In response, many occupiers signed five-year leases, often on second-hand space, prioritising availability over quality. 

Now, as those leases approach expiry, the question is are we about to face a flood of stock back to the market?

A ripple, rather than a wave

To find out, we analysed nationwide deals for which lease terms were known. This sample covered over 15.7 million sq ft across 69 big-box units. The results were encouraging: 84% of the space (13.3 million sq ft across 58 units) remains occupied. That’s a strong retention rate, especially given the short-term nature of many of these leases. It suggests the anticipated wave of second-hand stock returning to the market might be more of a ripple than a wave. 

Regional variation 

However, regional differences present a more complex picture. Yorkshire & The Humber and the South West have experienced poorer retention rates, with occupancy rates dropping to 67.3% and 60.1%, respectively. Meanwhile, the East Midlands and West Midlands have remained more stable, with occupancy rates decreasing to 95.3% and 87.2%, respectively. At the same time, Greater London and the South East maintain full occupancy, highlighting their resilience as key logistics hubs. In more peripheral areas, turnover is higher, notably in the East of England, where 0% occupancy is due to only one large unit being returned to the market.

Delving deeper, it becomes apparent that sectoral trends are also evident. For instance,  manufacturing tenants have kept all their leases at 100%, while retail is close behind at 91.7%. 3PLs, which accounted for the majority of leases signed in this sample (34 units), maintained a 76.3% occupancy rate, with 23.7% of the space added back to supply. However, this sector is always likely to experience the most movement, as 3PL operational footprints are often influenced by consolidation and contract changes.

What does this mean for the market?

Overall, the data indicates a positive outlook. While some supply is returning, it is not excessive. Most tenants have maintained their warehouse buildings, with returned space mainly concentrated in specific regions and sectors. For landlords and investors, this shows resilience and suggests that the short-term leases signed during the pandemic have not resulted in widespread vacancies. Although, those pockets of second-hand supply that have returned in areas like Yorkshire and the South West might offer opportunities. Re-letting, repositioning, or upgrading space could address changing demand and may align with broader ESG strategies.

While some fear a surge of existing supply will hit the market next year, our data suggests otherwise. Most of the units leased in 2020 remain let, and as we approach 2026, the logistics sector continues to demonstrate its fundamental strength. Ultimately, some churn is unavoidable. But is a flood imminent? Not quite, more of a gentle drizzle.

Further information

Contact Lewis Rapley