Figures from Savills latest Big Shed Briefing show that the industrial and logistics markets across the East and West Midlands have demonstrated continued resilience over the past year, with robust occupier demand and positive rental growth forecasts, despite ongoing economic uncertainty.
According to the international real estate adviser, year-end take-up in the East Midlands totalled 7.03 million sq ft across 26 units, sitting 47% above the long term, pre-pandemic average. This performance highlights the region’s continued appeal, even as some occupiers delayed decision making in response to wider macroeconomic pressures.
While available supply increased to 14.88 million sq ft, the market remains balanced, with stock equating to around 1.5 years of historic demand and over 1.3 million sq ft currently under offer.
Build-to-suit development continued to dominate activity, according to Savills, accounting for 44% of take up regionally and 31% of the national total, reflecting occupiers’ long term commitment to the region. Highlights include Daventry International Rail Freight Terminal, where Savills represented a number of occupiers, including the 1.3 million sq ft build-to-suit transaction for Marks & Spencer, which will serve as the retailer’s new national distribution centre.
According to Savills, where second hand space was transacted, demand remained firmly focused on quality, with Grade A stock representing over three quarters of second hand lettings, reinforcing the ongoing flight to prime and ESG compliant buildings. Although the development pipeline has contracted sharply following a wave of completions, Savills forecasts annual rental growth of 2.1% to 2029, rising to 2.7% under a more optimistic scenario.
Savills research also indicates that the West Midlands recorded a solid year, with 5.2 million sq ft transacted across 24 deals, 28% above the long term average, despite a modest slowdown from 2024. Supply increased to 7.73 million sq ft, pushing vacancy to 7.5%. However, with 62% of the supply classified as good quality second-hand (Grade A) or new build stock (Grade A specification), occupiers face limited options, not only in terms of quality but also in size, especially in key markets. Savills notes that developer confidence remains evident, with 2.55 million sq ft of speculative space completed in 2025, and additional sites poised to come forward as conditions allow.
Looking ahead, the adviser forecasts annual rental growth of 2.7% in the West Midlands, increasing to 2.9% under an optimistic outlook, supported by the region’s strong occupier base, skilled workforce and strategic location at the heart of the UK.
Ranjit Gill, Director, Savills Birmingham, says, “While macroeconomic uncertainty has naturally slowed decision-making in parts of the market, the Midlands continues to show real resilience. The East Midlands, in particular, has stood out over the past year, with occupier demand remaining well ahead of long term averages and a clear preference for high quality, future proofed space. Although supply has risen across both markets, tightening development pipelines and limited prime stock are expected to support rental growth, leaving the overall outlook firmly positive.”
