For anyone who has been renting industrial space in the UK for more than a decade, the question in the headline will sound almost nostalgic. Sub-£10 per square foot warehouse rents were unremarkable not so long ago; today they survive only in pockets of the North East and parts of Northern Ireland, while the UK average prime rent for big-box warehouses over 50,000 ft2 sat at £12.04 per ft2 in Q3 2025, with London reaching £29 and the South East and East around £23.50. Even “affordable” large distribution space (100,000+ ft2) was averaging close to £12 per ft2 by early 2026, up roughly 3% on the year. So, will sub-£10 rents return? To answer that properly, we need to unpick the five forces actually driving the market.
1. What Is Driving the Constant Upward Pressure on Warehouse Space Cost?
The simplest explanation is a persistent supply and demand imbalance. Occupier take-up has been remarkably resilient: UK Big Box take-up reached roughly 22.6 to 24.5 million ft2 in 2025 depending on the measure used, up around 5.6% to 9% year-on-year and comfortably ahead of the pre-pandemic long-term trend. Meanwhile, speculative development has been cautious; only around 7.6 million ft2 of new development started in 2025, the lowest annual total since 2014. That combination, strong demand chasing constrained new supply, is the fundamental engine behind rental growth.
There is also a structural shift happening within demand itself. Occupiers are increasingly consolidating operations into fewer, larger, more efficient buildings rather than maintaining networks of smaller sites; a single one-million-square-foot facility can now replace several older units, and this “bigger and better” trend concentrates competition on the best located, best specified space, pushing rents for that space up disproportionately. Layer on top of this the cost of construction, energy, and increasingly demanding sustainability requirements (BREEAM, EPC ratings), and it becomes clear why rental growth of around 4% to 6.5% a year has become the norm for prime, Grade A stock, even while secondary space has seen much flatter growth of around 1.4%.
2. Are the Big Non-High Street Retailers Pricing Everyone Else Out of the Market?
There is real substance to this concern, though the picture is more nuanced than “Amazon takes everything.” Grocers and major retailers have continued to transact at scale: Marks & Spencer, for instance, acquired a 1.3 million ft2 warehouse at DIRFT in Daventry during Q3 2025 alone. But the data for 2025 tells an interesting story: third-party logistics (3PL) operators, not retailers directly, were the single dominant occupier group, accounting for as much as 41% of annual take-up in some measures, as retailers increasingly outsource fulfilment rather than hold space themselves. For the first time on record, manufacturers also became the largest occupier group in some datasets, representing 31% of the market, reflecting reshoring and defence-related investment.
What this means for smaller and mid-sized businesses is less a story of being deliberately “priced out” by any single retail giant, and more one of structural disadvantage: only around one in ten units currently on the market exceeds 400,000 ft2, so competition for the limited pool of large, modern space is intense, and that scarcity pricing filters down through the whole market. Smaller occupiers are often pushed towards older, second-hand stock (roughly 63% of available space) or into less accessible locations, which brings its own operational cost penalties even where headline rents are lower.
3. The Lack of Brownfield Opportunities for Warehousing
Brownfield land should, in theory, be the natural release valve for warehousing demand near population centres; reusing previously developed land avoids the political friction of greenfield or Green Belt development. In practice, it has become a genuine bottleneck. The revised National Planning Policy Framework, published in February 2025, enshrined a “brownfield first” approach, but the overwhelming policy focus has been on housing, not commercial or logistics use. Logistics UK and the British Property Federation have both raised concerns that a residential presumption on brownfield land could actively squeeze out logistics development, with the sector calling for the reintroduction of “Brownfield Passports” (pre-approved planning frameworks) specifically for strategic logistics sites.
The practical barriers are significant too: a National Brownfield Forum report identified more than 120 factors affecting brownfield development, and remediation permitting delays through the Environment Agency have, in some cases, held up projects by as much as 15 months. Contamination, historic ground conditions, and Biodiversity Net Gain requirements all add cost and time that greenfield sites simply don’t carry. The result is that even where brownfield land nominally exists, converting it into deliverable warehouse space at a competitive cost is slow and expensive, which keeps a lid on the supply response that might otherwise ease rents.
4. The Role of Private Equity and Institutional Investors
Capital has poured into UK logistics real estate because the sector’s fundamentals have simply outperformed the rest of commercial property. Industrial and logistics accounted for 33% of all UK commercial investment volume in 2024, well ahead of the long-run average of 19%, and overtook offices for the first time in history. Five-year average annual rental growth for industrial and logistics has run at 6.8%, compared with 1.2% for offices and -1.3% for retail. Total investment volumes reached around £8.7bn to £8.9bn in 2025, and industrial remained investors’ single preferred sector in Europe for the third year running, according to CBRE’s investor intentions surveys.
This weight of capital matters directly for rents. Institutional and private equity buyers, from Blackstone’s near-£500m acquisition of Warehouse REIT to Sixth Street’s purchase of Industrial REIT, are consolidating ownership and, in doing so, are often underwriting future rental growth into their pricing assumptions; that is, part of what they are paying for is the expectation that rents will keep rising, particularly for prime, ESG-compliant stock, which in turn reinforces the trend. With prime yields compressing (UK average around 5.91% and prime London industrial now below 5%), investors are increasingly reliant on rental growth to hit their return targets, giving them every incentive to support, rather than undercut, upward rental pressure.
5. The Impact of Government Policy
Government policy cuts in genuinely contradictory directions. On one hand, there is clear recognition of logistics as nationally significant infrastructure, with Logistics UK lobbying (via the Planning and Infrastructure Bill) for logistics to be treated as a core, rather than incidental, part of planning reform, and the sector highlighting that transport and storage attracted £17bn of investment in 2023 alone. Freeport incentives, particularly in Scotland, and government-backed schemes like the Universal Studios development in Bedford (expected to require over 2.2 million ft2 of additional warehouse space to support it) are actively stimulating new logistics demand.
On the other hand, business rates remain a persistent headwind; industry commentary through late 2025 flagged rising business rates pressure as a factor that could continue to weigh on occupier decisions, particularly in London and the South East, even as rental pressures elsewhere start to ease. The cancellation of the northern leg of HS2 removed a potential catalyst for rail freight capacity, and permitting delays through bodies such as the Environment Agency continue to slow development timelines. In short, government policy is simultaneously trying to unlock supply through planning reform while imposing cost and delay through taxation and regulation; the net effect so far has been more friction than relief.
So, Will Sub-£10 Rents Return?
Almost certainly not, at least not for modern, well-located, Grade A space anywhere near the golden triangle or the South East. The forces driving rents upward, chronic undersupply of large modern units, deep-pocketed institutional capital underwriting further growth, a brownfield planning system that talks a good game but delivers slowly, and 3PL and manufacturing demand now rivalling retail as the driver of take-up, are structural, not cyclical. Sub-£10 rents will likely persist only in secondary, older stock in the least connected regions, and even there, the gap to prime rents is widening, not narrowing. For businesses planning their warehouse strategy, the sensible assumption is not “wait for rents to fall” but “design for a market where space is expensive and scarce”: sweat existing footprints harder, get SKU segmentation and layout right before reaching for more square footage, and treat any brownfield or secondary opportunity that does emerge as a genuine strategic asset rather than a fallback option.
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