Second-hand stock has increased 55% compared to a year ago
Despite a rise in supply, now reaching 15.7 million sq ft, there are very few speculative developments starting on site this year, and so we expect supply to decline going forward as existing stock is absorbed
David Tew, Director, Industrial
Derby 507, a recently constructed speculative unit which Savills is marketing on behalf of Logicor
Supply
Available supply totals 15.74 million sq ft across 68 separate units, representing a 44% increase over the past twelve months and a vacancy rate of 10.91%. This amounts to only 1.58 years' worth of stock.
Despite an elevated vacancy rate, some areas of the East Midlands are undersupplied, particularly for larger units. For example, Derbyshire, Leicestershire, Lincolnshire and Northamptonshire are particularly undersupplied, with available units above 300,000 sq ft relative to historical demand.
By grade, 33% is new speculative development, 42% is second-hand Grade A, 16% is second-hand Grade B, and the remaining 8% is low-quality Grade C space, which may be considered obsolete due to its failure to meet modern occupier requirements.
There are 39 units in the 100,000–200,000 sq ft size range, 15 in the 200,000–300,000 sq ft size range, eight in the 300,000–400,000 sq ft size range, one in the 400,000–500,000 sq ft size range, and five over 500,000 sq ft.
Looking ahead, Savills expects that in the second half of 2025, increasing demand, a shrinking development pipeline, and ongoing challenges with BTS projects will prompt occupiers to take existing units, resulting in a decrease in the vacancy rate.
Take-up
While challenges have hindered occupier decision-making, it is clear that the East Midlands remains the bedrock of transactional activity across the UK. In H1 2025, 3.36 million sq ft was let across twelve units, representing 23% of the entire UK big box market. However, 3.36 million sq ft is 27% lower than the same period last year, reflecting a market under pressure; nonetheless, compared to the region’s historical results, the region continues to demonstrate resilience, with the figure 26% above the long-term H1 average.
Given the increasing concerns about feasibility caused by economic and political uncertainties, the amount of BTS activity is declining, with only 987,221 sq ft of BTS units signed for in H1 2025, a 73% decline from the market's peak in 2020 and a 27% decrease compared to the long-term H1 average BTS volume.
This dwindling of BTS units means they account for only 29% of H1 take-up in the East Midlands, compared to 42% of the total space transacted, which was second-hand. The remaining 28% was signed for newly developed, Grade A speculative space. And when analysing the type of second-hand space taken, it is clear that there remains a strong preference for buildings with better ESG credentials, as second-hand Grade A stock made up 64% of the second-hand space let.
Regarding size ranges, there were five deals in the 100,000–200,000 sq ft range, one in the 200,000–300,000 sq ft range, three in the 300,000–400,000 sq ft range, two in the 400,000–500,000 sq ft range, and one over 500,000 sq ft.
3PL firms continue to hold the majority share of take-up, accounting for 50% of total activity. Online retailers represent 21%, while manufacturers rank third at 10%.
Development pipeline
The development pipeline has decreased by 93% over the past twelve months, with more than 2.73 million sq ft of speculative units completing and being added to supply. Due to such high levels of deployed space, speculative announcements have slowed, with only one unit currently under construction, totalling 117,050 sq ft. However, with a limited pipeline and upward trend in our requirements index, Savills remains optimistic about rental growth prospects for the region.