The UK logistics property market has undergone significant change over the past decade. Rapid growth in e-commerce, evolving supply chains and changing consumer expectations have all influenced demand for warehouse and distribution space. Today, however, the conversation is shifting from how much logistics space is required to how capable that space is. It is a shift increasingly reflected in HartDixon’s work across the logistics and industrial sector, where the technical capability, condition and future adaptability of an asset are becoming central to investment and development decisions.
Occupiers are becoming more selective, and the numbers show an evolving marketplace. CBRE reports that 70% of UK logistics space leased in 2025 was new stock, as tenants continued to favour modern, well-specified buildings. Yet the market is already turning, by the first half of 2026, second-hand space accounted for 42% of take-up, up from a three-year average of 32%, even as vacancy climbed to around 7% nationally. Put simply, occupiers still want quality space, but there is now more choice, and older buildings are finding it harder to compete.
The answer to that challenge extends well beyond location and floor area.
A changing definition of prime
Location will always be fundamental to logistics. Access to strategic road networks, customers and labour remains critical, but the specification of the building itself is playing an increasingly decisive role in occupier decisions.
Modern logistics operations can require sophisticated automation, greater electrical capacity, EV charging infrastructure and increasingly complex building systems. Automated storage and retrieval systems alone can demand up to twenty times more power capacity than conventional warehouse operations, alongside taller clear heights, stronger and flatter floor slabs, and wider column spacing. Yard configuration, servicing arrangements and employee facilities all continue to influence whether a property works effectively for an occupier, but they now sit alongside a much more technical set of requirements.
Sustainability has moved from a consideration to an absolute condition of requirement. From 2031 the UK government requires commercial buildings over 1,000 sq m to reach an EPC B rating to be let. That is a significant deadline for a sector where an estimated three-quarters of existing logistics floorspace currently sits below that standard. It is worth remembering, too, that base-build performance and fit-out performance are assessed differently: EPC and BREEAM address the building envelope and services, while SKA assessment addresses the sustainability of the fit-out itself. Occupiers and landlords negotiating alterations or handovers increasingly need both pictures, not just one.
For owners and developers, this creates a broader definition of what constitutes a prime logistics asset. It is no longer enough to provide a well-located warehouse; the building must be capable of supporting the operation taking place within it, complying with tightening regulation, and retaining sufficient flexibility to accommodate changing requirements in the future, particularly in regard to technological advancements and automation.
Power moves up the property agenda
The most significant shift in the market arguably surrounds power requirements.
Automation, robotics, warehouse management systems, electrification of vehicle fleets and other technologies are increasing the electrical requirements associated with logistics operations, at precisely the moment grid capacity is becoming constrained in parts of the UK. Industry analysis has recorded distribution networks losing over a gigawatt of headroom in regions where logistics development has been concentrated, and nationally the queue of projects awaiting a grid connection has, at points, run into the hundreds of gigawatts, with waits historically extending for years.
Reform is underway. New connection rules introduced by the National Energy System Operator in mid-2025, replacing a first-come-first-served queue with a “ready and needed” process, are intended to unblock capacity for viable projects. But demand-side connection applications, driven substantially by data centres, have grown several-fold in little more than a year, and the sector will continue competing directly with logistics for suitable sites and available power. In some markets, data centre operators are now taking land and infrastructure that would previously have been considered part of the future logistics pipeline.
Power availability therefore needs to be considered much earlier in the property lifecycle. For a new development, understanding available capacity and connection timescales can have significant implications for feasibility, programme and cost. For an existing asset, the question may be whether current infrastructure can accommodate an occupier’s future requirements, from EV fleet charging to automated systems, and if not, what investment would be required to close the gap. What was once a technical matter that followed an acquisition or development decision is increasingly becoming part of the decision itself.
The opportunity within existing stock
The preference for modern space does not necessarily mean that older logistics buildings have reached the end of their useful life.
