Portfolio Deals Drive H1 2025 Investment
H1 2025 industrial investment volume has exceeded the previous year’s total and is broadly in line with the 10-year H1 average. This has been driven by portfolio and merger & acquisition (M&A) deals, accounting for almost two-thirds of all industrial investment volume. This trend is set to continue with Warehouse REIT reportedly close to accepting £489m for their portfolio from Blackstone.
US & APAC Buyers Active
US investment in the UK industrial market in H1 2025 has dipped relative to the post-pandemic trend. However with the above Blackstone deal set to complete as well as Sixth Street’s agreement to purchase Clipstone’s Industiral REIT, US-led investment into UK industrial market should substantially increase. Meanwhile, the rise in Asia-Pacific buyers,159% above the H1 10y average this year, is a key theme so far this year.
Multi-Let Estates Deliver Strong Returns
Pricing remains stable despite elevated risk-free rates, particularly in the multi-let estates segment where investors have continued to chase assets with strong reversion. Indeed, recent trading updates from industrial REITs provide evidence of the sector’s continued strong income growth potential.
Occupier Demand Spreads Beyond Midlands
Q2 2025 demand for industrial units over 100,000 sq ft reached 9.3m sq ft, a c. 50% increase on the previous quarterly performance. This brings take-up in line with H1 2024 and an 8% decrease on the 10-year H1 average (2015-2014). Q2 2025 demand was bolstered by large industrial occupiers, typically drawn towards the prime logistics regions of the Midlands, greatly exceeding average quarterly take-up in both the South West and in Yorkshire and the Humber.
South West Demand Hits 5-Year High
GXO took 885,000 sq ft from Panattoni in Avonmouth to service their contract with Amazon. This is the largest speculatively developed unit in the UK. Two major lettings from UK supermarket chains, taking advantage of global access via Bristol ports, bolstered regional demand. M&S have taken 400,000 sq ft build-to-suit space at Axis South West and Waitrose have taken Mountpark 360, a speculatively developed unit which had sat vacant since 2021.
Chinese 3PL Demand Rising
Q2 2025 also saw a rise in the diversity of Chinese 3PLs taking space in the UK. Companies including JD.com and Top Cloud Logistics are completing significant deals at a faster pace than typical transactions as these companies aim to provide the logistical solutions to rapidly growing online marketplaces such as Shein and Tik Tok. These e-commerce sites have allowed cheap, mass-produced goods to enter the UK market. Chinese 3PL firms are diversifying their overseas assets so as to be less reliant on US supply chains in the wake of US tariffs, and also to reduce congestion at South East Asian ports.
Supply at 10-Year High
Continued rental growth is the sector is challenged by the increase in supply of available space, which has ticked upwards in Q2 2025 by c.1% to 60.3m sq ft in big box space. This is a 10-year high driven by second-hand space returning to the market, including 7.9m sq ft of grey space. However, only 6.6m sq ft of big box space which is currently under development is expected to become available in the rest of this year, c.40% of which will be in the Midlands.
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