High-quality Grade A space accounts for 73% of available supply.
2025 marked a significant rebound for the region, with take-up surging 43% year-on-year, helped by the return of big-box activity inside the M25 and several large-scale BTS transactions, underscoring renewed confidence in the market. While supply increased, the development pipeline contracted sharply by 83%, signalling potential constraints on future availability going into 2026.
Toby Green, National Head of Industrial and Logistics
DP World London Gateway, where over 1 million sq ft of space was transacted in 2025, including an 808,000 sq ft pre-let to Tesco, and where further buildings of up to 1.3 million sq ft can be delivered.
Supply
At the end of 2025, the available supply in London and the South East had risen by 14% to stand at 12.7 million sq ft across 73 units. The combined vacancy rate across the two regions now stands at 9.04%, up 78 basis points (bps) from the end of 2024, with the Inner M25 vacancy rate at 8.42%, up 104 bps from 2024, and the South East at 9.27%, up 66 bps from 2024.
When analysing the current supply by grade, 53% of available space is Grade A speculative development, with 20% of second-hand Grade A space, 11% of Grade B space, and 16% of low-quality Grade C space. High-quality Grade A space accounts for 73% of the available supply — this indicates that the market is poised to meet the continued occupier demand for best-in-class units.
By unit count, there are 54 units within the 100,000–200,000 sq ft range, representing a 15% increase in the last twelve months, 14 units within the 200,000–300,000 sq ft range, representing an 8% increase in the last twelve months, three units within the 300,000–400,000 sq ft range, which is on par with the level seen twelve months ago, and two units within the 400,000–500,000 sq ft range, representing a 100% increase in the last twelve months. There continues to be no units over 500,000 sq ft available on the market since Q2 2021.
There is currently 273,686 sq ft of space under offer across two units, with both transactions expected to complete in H1 2026. One unit is within the Inner M25, which will help to boost transactional activity in the region as we move into 2026.
Take-up
In 2025, take-up totalled 4.46 million sq ft across 21 transactions, which is up 43% on take-up in 2024. Of these transactions, 95% occurred within the South East, which equates to 19 transactions, and 5% occurred in the Inner M25, reflecting two transactions and a return to transactional activity over 100,000 sq ft in the Inner M25 region.
Take-up in the Inner M25 totalled 242,614 sq ft for 2025, which is up on 2024 but 80% lower than the pre-pandemic average (2007–2019) of 1.22 million sq ft. In comparison, the South East totalled 4.21 million sq ft, which is 14% higher than the pre-pandemic average (2007–2019) of 3.7 million sq ft.
When analysing transactional activity by specification, the market divided fairly evenly, with 28% of space transacted involving build-to-suit (BTS) space, up from 20% of space transacted in 2024. The key deal being the 808,000 sq ft Tesco letting at DP World London Gateway. 33% involved new speculative development space, which has more than doubled since 2024. The remaining 40% involved second-hand space, which has fallen from 67% of space transacted in 2024.
There are a number of ongoing large-scale acquisitions that will deliver significant BTS deals for the South East market in 2026.
By grade, 33% of space transacted was Grade A speculative development, and 60% involved Grade A space. There was no Grade B space transacted in the region, and 8% of space transacted was low-quality Grade C.
In terms of size ranges, there were 15 transactions in the 100,000–200,000 sq ft range, three transactions in the 200,000–300,000 sq ft range, one transaction in the 300,000–400,000 sq ft range, one transaction in the 400,000–500,000 sq ft range, and one transaction over 500,000 sq ft.
In 2025, five sectors comprised the bulk of transactional activity, with third-party logistics (3PLs) accounting for 19% of transacted space, closely followed by grocery retailers accounting for 18% of space, 17% from online retailers, 16% from wholesale occupiers, and 10% from manufacturing companies.
Development pipeline
Currently, there are five units under construction across London and the South East, totalling 671,005 sq ft. Of those units under construction, all units are in the 100,000–200,000 sq ft size range, with two units in the Inner M25 and three in the South East. There are no units over 200,000 sq ft under construction, which creates opportunities for developers to refurbish existing stock or break ground on speculative development projects.