2025 in review: Industrial - “Quality, sustainability and location are defining the East Midlands market”

The East Midlands industrial and logistics property market has held firm through 2025, demonstrating resilience despite wider economic uncertainty. Yet, according to Richard Sutton, our managing director, the market is now showing clear divisions between the best and the rest.

“The East Midlands continues to perform strongly, particularly for large-scale logistics and modern industrial units,” says Richard. “There is still real depth of demand for high-quality space in the right locations. For older, less flexible buildings, the picture is more complex. Some of those assets are struggling to attract tenants or require significant investment to remain competitive.”

Rethinking supply chains

Richard believes the region’s performance has been underpinned by structural changes in the way businesses manage their supply chains and operations.

“Companies are moving away from purely cost-driven models and are thinking more about resilience, agility and proximity to customers,” he explains. “That shift is continuing to benefit the East Midlands because the region sits at the heart of the country’s distribution network. Strong transport connectivity, both road and rail, keeps the area very attractive for occupiers.”

The result, he says, is continued competition for prime logistics hubs, particularly those close to the M1 and major transport intersections. “Occupiers want modern, efficient space that can support their operations and future growth. Those buildings remain in high demand, and that is supporting rental growth and investment interest.”

A selective market

Although demand remains strong overall, Richard notes that occupiers have become far more discerning in 2025. “Businesses are choosing the best space available, rather than simply the cheapest,” he says. “Specification, energy efficiency and flexibility are now the key decision factors. That means landlords and developers who can offer modern, sustainable and adaptable accommodation are finding plenty of demand. Others are having to work harder to compete.”

He adds that more second-hand stock has returned to the market this year as some occupiers consolidate or relocate. At the same time, speculative development has slowed, reflecting a more cautious approach from developers. “We are seeing a slight rise in availability of older units, while speculative completions have moderated,” he explains. “This is creating a two-speed market. Prime space continues to move quickly, while secondary stock is taking longer to let.”

Sustainability now essential

Sustainability has become a defining feature of the market in 2025. Richard says it is no longer a differentiator but a baseline requirement.

“Sustainability and modernisation are not optional extras anymore,” he says. “They are fundamental to the value and performance of industrial and logistics assets. Buildings that are modern, efficient and flexible are future-proof. They attract strong demand, achieve higher rents and provide investors with greater confidence. Older, inefficient buildings that fail to meet current standards face longer voids, higher incentives and the risk of obsolescence.”

Refurbishment and redevelopment are therefore becoming central strategies for landlords and investors. “There are real opportunities to reposition older stock,” Richard says. “If landlords can upgrade their assets to meet modern sustainability and energy requirements, there is a chance to capture tenant demand that might otherwise be lost. The key is understanding what occupiers now expect from their space.”

Outlook for 2026

Looking ahead, Richard expects the East Midlands industrial market to remain solid, supported by the region’s strong fundamentals and central location.

“Take-up is likely to stay above the long-term average, but growth may be more measured than in the peak rebound years,” he says. “We are in a more balanced phase of the cycle, where quality matters more than ever.”

For modern, well-specified units, he expects vacancy rates to edge downwards as occupiers absorb available stock and limited new development comes forward. “The best buildings will continue to perform well. For older, secondary stock, vacancy could drift higher,” he notes.

Prime rents are forecast to grow moderately in 2026, at around three to five per cent, with higher increases in tight sub-markets. “Grade A units with strong connectivity and sustainability credentials will command a premium,” Richard says. “Secondary stock may see little or no rental growth.”

He also expects investor confidence to remain firm. “Prime industrial and logistics assets in the East Midlands will continue to attract attention because the underlying drivers are strong. Investors are increasingly focused on active asset management opportunities, such as refurbishment or redevelopment, rather than simply holding existing stock.”

Richard’s message to occupiers, landlords and investors is clear: “For occupiers, move early if you need modern, large-format space, because there will be growing competition and fewer new opportunities coming forward. For landlords and developers, focus on modernisation and sustainability. For investors, be selective and understand the difference between prime and secondary. The East Midlands remains a strong structural play, but the market is maturing.”

He concludes: “The fundamentals of the East Midlands industrial sector are robust. Logistics, manufacturing and e-commerce will continue to drive demand. The key to success in 2026 will be quality, specification, location and timing. Those who focus on those factors will continue to perform well.”