Regional Occupier Markets: Diverging conditions emerge across the UK's logistics markets - Q3 2026

Regional logistics markets continued to move in different directions during Q3 2026, reflecting local supply dynamics, occupier profiles and varying levels of development activity. While some of the UK's largest distribution markets experienced a moderation in take-up, others recorded a notable rebound in occupier demand. Across almost every region, however, the availability of modern logistics accommodation remained a key determinant of market performance.

The Midlands was again the most active regional market in Q3, recording 4.7 million sq ft of take-up. Demand remained concentrated in larger distribution facilities, with particularly strong activity in units between 250,000 sq ft and 400,000 sq ft. The region continues to benefit from its central location, extensive motorway connectivity and role within national fulfilment networks.

London and the South East recorded lower levels of activity than recent years, but occupier demand remained focused on modern facilities in established distribution corridors. Speculative development activity has begun to increase across the region, providing occupiers with a broader choice of accommodation than has been available in recent years.

Regional markets remain highly varied

Elsewhere, occupier activity was driven by a diverse range of sectors and requirements.

In Wales, defence-related demand provided a significant boost to quarterly activity following Marshall Land Systems' acquisition of a major facility in Merthyr Tydfil. Manufacturing occupiers also remained active, continuing a long-running trend within the Welsh market.

South Yorkshire recorded one of the strongest quarter-on-quarter increases in take-up, supported by Primark's expansion into a major distribution facility in Sheffield. The transaction contributed to a tightening of market conditions and a reduction in vacancy.

In West Yorkshire and the Humber, occupier activity increased from the previous quarter, supported by demand for both modern logistics facilities and lower-cost second-hand accommodation. The market remains characterised by a very limited supply of Grade A stock.

The North West experienced a quieter quarter, with occupier activity dominated by mid-box requirements and manufacturing businesses. While take-up moderated, tenant demand remained concentrated around the region's key industrial locations.

In the South West, occupier demand was driven largely by logistics operators, with activity supported by both existing distribution networks and continued investment in parcel delivery infrastructure.

Scotland saw a sharp improvement in take-up compared with the previous quarter, with activity spread across energy, manufacturing and logistics occupiers. In contrast, the North East recorded relatively few transactions, although demand remained evident despite limited availability of suitable modern accommodation.

Development pipelines are becoming an increasingly important differentiator

One of the clearest distinctions between regional markets is the level of future supply.

The Midlands and London and the South East both saw increases in speculative development activity during the quarter, providing a larger pipeline of modern accommodation for occupiers. The Midlands now has 5.5 million sq ft under construction, while London and the South East has 2.5 million sq ft currently being developed speculatively.

By contrast, development pipelines remain limited across several other regions. Scotland currently has no speculative schemes under construction, while the North East also lacks any speculative development activity. West Yorkshire has only a single speculative scheme underway, highlighting the more restricted supply picture outside the major distribution markets.

Rental growth increasingly reflects local supply conditions

Rental performance continues to vary considerably between locations.

Strong rental growth has persisted in markets where modern supply remains particularly constrained. The South West and North East continue to record some of the strongest annual rental growth rates, while rental growth in London and the South East, the Midlands and Yorkshire remains positive but has generally moderated compared with recent years.

In several regions, including Wales, Scotland and Yorkshire, rental performance remains supported by a shortage of high-quality accommodation rather than exceptionally strong take-up volumes. Meanwhile, markets with improving development pipelines are beginning to offer occupiers greater choice, helping to moderate rental pressure.

Outlook

Looking ahead, regional performance is likely to remain increasingly market-specific. Development activity, the availability of modern stock and the requirements of dominant occupier groups are becoming more important drivers of performance than broader market trends.

While conditions vary considerably between regions, the markets with the strongest combination of occupier demand and limited modern supply continue to be best positioned for future rental growth. At the same time, growing levels of speculative development in selected locations should gradually improve occupier choice and support a more balanced market environment.