2026 Industrial and Logistics Outlook

As we start 2026, we continue to see encouraging fundamentals across the North East industrial and logistics market, despite the backdrop of wider economic challenges and ongoing geopolitical uncertainty. The region remains resilient, supported by strong occupier demand and an increasingly compelling investment proposition.

The outlook for the sector is broadly positive. Rental levels are expected to continue their upward trajectory this year, with prime and modern assets forecast to achieve growth of between 4–7%, particularly those with strong ESG credentials where demand continues to outstrip supply. Rental growth for secondary stock is likely to be more modest.

A shortage of Grade A space persists across the region, with limited speculative development expected in the short to medium term due to ongoing pressures around construction, financing and operational costs. As a result, vacancy rates are anticipated to remain below 5%. While design-and-build opportunities will come forward, supported by a number of ‘oven-ready’ development sites, the availability of high-quality opportunities more broadly is expected to remain constrained.

Investor appetite remains strong, with rising headline rents and higher yields continuing to make the North East an attractive market. However, the number of opportunities brought to market will ultimately depend on the willingness of owners to sell.

Looking ahead, the new Rateable Values coming into effect in April 2026 may influence occupier behaviour, particularly among SMEs, where increased costs could impact relocation and expansion decisions.

Sustainability continues to be a key priority for both landlords and tenants alike, with high EPC targets, electric vehicle infrastructure and solar energy firmly on the agenda as occupiers seek to reduce costs and meet increasingly stringent ESG requirements.

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