5 Things You Need to Know About Big Box Logistics in Q1 2026
- Q1'26 saw 7.5 million sq ft transacted across thirty-one (31) deals, 19% ahead of the pre-Covid quarterly average (2007-19).
- DTRE Big Box Vacancy Rate has edged back above 7%, however, Grade A vacancy has tightened to just 2.9% — down 15 bps year-on-year and, with only c.6m sq ft of spec completions in the next 12 months (vs a 10-year average of 10.9m).
- Across both single and multi-let, £913m of industrial and logistics investment traded in Q1’26, with the EQT Exeter acquisition of ‘Project Dawn’ from Prologis (£130m) the largest deal.
- 3PLs and retailers dominated occupier demand, accounting for the majority of Q1 deals, with Farmfoods’ 803,000 sq ft letting at Logicor Park Daventry the standout transaction.
- The investment case for prime, long-let big box rests on rental growth, income durability, and liability-matching characteristics. Those fundamentals remain intact, and prime rental growth is actively strengthening as land supply, planning, and construction costs throttle new development.
Key Market Indicators You Need To Know About Big Box Logistics in Q1'2026
Occupational Market
The UK’s Big Box logistics market has carried its 2025 momentum into the new year. Q1’26 saw 7.5 million sq ft transacted across 31 deals, running 19% ahead of the pre-Covid quarterly average (2007–19) and representing the strongest start to a year since 2022.
Logistics operators were the most active occupier group in Q1, accounting for 15 of the 31 transactions and reflecting continued investment in distribution networks. The standout deal saw Farmfoods commit to 803,000 sq ft at Logicor Park Daventry on a 25-year lease, whilst DHL took an assignment of 515,000 sq ft at Derby Commercial Park and Maersk secured 411,000 sq ft in Doncaster. Parcel and last-mile operators also featured prominently, with DPD pre-letting 386,000 sq ft at i54 in Wolverhampton and Evri taking 265,000 sq ft at Arrow, Barnsley.
Retailers were the second most active sector (seven deals), led by Morrisons’ 235,000 sq ft lease at Snodland in Kent and EDA Cloud’s 324,000 sq ft letting at Citadel, Bilston. The continued presence of Chinese e-commerce platforms was also notable, with a 450,000 sq ft freehold D&B acquisition at Dove Valley Park in Derby. Manufacturing activity, whilst more muted than 2025’s record year, included Onboard Corrugated’s 297,000 sq ft letting at Vola Bilston.
Big Box Take-up by Grade and Quarter
Geographically, the West Midlands and East Midlands dominated activity, together accounting for 19 of the 31 deals, reaffirming the Golden Triangle’s grip on UK logistics. Yorkshire and the Humber contributed six transactions, whilst the South East and London accounted for three deals, including Prologis’ DC1 Brooklands letting at £20 per sq ft. Wales also saw improved activity with Amazon in Cardiff and Oak Group in Newport.
The DTRE Big Box Vacancy Rate has edged back above 7% following the return of ‘second-hand’ space to market, with 61 million sq ft of vacant units now available across the UK. Whilst the headline rate had fallen to 6.9% by end-2025, the first time below 7% in over two years, the release of stock back onto the market has reversed that progress in the short-term. However, the amount of new product coming to the market via speculative development remains subdued, with just under 6 million sq ft due to reach practical completion over the next 12 months, significantly below the long-term rolling four-quarter average of 10.9 million sq ft. This supply-side constraint should place renewed downward pressure on vacancy through the second half of the year, and particularly on Grade A supply, which has seen a fall of 6% over the last 12 months, with Grade A vacancy now standing at just 2.9% and expected to fall further.
Speculative Development Completions Each Quarter by Size Band
As a result, the rental polarisation witnessed in 2025 will continue to entrench. Grade A rents grew 6.5% in 2025, and we expect incentives for new, energy-efficient product to tighten further as supply diminishes. In contrast, secondary stock, of which there are 178 units totalling 37.2 million sq ft, faces mounting competition from refurbished and new-build alternatives, with average headline growth for ‘second-hand’ product of just 1.4% in 2025 and expect this divergence to widen through 2026.
The story is even more stark in the world of XXL Big Box (units of 300,000 sq ft plus), particularly for new-build units between 300-400,000 sq ft, where supply has shrunk by 38% in the last 18 months. There’s only one unit of this size coming online in next 12 months and coupled with the new elevated construction costs, expect to see a reaction from landlords in terms of rental tone.