In the right location, there can be a compelling case for investment in existing assets, and the evidence for that case is strengthening. Research into UK logistics leasing since 2020 found that buildings rated EPC A or A+ commanded a rental premium of 55% over those rated C or below, a gap too large to ignore. Separate analysis of European warehouse sales found investors paying close to a fifth more for buildings with strong sustainability credentials. The commercial argument for repositioning, rather than accepting obsolescence, is now well evidenced.
Several UK owners have already demonstrated what this can look like in practice. Refurbishment programmes retaining existing frames and floor slabs, while upgrading MEP systems, adding renewable generation and improving insulation, have taken buildings from EPC ratings as low as E up to A or A+, in some cases with double-digit reductions in embodied carbon compared to a full rebuild. Portfolio logistics landlords are now running dedicated repositioning programmes precisely because the returns justify it.
The challenge is determining where investment will add significant value. Not every asset requires wholesale redevelopment, and not every improvement will generate an equivalent return. Understanding the existing building, its constraints, and the requirements of the target occupier market is essential before committing significant capital expenditure.
This is an area where HartDixon’s work with owners, investors and developers can provide important early clarity. A thorough building and due diligence survey is usually the starting point: identifying where a building may fall short, quantifying the likely cost and complexity of improvements, and establishing whether refurbishment, repositioning or redevelopment represents the most appropriate route. Where investment does proceed, independent development monitoring gives funders and investment parties confidence that capital is being spent as intended and that programme and cost risk are being properly managed, particularly relevant given how much of this expenditure is now driven by regulatory deadlines rather than discretionary upgrades. This becomes particularly important in a market where the gap between the best and least suitable stock has the potential to widen further, and where, in some regions, more than half of available second-hand space is now considered poor quality.
Designing for the future
There is also a balance to strike between meeting today’s requirements and retaining tomorrow’s flexibility.
Logistics operations can be highly specialised; automation systems, racking, loading arrangements and servicing requirements may all be designed around a particular occupier’s business model. While bespoke solutions can deliver significant operational benefits, an asset designed too closely around one set of requirements can become more difficult or expensive to adapt later.
Future-proofing therefore does not necessarily mean predicting exactly how logistics will operate in ten or fifteen years’ time. Few owners or developers could do so with certainty. Instead, it means considering adaptability from the outset: understanding where additional power, height or floor capacity could be required, avoiding unnecessary constraints, and making informed decisions about which elements of the building should be designed for flexibility.
The same principle applies to refurbishment. Investment should address today’s requirements, from EV charging infrastructure to occupier-specific fit-out, while considering how the asset could need to evolve during its remaining lifecycle. A well-structured planned preventative maintenance programme is one of the more underused tools here: rather than treating an asset’s performance as fixed at the point of refurbishment, it allows owners to track condition, anticipate obsolescence, and phase further investment before problems become urgent or costly.
Looking beyond the shed
The logistics property market remains fundamentally strong, but the requirements placed on its buildings are becoming more sophisticated, and the consequences of falling short are becoming more clearly priced.
Location, scale and connectivity remain essential, but power, regulatory compliance, technology and adaptability are increasingly determining which assets occupiers choose and where investors see long-term value. For owners, investors and developers, that makes early consideration of the physical and technical characteristics of an asset increasingly important. Decisions around acquisition, refurbishment and development need to consider not simply whether a building works today, but how readily it can respond to what comes next, and how quickly regulation will force the issue.
The logistics assets best positioned for the future may therefore not always be the newest or most technologically advanced. They will be those where investment has been carefully considered, infrastructure aligns with operational requirements, and sufficient flexibility has been retained to respond to a sector, and a power system, that continue to evolve. HartDixon supports logistics projects throughout the entire property lifecycle, from initial feasibility and due diligence through to project delivery and ongoing asset management. Our services include building and due diligence surveys, dilapidations consultancy, project and development monitoring, and project management for schemes involving complex technology facilities across the UK logistics and industrial sector. This allows us to provide continuity from inception through to completion and beyond, helping clients protect the long-term performance and value of their assets.