Steady occupational market recovery as supply tightens and confidence continues to improve
The UK occupational market continues its steady recovery, supported by falling supply and improving occupier confidence. The UK availability rate eased further to 7.6% in Q4 2025, with Q2 likely to have marked the cyclical peak. Solid demand, increasing space under offer and subdued speculative development point to further tightening in 2026, though the ongoing release of secondary space will moderate any sharp contraction.
UK take-up was 12.2m sq ft in Q4, down 8% on Q3 but 15% higher than the 10-year pre-Covid quarterly average. Annual take-up for 2025 was fractionally ahead of 2024, shoring up the longer-term recovery since 2023. Demand is considered and strategic but is broad-based and mostly expansionary, led by logistics and e-commerce operator requirements along with new overseas entrants and defence-related manufacturers.
Prime annual rental growth is at a cyclical low but stabilised at 3.2% in Q4 2025. A wide gap between prime and secondary rents persists, with rental uplift concentrated on new completions. Fit-out quality and power availability are key differentiators, with strong grid connections now as valuable as effective transport links to some occupiers. Speculative development was a subdued 11m sq ft in 2025, which the lowest since 2017. This continues to support prime headline rents along with significant incentives.
Industrial investment in 2025 was dominated by large portfolio transactions, notably M&A and recapitalisations. Single asset activity was subdued and largely confined to smaller, last-mile units. Investor sentiment improved post-Autumn Budget and pricing was stable in Q4. Deferred year-end sales and residual portfolio stock should support a modest uplift in single asset transaction activity in 2026, though capital targeting logistics remains highly selective
