Regional Occupier Markets: Quality Space Drives Performance Across the UK

The UK logistics market continues to be shaped by a familiar theme: occupiers remain highly active where the right space is available. Across regional markets, demand is increasingly concentrated on modern Grade A accommodation, while constrained development pipelines and limited high-quality supply continue to support rental growth despite higher vacancy rates in some locations.

The Midlands remains the UK's standout occupier market, recording 5.2 million sq ft of take-up in Q2 and its strongest first half since 2021. Ecommerce and third-party logistics operators continue to drive activity, while Grade A vacancy has tightened to just 3.2%, underlining the shortage of high-quality space.

In London and the South East, occupier demand was led by Amazon's return to expansion, with major lettings in West Thurrock and Crawley highlighting renewed confidence among retailers. Although availability has increased, 92% of vacant stock is new or Grade A space, reflecting continued developer confidence. Prime rents in West London reached £29.50 psf, the highest level across the UK.

The North West delivered one of the strongest rebounds of the quarter, with take-up reaching 1.6 million sq ft, almost eight times higher than Q1. Retailers accounted for nearly 70% of demand, although vacancy rose to 10.2% as second-hand supply continued to return to the market. Rental growth remains positive, led by Manchester and Warrington.

In the South West, demand was supported by defence and advanced manufacturing occupiers. The Ministry of Defence's 545,000 sq ft commitment at Panattoni Park Swindon illustrates the growing influence of the defence sector, while Bristol's prime rents rose 9.5% year-on-year amid a shortage of Grade A accommodation.

Across Yorkshire, occupier demand remains resilient despite a slower quarter. South Yorkshire continues to attract distributors seeking a cost-effective alternative to the Midlands, while West Yorkshire has seen manufacturers become the dominant source of demand. In both markets, limited Grade A availability is supporting rental growth prospects.

The North East is experiencing some of the strongest rental growth in the UK. A lack of modern supply and rising competition for quality space helped push prime rents in Newcastle to a record £9.00 psf, up 12.5% year-on-year. Vacancy continues to fall as demand outpaces new supply.

Meanwhile, Scotland and Wales remain constrained by shortages of modern accommodation. Scotland's vacancy rate fell to just 3.9%, with only 112,000 sq ft of Grade A space available across the country, while Wales continues to be driven by resilient mid-box demand and a Grade A vacancy rate below 1%. In both markets, limited quality supply remains the key driver of future rental performance.

Overall, regional occupier markets are increasingly defined not by a lack of demand, but by a scarcity of modern, well-located logistics space. As development remains constrained, the competition for Grade A accommodation is expected to continue to support rental growth across the UK's core industrial and logistics markets.