If 2025 was a year when market sentiment began to shift towards the occupier, then the first half of 2026 has demonstrated that the occupier is increasingly being taken into account in market interactions.

Across the UK’s big-box sector, 15.7 million sq ft was let in H1 2026, which is 8% lower than in H1 2025. Deals are taking longer due to increased geopolitical uncertainty and macroeconomic headwinds, but they are still transacting, and take-up feels both sustainable and well supported by occupier activity. Although this demand remains diversified and resilient, the Midlands have seen the majority of occupier activity so far this year, as reflected in the data in the wider report.

However, the headwinds from last year – UK tariffs, budgets, and geopolitical uncertainty – have persisted into this year, prompting occupiers to scrutinise their real estate decisions more closely. While globally, conflict in the Gulf has disrupted supply chains and energy prices, closer to home, the uncertainty within the UK government is creating doubts in the economy.

Specific to the real estate market, we also can’t ignore the ban on upward-only rent reviews. Although implementation remains subject to further legislation and is not currently anticipated before 2027–2028, the removal of OMR-based UORRs will affect the rate of rental growth across the sector, as Savills research shows that, over full market cycles, OMR-based UORRs deliver superior income growth relative to CPI/CPIH indexation.

In the general environment of rising costs – whether energy, N.I., minimum wage, or rates – occupiers see rent as something they still have some control over and can create at least five years of certainty about. However, lease events are ultimately unavoidable, and where there is a business or operational justification to relocate, indecision or inertia is a barrier to growth.

So where the stock is suitable, the deals are happening, and in 2026, there has been a constant stream of extra-large (XL) big-box deals (400,000+ sq ft) – eight so far this year – and they have accounted for 28% of the market year-to-date. Notable activity includes Farmfoods’ acquisition of 800,000 sq ft at Logicor Park, Daventry, while Amazon has been the most active occupier, securing significant space through lettings at Lutterworth – 761,000 sq ft to Bleckmann – and Rugby, where ID Logistics have committed to 661,000 sq ft. These Amazon-backed deals, alongside its own freehold development programme, underline that the e-commerce giant is firmly back in the UK and adopting both a proactive and reactive approach.

This activity across the big-box market is prompting occupiers to reassess supply chain models, with a clear emphasis on proactivity rather than reactivity. The depth of the sector is further supported by growing investment from Chinese e-commerce providers, with operators such as JD.com / Joybuy actively expanding across multiple UK locations, including last-mile hubs supporting same-day delivery.

The third-party logistics (3PL) market generally remains dominant at 38%, driven by Amazon’s increasing activity – occupying space both through 3PL providers and directly – amounting to 1.5 million sq ft in 2026.

We believe this will now lead to a supply crunch due to the macroeconomic environment, as the development market remains challenging for speculative building of these units or for tenants to commit significant capital expenditure to custom-build them. This explains the decline in built-to-suit (BTS) activity, which has only accounted for 10% of the market so far in 2026 – well below its long-term average of 37%. With the funding environment remaining tough, the BTS market will continue to be a difficult option for many occupiers to justify; however, with the lack of available mega box space (>500,000 sq ft), this supply shortage is likely to pose a challenge for occupiers – potentially even leading to a race for space in core locations.

Defence has also continued to grow in prominence – most recently with the MOD taking structurally significant amounts of space at Panattoni Swindon. Following the UK Government’s £15 billion defence spending announcement at the end of June, to fund key equipment and technology, we expect this to filter positively into defence-linked occupier activity in the industrial and logistics market and across all size ranges.

As discussed at a recent Savills occupier roundtable, for those occupiers not making the strategic decision to commit capital to automation programmes now, a large number must still maintain a focus on the retention and development of existing labour pools, raising important questions about the timeline for automation adoption. While automation will be essential in some sectors, significant power requirements and uncertainty about grid capacity are leading many occupiers to focus on workforce investment rather than large-scale capital expenditure in the near term.

Following the publication of Future Space, the report's findings highlight both the importance of labour and a quiet confidence across the occupier market, with many expecting to increase investment in logistics space over the next 12–18 months as they respond to evolving supply chain challenges and opportunities.

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