As the leasing markets entered 2025, there was a sense of greater stability and liquidity returning to industrial and logistics capital markets. However, a combination of factors such as gilt rate volatility in the early part of the year, continued uncertainty around the impact of US ’liberation day’ tariffs, and ongoing global conflicts have given investors multiple reasons to hold back on deploying capital.

Multiple surveys of investors, including Savills’ own pan-European survey, continue to show that industrial and logistics remains the most desirable asset class for capital deployment. Despite the prevailing market uncertainty, it is pleasing to report that investment volumes for UK logistics reached £1.01 billion in the first half of 2025. While this represents a 28% drop compared to H1 2024, it exceeds the H1 average of £0.98 billion, excluding the anomalous years of 2021 and 2022, and is ahead of the c.31% decline in wider commercial investment experienced in the first five months of 2025.

Since early April, whilst pricing has broadly been maintained, we have seen the depth of buyer pool reduce, and in particular, there has been a limited number of core buyers. The number of sellers has also been limited, which has resulted in lower investment volumes and limited value outperformance in marketing processes.

In a sign that investors are no longer willing to wait for greater certainty or clarity, at least in relation to geopolitical events, it is interesting to observe a significant volume of industrial portfolios come to the market in recent months. Since March, we have tracked over £3 billion of industrial packages brought to market. Should these processes prove successful, they will be a welcome boost to H2 volumes. However, with core / core+ capital still relatively thin, particularly for portfolios over £100 million, it remains to be seen if value-add investors will be able to satisfy these portfolio vendors’ pricing aspirations.

In our last Big Shed Briefing in January 2025, we commented that a clear focus on rental growth will be key moving forward, and whilst there are pockets of the country where supply has risen sharply, the rental growth trajectory remains intact. Indeed, taking data from the MSCI monthly index for the first five months of the year demonstrates rental growth so far this year of 1.7%, which, if the trajectory continues into H2, would see 2025 rental growth of close to 4.1%, in line with the upper ends of our scenario planning.

This, combined with expected inward base rate movements for the rest of the year, should give investors another reason to continue to deploy capital into the sector.

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