Capital Markets
Industrial and logistics investment volumes totalled £913 million in Q1’26 across 24 completed transactions. Whilst this represents a quieter start to the year relative to Q4’25’s £3.8 billion surge, it is consistent with the seasonal pattern of recent years where capital deployment has been weighted toward the second half.
The largest transaction saw EQT Exeter acquire ‘Project Dawn’, a portfolio of four single-let assets totalling 909,000 sq ft from Prologis for £130 million at a NIY of 5.64%. DWS also completed its funding of a new Tesco unit (489,000 sq ft) at Mountpark Hinckley for £105 million at 5.30% NIY, demonstrating continued institutional appetite for long-income, prime logistics assets. The third largest deal saw Marchmont and Invesco acquire the ‘Marlin’ multi-let portfolio from Indurent for £101 million at 7.11%. DTRE advised on all three.
Multi-let and urban logistics assets attracted significant activity, accounting for the majority of Q1 transactions by number. The Merlin Centre in High Wycombe traded at £53 million (4.85% NIY), whilst LOC8 in Maidstone sold for £44 million (4.84%), and Crest Distribution Park in High Wycombe at £39 million (4.96%). These pricing levels confirm that well-located, multi-let estates with reversionary potential continue to command sub-5% yields.
Rolling 4 Quarter Investment Volumes
Buyer preference still leans toward multi-let, where deeper and wider buyer pools offer greater liquidity. Core and core-plus single-let pricing is expected to remain resilient given the lack of available stock, a tight development pipeline and limited exposure to debt markets, with LGPS pools and insurance capital increasingly active. Secondary pricing, however, faces headwinds from widening swap rates, exit yield concerns, elevated gilt yields and rising capex demands.
The broader macro backdrop remains noisy. Conflict in the Middle East has injected fresh uncertainty into global energy markets, supply chains and investor sentiment, whilst tariff tensions haven’t completely gone away either. In that context, transaction volumes in the near-term could be subdued as some capital adopts a ‘wait and see’ posture, and we would not be surprised to see deal activity once again back-loaded into Q4 as decisions are deferred.
Whilst we acknowledge those headwinds, DTRE’s view is that the fundamental investment case for UK Big Box logistics has not changed. If anything, it has strengthened. We estimate that there’s currently £2.5bn of big box logistics assets ‘in-train’, despite the wider macro story. This only further underlines the fact that in an increasingly uncertain world, the sector offers something relatively straightforward. Long, secure income, let to strong covenants, underpinned by structural demand that is not going away. The development pipeline is constrained, vacancy is manageable and rental growth for the best product continues. Therefore, we expect the weight of capital targeting logistics to reassert itself through the second half of the year.
DTRE Definitions
Big Box: Unit of 100,000 sq ft +
Take-up: A single-let unit upon which a new lease or occupier freehold purchase has completed (does not include lease renewals/re-gears) and is not conditional upon planning. Deals that have been agreed but remain conditional to planning remain classified as ‘under offer’.
Supply: Currently available. Newly developed units are added to the supply schedule upon reaching practical completion.
Grade A: New or recently refurbished Big Box stock built to modern institutional specification. Typically clear internal height of 12m or more, a modern dock-leveller ratio, 50m+ yard depth, EPC rating of A or A+, and BREEAM Very Good or better. Grade A includes both newly speculatively-built and some ‘second-hand’ units that continue to meet this specification. Built in last 20 years.
Grade B: Functional distribution stock that falls short of Grade A on one or more key specifications — typically lower eaves (c.8–10m), older construction, mid-range EPC ratings (B/C/D), and/or less generous yard and dock provision. Usually older Grade A product that has been overtaken by newer stock, or refurbished units that cannot be brought fully up to modern spec.
Grade C: Older, lower-specification stock, often not originally built as modern distribution warehousing. Typical characteristics include low eaves (<8m), limited yard depth, poor EPC ratings (E or below), and constrained dock provision. Typically candidates for comprehensive refurbishment or redevelopment.
Grey Space: Whole or part-units being actively marketed for sub-lease or assignment by an existing occupier, rather than being offered directly by the landlord. DTRE includes actively-marketed grey space within its total supply schedule, as it represents genuine competition for occupier requirements.
