LOGIC: Logistics Sector Update - Autumn 2025
Capital Markets Outlook
By Eddie Richards and Mark White
Towards the tail end of 2024, with all its elections and upheaval, a repeated message from clients was that they viewed 2025 as a potential stability year. Those seeking that period of stability and a return to ‘normal’ have, though, found 2025 a bitter pill to swallow.
The accelerating rate of change at the geo-political events level, often with very little warning or predictability, means it has become nigh on impossible to make confident long-term projections. This is perhaps best characterised by President Trump’s ‘Liberation Day’ followed by a tariff hokey cokey where for a while the concept of TACO became what passed for market commentary. In fact it appears that President Trump meant what he said, but as tariffs appear to be a particularly personal quest for him it is hard to see how global organisations can make genuine 10 year business planning decisions on location of critical supply chain infrastructure when at any time the game could be reset – save perhaps for considering how to mitigate exposure to a more capricious US. Similarly on the issue of defence the approach of the US may appear motivated by personal animus, but fundamentally nation states (and their defence sector businesses) need to now consider whether a strategy built on an assumption of US support was a good one.
Those days are gone and with housing costs in particular high, with persistent supply side issues and sluggish planning reform, the consumer is feeling much lighter in the pocket.
So, what does this mean for the UK logistics investment market? Take up got off to a slow start in Q1 2025 but did see a rise in Q2. Savills ‘Big Shed Briefing’ talked about a market of two halves, with take up of build to suit deals at its lowest level since 2013. The market for existing units however remained strong. The UK Government was one of the first in the queue to sign a new trade deal with the US which settled nerves for a lot of UK exporters. There has been some stealthy creep as the scope of the tariffs subsequently increased but in reality the export market to the US is fairly small.
That global backdrop also comes against a picture of lower than hoped economic growth in the UK, and a consumer market getting used to higher interest rates and greater inflationary pressure after years of, in particular, cheap credit. Those days are gone and with housing costs in particular high, with persistent supply side issues and sluggish planning reform, the consumer is feeling much lighter in the pocket. The prospect of large tax rises looms in the Autumn budget and national debt remains stubbornly high. We are seeing a drop in the value of some of the large UK retailers and with the retail sector having been the fuel driving growth in the logistics industry over the last few years, we could see a drop in uptake in Q4 despite a trend of rising supply and vacancy. Our investor clients are carefully considering which sectors may step in to plug those gaps, and how they ensure that their stock is fit for purpose. A number of speculative developments have and are due to complete in 2025 giving more choice for would be tenants who will be managing their long-term growth and efficiency targets against the short-term requirement for flexibility to remain nimble in an unstable market place.
It's not all doom and gloom though with CBRE predicting investment volumes growing in H2 with industrial and logistics the preferred sector for investors targeting the UK in 2025. We consider elsewhere in our update the impact of defence on demand and take up, and the Government remains intent on unlocking national infrastructure and large investment projects which, if successful, will generate jobs and a demand for accompanying warehouse space to ensure a robust supply chain. The recent approval for a new Universal Studios theme park near Bedford is a prime example of a project that could kick start demand given it requires expansion works at Luton Airport and upgrades to rail infrastructure.
Alumni • Legal Notices • Accessibility • Privacy Notice • Fraudulent or 'scam' communication • Complaints Procedure • Pricing Information
© Charles Russell Speechlys 2025. Solicitors Regulation Authority number 420625.