Chinese Ecommerce Becomes a Major Driver of UK Logistics Demand

Chinese ecommerce operators have become one of the most significant sources of occupier demand within the UK logistics market. Expansion by platforms such as JD.com, Temu and Shein, together with their logistics partners, is no longer centred solely on cross-border parcel flows. Increasingly, operators are localising inventory and investing in UK fulfilment infrastructure to improve delivery speeds, customer experience and mitigate regulatory risk. 

Take-up Patterns: How Much Space and Where?

In the past 18 months (2025 and H1 2026), Chinese ecommerce occupiers have taken just over 4.0 million sq ft of logistics space in units above 50,000 sq ft. That represents approximately 7% of take up across the UK. However, take up has not been evenly spread across the UK.

Demand has been concentrated in the UK's core national distribution markets, with three-quarters (74%) of their take up focused on the East and West Midlands markets combined, reflecting a preference for locations offering motorway access, labour availability and large-format Grade A warehousing. 

London and the South East accounted for a further 19% of their take up in units over 50,000 sq ft, however, if smaller units were included this proportion would be higher. This is followed by the North West (7%), with almost no space taken outside of these four regions.

Occupier Requirements and Leasing Preferences

Requirements have largely focused on modern distribution facilities of 200,000 sq ft to 1 million sq ft, with strong power provision, high eaves, extensive yard space and automation capability. As operators seek to replicate highly automated fulfilment models developed in China, there is a clear preference for Grade A buildings capable of supporting robotics and advanced warehouse management systems.

However, speed to occupation is often prioritised over bespoke specifications. Many occupiers are looking to acquire, fit out and operationalise warehouse space as quickly as possible, favouring recently developed or second-hand Grade A units over build-to-suit solutions. 

Chinese ecommerce occupiers typically seek greater lease flexibility. The average lease term for Chinese ecommerce operators is 9.6 years for units above 50,000 sq ft, compared with 10.9 years across the wider market. The difference becomes more pronounced when excluding 3PL-led transactions and focusing solely on retailer-led transactions, where the average lease length falls to 7.0 years (compared with 10.9 years for all retailer leases).

NB: This analysis looks only at Chinese ecommerce operators (both retailers and 3PLs that act for them). It does not include Chinese manufacturers, such as BYD that have taken space recently.

Adapting to Chinese Occupier Requirements

China's logistics market operates under very different leasing dynamics to the UK, with higher vacancy rates and lease structures that are generally more tenant-friendly. As a result, Chinese ecommerce occupiers often arrive with different expectations around property, leasing and landlord support.

Typical requirements include:

• Shorter lease commitments and greater flexibility, including break options.
• Faster occupation timelines.
• Greater landlord involvement in building management and maintenance.
• More comprehensive fit-out support.
• Access to labour markets that can provide Mandarin-speaking management teams where required.

In China, logistics leases typically range from one to three years, extending to five to seven years for major ecommerce hubs or 3PL-led operations. As a result, Chinese ecommerce occupiers in the UK often seek lease terms of three to five years, although developers usually require longer commitments for newly developed space.

Expectations also differ around landlord responsibilities. While FR&I leases remain the norm in the UK logistics market, Chinese occupiers are more familiar with modified gross or modified net lease structures, where landlords retain greater responsibility for building maintenance and operational management. Structural repairs, property taxes and common area services such as security, fire safety and insurance are often managed by the landlord and recovered through a separate service charge.

With vacancy rates elevated, UK developers and landlords are increasingly adapting to attract this growing source of demand through more flexible lease structures and enhanced fit-out packages. However, they may need to go further.

The opportunity has already attracted Chinese capital. Earlier this year, Shanghai-based investor and asset manager Mit-Log acquired a 540,000 sq ft development at Dove Valley Park in Foston, its first UK project. The company plans to deliver more than 3 million sq ft of warehouse space in the UK over the next three years, reflecting growing confidence in demand from Chinese occupiers.

JD.com: A Logistics-Led Expansion Strategy

JD.com is the most notable recent entrant, positioning itself against Amazon through a combination of owned logistics infrastructure and same-day delivery capabilities. Following the launch of their retail platform JoyBuy across six European markets in March 2026, its UK same-day delivery network now serves more than 17 million consumers across six UK cities.

Recent leasing activity suggests continued expansion. JoyExpress secured a last-mile depot in Leeds in August 2026 and has also established a delivery hub in Manchester. The emergence of these facilities mirrors JD's China playbook, where dense last-mile networks underpin rapid fulfilment, and may signal further expansion ahead.

Why the UK and Why Now?

The UK has emerged as a key target market for Chinese ecommerce platforms due to a combination of market scale, logistics efficiency and regulatory change.

It remains one of Europe's largest ecommerce markets, with high online penetration and a relatively concentrated population that supports efficient delivery networks. At the same time, policymakers across Europe are tightening rules around low-value imports, encouraging retailers to move inventory closer to customers through local fulfilment networks rather than relying on direct parcel shipments from Asia.

Slowing domestic growth and intensifying competition within China are providing an additional push towards international expansion. With the UK removal of its de minimis exemption for imports below £135 scheduled by October 2028, occupiers still have time to establish local fulfilment networks ahead of the changes.

Could UK Customs Reform Accelerate?

Possibly. The EU originally planned to remove its de minimis exemption in 2028 but accelerated implementation following similar action in the US. It has since introduced a €3 customs charge on B2C distance sales and is proposing a €2 handling fee per consignment from November 2026.

The UK announced the removal of its own de minimis threshold in the Autumn 2025 Budget and subsequently brought implementation forward from March 2029 to October 2028. Pressure from domestic retailers, developments in the EU and US, and efforts to strengthen tax revenues could support further acceleration. The UK may also consider a flat-fee model similar to that adopted by the EU.

What Could Customs Reform Mean for Logistics Demand?

Evidence from Europe suggests that customs reforms can significantly reduce the volume of low-value imports entering markets directly from overseas. Finland, for example, reported a 76% year-on-year fall in low-value imports in July following recent changes, with Chinese shipments accounting for the vast majority of affected volumes.

The implications for UK logistics could be substantial. HMRC data reported by Politico suggests that £8.3 billion of de minimis goods, defined as parcels valued below £135, entered the UK last year, up from £3.8 billion in 2023/24 and £5.9 billion in 2024/25. If customs reform resulted in a similar reduction to that seen in Finland, the value of goods entering the UK via direct parcel shipments could fall by as much as £6.3 billion.

If these goods instead shifted to bulk imports supported by UK warehousing and fulfilment networks, demand from Chinese and other overseas ecommerce operators would increase further.

Knight Frank analysis suggests that every £1 billion of online sales supports approximately 1.36 million sq ft of warehouse demand. Applying this ratio, the potential shift in fulfilment activity could generate up to 8.6 million sq ft of additional warehouse requirements in the UK.

Of course, some of this demand may have already materialised, with overseas ecommerce operators acting pre-emptively, and not all retailers will have the scale in the UK to justify a local fulfilment model. Nevertheless, the analysis highlights the significant potential for customs reform to support additional warehouse demand across the UK.

Conclusion

The continued localisation of inventory by Chinese ecommerce operators increasingly appears to be a structural driver of logistics demand. As these businesses expand their UK fulfilment networks, occupier requirements are evolving beyond large national distribution centres to include regional and last-mile facilities. For landlords and developers, understanding the operational priorities, leasing preferences and pace of expansion of these occupiers will be critical to capturing this growing source of demand.