Logistics investor and developer Tritax Big Box, along with Savills, has launched the eighth annual Future Space report, with research conducted in late 2024 by supply chain analysis firm Analytiqa.
The report presents key trends and factors shaping the industrial and logistics space over the coming 12 to 24 months and beyond, based on insights from 330 occupiers, investors and developers.
Improved occupier confidence
Occupier confidence has strengthened, found the report, with sentiment turning more positive in 2025. A total of 39% of respondents view market conditions as better than six months ago, which is a huge rise from 22% in 2023.
For occupiers, demand for industrial and logistics space is driven not just by business growth but by a variety of factors such as entry into new sectors, network consolidation, increased automation, holding higher stock levels and enhancing ESG performance.
While business growth was the most common motivation, mentioned by 63% of respondents, many also highlighted other factors. This indicates that demand will continue to be shaped by a broad spectrum of strategic objectives.
Notably, 40% of occupiers anticipate needing additional space over the next two years, while only 6% expect a reduction. The South East, East Midlands and West Midlands were the top locations for these new requirements.
Future outlook
Automation and technology will continue to play a critical role in the future of supply chains over the next three years.
For 40% of occupiers, automation and technology remains their top priority, while 38% plan to enhance supply chain visibility and invest in software and analytics to optimise operations.
This focus on innovation is set to impact real estate markets, with 28% of respondents intending to realign their warehouse networks, an increase from 17%, and 24% consolidating their physical footprint, up from 18%.
Additionally, 20% of manufacturers and retailers expect to re-shore or near-shore parts of their supply chains within three years, while 25% of occupiers plan to increase their stock levels.
ESG themes such as decarbonisation and greener transportation also emerged as top priorities for occupiers over the next five years.
Andrew Blennerhassett, associate in the Savills research team, said: “While occupiers appear more optimistic than last year, a recovery in 2025 looks set to be led by the investment markets. The majority of investors expect volumes to rise this year, with a focus on best-in-class units in top locations.
“Investors also ranked pricing aspiration as the most important factor when considering acquisitions, and much will depend on the pricing gap between purchasers and vendors, which has consistently hampered investment activity since 2022. Crucially, investors appear to be settling on a consensus for prime yields, which we believe reflects a narrowing in the pricing gap.”
Key challenges for occupiers
Occupiers are grappling with a range of operational challenges. Labour costs have emerged as the most pressing concern, cited by 62% of respondents (up from 41% in 2023), with 34% highlighting difficulties in sourcing workers.
Availability of power has also become a major issue, with 36% identifying it as a barrier to securing future space – up sharply from 11% in 2023. This reflects the strain on existing infrastructure, the evolution of fleets and growing reliance on power-intensive technologies such as automation and AI.
Henry Stratton, head of research at Tritax Management, said: “More change is coming with ongoing supply chain network evolution. We are seeing occupiers continue to realign their logistics real estate networks and consolidate their physical footprint.
“Ongoing labour challenges are likely to fuel further technology and automation adoption – increasing power demands and the criticality of adequate capacity and reliable supply, as well as demand for high-quality modern logistics facilities.”
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