Moving into 2026, we anticipate core buyers slowly returning to the market, with continued investor sentiment shifting from single let to multi-let (MLI) assets.
Leftfield Park, Basingstoke – a Tungsten development funded by Leftfield
Looking back at our commentary on the industrial and logistics investment market from twelve months ago, we were highlighting the fact that a strong end to 2024 had given rise to an element of stability after a tumultuous few years. However, as 2025 progressed, it became clear that stability wasn’t the order of the day. But despite that, investors remained relatively pragmatic as investment volumes surprised on the upside within the context of the year’s volatility.
Year-end total investment volumes for single-let distribution assets were just shy of £3 billion, a 15% decline compared to last year’s £3.47 billion, and 4% below the long-term annual average, excluding the Covid-19 anomalies of 2021 and 2022. H2 logistics investment volumes were down 34% on the same period in 2024, and down 19% against the long-term H2 average [2010–2025].
As we highlighted in our recent Big Shed Prospects research paper, what stood out in 2025 was the shift in investor sentiment away from single let units towards the multi-let market. As Gilt rates have remained stubbornly high (relatively) over the year, the demand for multi-lets hasn’t wavered as investors sought to capture the investment performance required to satisfy their typically value-add target returns in the shorter time periods than single lets allow.
However, looking at the global data, several underlying trends are indicative of a recovery that can be sustained. One of the most telling is the rise in average deal size, which reflects improving liquidity in larger lot sizes. Indeed, the number of individual properties transacting for US$100 million or more has risen by 14% on the year. Moreover, many deals are attracting multiple competitive bids. This would suggest that buyers and sellers are increasingly aligned on pricing, consistent with a growing body of evidence in support of the conclusion that we are now well past the trough in values.
Another area where this cycle is clearly different from that of any of the recoveries in the last 30 years is the lack of distress in the investment market. For policymakers, this is a good thing, and much of this stability can be attributed to the changes that were put in place to lending practices after the global financial crisis (GFC). However, for the investment market, the lack of distressed sales has created a target-poor environment for the opportunistic buyers who typically kick off any recovery phase of the cycle. This, combined with the less-than-attractive spread between some property yields and the all-in cost of debt, goes a long way to explaining why the recovery in investment volumes and prices has been more muted than normal.
Moving into 2026, that could change however, as core buyers slowly return to the market, largely driven by the consolidation within the Local Government Pension Schemes (LGPS) into super pools. Additionally, the denominator effect should provide further momentum in the new year, as major institutional investors look to rebalance their portfolios towards real estate, given the significant outperformance of global equities in recent years. We are already seeing evidence of increased core investor activity, and we further expect their return to act as a catalyst to bring more sales to the market.
Savills prime yields currently sit at 5.25% for logistics. With an expected increase in active core / core+ purchasers and assuming Gilt rates trend downwards, it is likely that yields could follow as the year progresses.