Industrial and logistics remains one of the more resilient parts of the property market, but the tone has changed from “demand at almost any price” to a more disciplined, cost-conscious market.
In March 2026, industrial investment volumes were reported at £750m, up from £570m in February, although still below the five-year monthly average of around £1bn. Year-to-date activity reached £1.9bn, down 14% against the same point in 2025.
The occupational market remains active. Q1 2026 take-up reached 6.1m sq ft, up from 5.9m sq ft in Q4 2025 and 11.5% above the same period last year. Third-party logistics and storage occupiers were particularly active, accounting for around 50% of Q1 take-up, supported by major distribution requirements.
Vacancy has edged higher but remains manageable in a long-term context. The UK vacancy rate increased to 8.7% in Q1 2026, from 8.4% in Q4 2025. At the same time, the speculative development pipeline is reducing, with only around 7m sq ft due for completion in 2026 and forward vacancy estimated at around 13.4m sq ft. That matters because a shrinking development pipeline can limit future occupier choice, particularly for better-quality, well-located units.
Rental growth remains positive, but the pace is slowing. Industrial annual rental growth was 4.3% in March 2026, down from 4.7% in February and the weakest rate recorded for the sector since 2021. This does not suggest a weak market, but it does suggest occupiers are pushing back harder on costs.
For Kemsley’s core markets, the structural drivers are still relevant: Essex, East London and the Thames Gateway benefit from access to London, the ports, the M25, the A12/A13 corridors, labour, trade counter demand, last-mile distribution and a large SME base. However, occupiers are now looking more closely at the full operational picture: power (both availability and cost), HGV access, loading and circulation, yard depth, eaves height, staff parking, EPC, business rates, service charge and repair liability.
Kemsley local view – Ben Collins
Our local view is that industrial demand is still healthy, but occupiers are sharper. Good, practical space remains attractive, especially where it is easy to occupy and close to road infrastructure or a strong customer base.
Smaller and mid-sized units continue to appeal to trade counter, logistics, food, storage, light manufacturing and service businesses. However, we are seeing more detailed questions earlier in the process. These tend to focus on operational functionality, such as power supply, whether there is a dedicated yard, EPC rating and the extent of fit-out required. They are also scrutinising operational costs more closely, beyond the headline rent or price, including business rates, service charge, estate obligations and any anticipated maintenance or replacement works during the lease term. As a result, decision-making is taking longer, with occupiers carrying out more due diligence before committing.
Older stock can still perform well, particularly where it offers a practical specification or strong location, but ensuring the correct quoting levels is now more important than ever. Landlords who can provide clear detailed information and reduce uncertainty are more likely to convert enquiries.
“Industrial demand remains healthy, but occupiers are sharper on total cost. The best units are practical, well-located and clear on power, building specification and occupational costs.”
Ben Collins, Director – Head of Commercial Agency, Kemsley Property Consultants
