Take-up rose 7% to 1.51 million sq ft despite a 41% pipeline fall, underlining resilient demand across London and the South East.
Whilst the regional development pipeline has fallen by 41%, leasing activity has remained robust, with the Inner M25 recording four consecutive quarters of transactions over 100,000 sq ft, demonstrating continued occupier confidence in the market.
Toby Green, National Head of Industrial and Logistics
SEGRO Park Enfield – Savills is instructed on Segro Park Enfield, comprising 232,000 sq ft across three BREEAM Excellent units, with a power provision of 3.9 MVA available across the site
Supply
At the end of H1 2026, the available supply in London and the South East has fallen by circa 4,500 sq ft year-on-year (YoY) to now stand at 13.4 million sq ft across 77 units. The combined vacancy rate across the two regions now stands at 9.48%, down 78 basis points (bps) YoY, with the Inner M25 vacancy rate at 9.69%, up 103 bps YoY and the South East at 9.40%, down 67 bps YoY.
When analysing the current supply by grade, 55% of available space is Grade A speculative development, with 16% of second-hand Grade A space, 16% of Grade B space and 13% of low-quality Grade C space.
By unit count, there are 57 units within the 100,000–200,000 sq ft range, representing a 4% increase in the last 12 months, 14 units within the 200,000–300,000 sq ft range which is on par with the level seen 12 months ago, four units within the 300,000–400,000 sq ft range representing a 33% increase in the last 12 months, one unit within the 400,000–500,000 sq ft range representing a fall of 50% in the last 12 months and one unit over 500,000 sq ft which is on par with the level seen 12 months ago.
There is currently 1.1 million sq ft of space under offer across eight units, with five units of existing supply and three units in the development pipeline. Of these units that are under offer, three units are in the Inner M25, which would continue the trend seen since Q3 2025 of transactions over 100,000 sq ft within the M25.
Take-up
In H1 2026, take-up totalled 1.51 million sq ft across eight transactions, which is up 7% on take-up in H1 2025, reflecting robust demand within the market despite geopolitical challenges. Of these transactions, 85% occurred within the South East, which equates to six transactions, and 15% occurred in the Inner M25, reflecting two transactions. We have seen transactional activity over 100,000 sq ft in the Inner M25 region for the fourth consecutive quarter.
Take-up in the Inner M25 totalled 232,500 sq ft in H1 2026, which is up significantly YoY. In comparison, the South East totalled 1.28 million sq ft in H1 2026, which is down 9% YoY.
When analysing transactional activity by grade, the majority of space taken up was for Grade A units (56%). With 27% of space transacted involving Grade B space and 17% involving Grade C space. This highlights that the occupier preference for best-in-class assets remains prevalent in the market, and the region is well placed to meet this demand.
By specification, we can see a shift back towards the take-up of existing units, with second-hand space accounting for 79% of take-up in H1 2026 and new speculative development space accounting for 21% of take-up. There were no deals in the first half of 2026 that involved pre-let or build-to-suit space in London and the South East. This shift back to existing units is evident in the wider trend in the market, as existing units make up 54% of National take-up in H1 2026.
In terms of size ranges, there were four transactions in the 100,000–200,000 sq ft range and four transactions in the 200,000–300,000 sq ft range. There have been no transactions over 300,000 sq ft in the market.
In H1 2026, the bulk of transactional activity can be attributed to the retail sector, with online retailers accounting for 53%, followed by grocery retailers at 17% and wholesalers at 14%. The remaining activity comes from a range of sectors, including parcel companies.
Development pipeline
Construction activity across London and the South East peaked during the pandemic, with more than 5 million sq ft under construction in Q2 2021. However, the development pipeline has recalibrated over the last five years back to the levels seen pre-pandemic, where there was, on average, 1.21 million sq ft of speculative development on site during each quarter. This trend is evident over the last 12 months, as currently there are nine units under construction across London and the South East, totalling 1.07 million sq ft, which is down 41% YoY.
Of those units under construction, all units are in the 100,000–200,000 sq ft size range, with three units in the Inner M25 and six units in the South East. There are three units totalling 522,000 sq ft, which are confirmed speculative developments and will be starting on site imminently.