New analysis by Avison Young reveals a resilient start to 2025 for the UK industrial and logistics sector, with big-box investment activity increasing by 9% year-on-year in Q1. The sector also recorded stable rental growth across most regions, with Scotland seeing a notable 3% rise in rents, highlighting ongoing demand for high-quality logistics space.

The Q1 investment total reached £393 million which is still below the five-year Q1 average, however, this is being driven by a lack of investment stock available within the market. Strong appetite remains from investors with the Southeast seeing the highest level of activity, totalling £130m whilst volumes in the Northwest totalled £75m. Key transactions included Valor Real Estate Partner, QuadReal’s acquisition of Tesco Distribution Centre in Thurrock for £130m and Tritax Big Box’s purchase of the Sainsbury’s Distribution Centre in St Helens for £75m.

Leasing activity for big-box distribution units over 100,000 sq ft was slightly softer in Q1. A total of 4.6 million sq ft of Grade A space was leased – 10% lower than the three-year Q1 average. Almost two-thirds (63%) of activity took place in the East Midlands, where the ‘Golden Triangle’ reaffirmed its strength through major deals including Amazon’s 956,000 sq ft facility in Kettering and DHL’s 497,000 sq ft lease in Corby.

Yorkshire also recorded a strong start to the year, with Grade A big-box take-up reaching 1.2 million sq ft in Q1 alone – exceeding the total for the whole of 2024 (712,000 sq ft). This underlines growing occupier demand in the region for high-quality logistics space.

The supply pipeline also remains healthy. Compared to Q4 2024, Grade A big box space under construction grew by 8%, reaching 55.7 million sq ft. Speculative development rose by 14%, bringing new stock to the market and supporting future demand. While the proportion of second-hand space has increased, this is providing with greater choice in a tightening market.

David Willmer, Principal and Managing Director, Industrial and Logistics at Avison Young, said: “Our outlook for the big box market for the remainder of the year is positive. Despite the decline in take-up levels, compared to Q1 last year, over 4 million sq ft of space is already under offer in April this year.

“Enquiry levels for big-box space remain encouraging and we believe that activity will be close to that of 2024, which is similar to pre-pandemic levels. It is also encouraging to see a rise in investment volumes, compared to Q1 last year, highlighting the sectors’ resilience and investors’ appetite for industrial stock across the UK.”