provides an alternative for major users, although it requires earlier decisions and longer commercial commitments. Automation, throughput, labour, and space needs must be forecast several years ahead in markets where customer contracts and retail volumes can change more quickly.
Prime rents have stabilised, but limited choice in the strongest locations can preserve upward pressure. Businesses unable to secure a single large building may extend existing leases, delay consolidation, or accept sites that increase transport and labour costs.
Local authorities and infrastructure providers will influence the rate at which supply responds. Planning reform alone cannot deliver buildings when road capacity, grid connections, or environmental mitigation remain unresolved.
The first-half figures show operational demand running ahead of investment appetite and large-unit supply. During the remainder of 2026, the constraint will be the number of buildings capable of accommodating major requirements, particularly across the Midlands, rather than a shortage of occupiers seeking them.
