Despite the uncertainty injected into global markets by the Trump administration’s ‘Liberation Day’ tariffs and the subsequent adjustments made since, take-up in the UK logistics sector is on track for its best year since the end of the pandemic. YTD take-up by the end of Q3 2025 totalled 26.3 million sq ft, 18% higher than the same period in 2024. Savills is aware of a further 5.5 million sq ft of space under offer. If these units transacted in Q4, this would bring full-year take-up to 32 million sq ft, in line with 2019.

Uncertainty remains a significant issue for both developers and occupiers, delaying decision-making and weighing on occupier take-up, which has exacerbated supply issues over the last two years. Developers have delayed bringing forward speculative schemes in response, with the speculative development pipeline falling to its lowest level since Q3 2020, with just 7.6 million sq ft of speculatively developed stock under construction.

Falling development has seen work thin out for construction contractors, which should lead to tighter margins in tender returns and potentially lower materials prices, which could have a deflationary impact on construction costs. As such, the Savills Build: Perspective index for industrial and logistics (I&L) is now starting to exhibit downward pressure.

We continue to see upward pressure on land values as the AI boom is driving significant demand in the data centre sector, with these assets often in direct competition with traditional I&L sites. Additionally, Savills estimates rising defence expenditure could lead to 32.3 million sq ft of additional demand over the next seven years. Notably, much of this will likely be build-to-suit (BTS) due to the complex nature of such facilities and associated security measures.

While some cost pressures on development are easing, the introduction of the UK Net Zero Carbon Buildings Standard (UKNZCBS) means that developers will need to increase the coverage of rooftop PV panels to comply going forward. The UKNZCBS benchmarks for compliant levels of embodied and operational carbon from I&L buildings are set to reduce incrementally over time, meaning that alignment to the standard will become increasingly challenging and potentially more costly in the short to medium term. Other developers are looking to offset embodied carbon through planting new forests and creating enhanced habitats, with one new scheme requiring a land bank almost the size of Gatwick airport and so competition for land remains fierce.

On-site wellness amenities are also becoming more prevalent, particularly in large I&L parks. Given that much of the labour for these parks commutes, there may be opportunities for developers to expand on-site offerings to include crèches and food outlets. An interesting case study is Granta Park Life Sciences in Cambridge, which has a doctor’s surgery, cricket pitch, crèche and pool. This could be a model for the I&L sector to follow, but case studies from the European market remain thin on the ground.

In Japan, the developer ESR has developed facilities which include children’s day-care centres known as ‘R:KIDS’. Managed by licensed day-care providers and offered free of charge, ESR’s R:KIDS provide high-quality childcare services, which have been well received by families who work for the tenant companies in the facilities. Not only does this initiative support ESR’s customers in attracting and keeping the talent they need, it also improves the well-being of on-site employees and workforce productivity, whilst creating greater inclusiveness, diversity and flexibility.

_{Read the articles within Savills Build: Perspective report below}