Occupier Market Overview

While memories of the boom have started to fade, the occupier market nonetheless performed relatively well in the face of notable economic headwinds during 2023. Meanwhile, the marked recovery in supply and improved choice at the quality end of the market will help to stimulate activity into the new cycle.


At 42.2m sq ft, UK-wide take-up in 2023 was the lowest annual total since 2017, but this arguably reflected a return to more ‘normal’ levels of activity after the pandemic-induced surge of demand. While 2023’s out-turn was significantly below the five-year annual average, it was slightly ahead of the annual average seen over the ten years prior to the pandemic.

2023 was bookended by two healthy quarters, with rising interest rates and heightened economic uncertainty coinciding with notably subdued take-up through the middle of year. Solid take-up of 10.4m sq ft in Q4 2023 was also flattered by Amazon’s emphatic return to the big box market, with the ecommerce giant committing to a 2.3m sq ft build-to-suit unit at SEGRO Logistics Park Northampton.

2023 was characterised by a notable drop-off in transactions at the larger end of the market. Amazon’s mega deal was 2023’s only transaction above 1m sq ft, compared with five in each of the previous three years. XL segment (>250,000 sq ft) take-up was the weakest against trend, standing 33% below the five-year annual average, while the smaller mid box segment (50,000 – 99,999 sq ft) was the most resilient, with take-up in 2023 only 11% below average.

UK Take Up By Size Band


Despite the slowdown, activity has remained resolutely focused at the quality end of the market, with grade A space accounting for almost 70% of total take-up in 2023. This reflects a substantial improvement in the supply of quality space in the market alongside occupiers’ increasingly discerning attitudes around ESG credentials and energy efficiency. By the same token, increasing aversion towards lower quality product was reflected in secondhand take-up slumping to a record low in 2023.

UK Take Up By Region


The sectoral breakdown of occupier demand was spread relatively evenly in 2023, having been dominated by retailers and particularly Amazon during the boom period. The retail and wholesale sector still accounted for the largest share of take-up in 2023, but only just, with 30% of the total. This included the Amazon deal and several major deals from the likes of Sainsbury's, Zara and Tesco. 

The manufacturing sector followed closely behind retail, accounting for 28% of 2023’s take-up and rising from a 22% share of the market in 2022. The West Midlands and the North West regions were a key focus of manufacturing demand, while securing production into supply chains and increasing moves towards nearshoring continued to spur activity. 

Third party logistics operators were notably active in the first half of the year, with occupiers including Maersk and Syncreon committing to 685,000 sq ft and 598,050 sq ft units respectively at SEGRO schemes in the Midlands. However, fewer deals taking place in H2 pulled 2023’s overall share of take-up from third party operators down to 20%, from 26% in 2022. 


No region was spared from the slowdown in occupier demand in 2023, with all of them recording take-up below their respective five-year annual averages. That said, some fared better than others, most notably the East Midlands, where annual take-up of 10.3m sq ft was only 2% down on 2022 and 16% below the five-year average. In contrast, the North East was the weakest performing region, with take-up of 1.3m sq ft 59% below average and comprising only nine deals.  


Supply has staged a meaningful recovery from 2021’s all-time low, fuelled by a combination of slower take-up, a development boom and an increased volume of existing space coming back to the market. UK-wide supply increased by 15% in 2023, with the availability rate climbing from 4.6% to 5.9% over the year. However, supply remains tight in its historic context, equivalent to only 1.3 years of average annual take-up.

By size-band, the XL segment saw the strongest rebound in supply, rising 27% year-on-year, while mid box saw the shallowest increase, rising 8% year-on-year. In terms of quantum, the large segment is the most well-supplied relative to demand, equivalent to 1.5 years of average take-up, while mid box possesses the highest availability rate, at 7.9%.

Moreover, the underlying make-up of supply has completely shifted following unprecedented levels of speculative development. New and refurbished space now accounts for a record 67% share of total supply, rising from a 41% share in 2019 and a just a 12% share a decade ago.

UK Availability


Inevitably, the calming of demand and a significant influx of new supply has been reflected in rising void periods. For deals transacting in 2023, the average void period across the UK stood at 8.5 months, rising from 7.4 months in 2022. 

However, reflecting an emphasis on quality, transactions for new build spec units showed significantly shorter void periods, averaging 6.6 months in 2023 compared with 9.8 months for secondhand units. Void periods also differ according to size. In the XL segment, voids averaged only 4.0 months from the deals done in 2023, which compared with 9.4 months for mid box units, albeit supply in this segment contains a higher proportion of secondhand space. 


Speculative development activity slowed significantly in 2023, an inevitable consequence of higher finance costs and weaker investor sentiment compared with two years ago. At the end of 2023, 14.3m sq ft was under construction across the UK, down 39% from the record high seen at the end of 2022.

The XL segment led the fall in speculative development, while only two regions recorded a year-on-year increase in speculative development, namely Greater London and Scotland. The East Midlands is once again the UK’s most active region for speculative development with 2.6m sq ft underway at the end of 2023.
While more occupier-controlled space is returning to the market, a moderating speculative development pipeline is likely to help keep a lid on supply, placating concerns over possible oversupply.


While the pace of rental growth has eased since the heights of 2021, it remained firmly in growth territory in 2023. Across the UK’s 60 key markets, average prime rents for circa 50,000 sq ft units increased by 9% over the year to Q4 2023, easing from 13% in the previous year. While the calming of occupier demand and recovering supply levels will lead to a further easing down of growth in 2024, occupiers’ willingness to pay a premium for quality space will continue to support growth, especially in key locations where grade A supply is limited.

With annual growth of 15% and 14% respectively, the West Midlands and East Midlands recorded the strongest growth at the regional level during 2023. Within the Midlands, Coventry (+28%) and Northampton (+22%) exhibited the strongest growth while, elsewhere, Southampton (+27%) 
and Manchester (+21%) saw some of the strongest growth among the 60 key markets.

Secondary rents also increased over 2023, albeit to a lesser extent than prime. On average, secondary rents increased by 7% over the year to Q4 2023, down from 13% in Q4 2022. Consequently, 2023 marks the largest outperformance of prime rental growth since 2011, and arguably reflects the growing flight to quality seen in the market.

Average UK Rental Growth

Regional Average Rental Growth

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