Take-up of UK industrial and logistics (I&L) space has rebounded in the second quarter of 2026, as retailers look to expand and occupiers continue to focus on the “best-quality” assets, according to a report by Knight Frank.
The report highlighted that a total of 10.3m sq ft of space, for units over 50,000 sq ft, was leased in Q2 – up 15% on Q1, but down 19% on the second quarter of 2025.
Grade-A spaces accounted for 50% of take-up in Q2 and 57% in Q1 – more than double its 26% average share over the past five years.
Knight Frank said this showed occupiers have been prioritising buildings that can support automation, power requirements, operational flexibility and faster occupation.
Meanwhile, occupier appetite remained resilient heading into the second half of the year, with enquiry volumes reaching their second-highest level since Q1 2022, despite ongoing global and domestic political uncertainty.
Additionally, retailers were the most active occupier group in Q2, accounting for 44% of take-up.
Ecommerce operators were also busy during this time, with Amazon securing 385,000 sq ft across two units in the South East.
The report also showed that regional momentum was strongest in the Midlands, where H1 take-up reached 10.2m sq ft – up 119% year on year and the strongest first half since 2021.
In the North East, prime rents in Newcastle reached a record £9/sq ft, up 12.5% year on year, while defence-led demand helped revive activity in the South West, headlined by the Ministry of Defence’s 545,414 sq ft lease in Swindon for a new drone-testing facility.
Nationally, prime rents increased by 3.1% annually, with five of the UK’s nine prime regional markets reporting annual rental growth during the quarter.
Claire Williams, head of UK and European industrial research at Knight Frank, said: “Q2’s strong take-up and enquiries figures show that occupiers have not stepped back from the market. They have become more selective. Grade-A space now accounts for well over half of everything transacted this year, and enquiry volumes remain at their second-highest level since Q1 2022.
“Development remains limited and concentrated in specific locations, so competition for genuinely modern space is intensifying. That continues to support rental growth despite high headline vacancy rates in some markets.”
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