Mid-Year Spotlight: Insights, Evidence & What's Next

2026 Mid-Year Insights

• Occuper Demand Remains Resilient: While wider economic conditions continue to create uncertainty, there remains a strong core level of occupier activity across the market. Demand has been particularly driven by businesses that require proximity to their customer base, whether servicing local contracts or supporting operations across central London. This underlying demand has helped maintain transactional activity despite broader economic challenges and continues to support rental levels across well-located industrial estates. 
• Secondary Space is Becoming Increasingly Valuable: Although vacancy rates have risen for some new-build and high-specification refurbished units, availability of secondary and tertiary stock remains limited in several size brackets across North and East London. As occupiers carefully manage costs, many are seeking more affordable relocation options rather than moving into premium accommodation. This has created strong demand for well-located secondary units, particularly where businesses can achieve operational efficiencies without taking on significantly higher occupation costs. The result is an increasingly segmented market, where affordability and location are often taking precedence over specification.
• Location Continues to Drive Decision Making: Occupiers remain highly focused on securing premises in locations that support their operational requirements and customer networks. For many businesses, proximity to Central London and key transport routes continues to outweigh wider economic concerns. Demand has been particularly strong from businesses servicing local contracts or requiring access to a Central London customer base, reinforcing the importance of well-connected industrial locations. This trend is reflected in the 37 transactions we completed across North and East London during the first half of 2026, totalling 395,218 sq ft of industrial and logistics space. As a result, strategically positioned estates continue to outperform with occupiers prioritising access to customers, labour and distribution networks when making property decisions. 

Looking Ahead: Two Predictions for the Remainder of 2026

• Vacant Stock Will Continue to Be Absorbed: With very limited development activity across North and East London, exisiting availability is expected to continue being absorbed throughout the remainder of the year. This is likely to apply across all specifications of industrial space, as occupiers remain active and opportunities for new supply remain constrained.
• Developers Will Begin Returning to the Market: As underlying occupier demand remains strong and competition for industrial sites from alternative uses, particularly residential development, continues to soften, we expect industrial developers to gradually return to the market. While development activity is unlikely to accelerate rapidly, improving market fundamentals and continued demand are expected to create greater confidence for new industrial schemes over the coming months.

2026 Mid-Year Insights

• The Market Responds to the Upwards-Only Rent Review Ban: Following Royal Assent of the legislation banning upwards-only rent reviews, landlords and tenants have moved quickly to agree lease renewals before the new rules come into force. Discussions have been increasingly centred around alternative rent review mechanisms, including index-linked reviews, fixed uplifts and more flexible lease structures. The result is a shift towards shorter, more adaptable lease arrangements, with rent review provisions becoming a key focus of negotiations rather than a standard clause.
• Occupational Costs Are Driving Greater Flexibility: The introduction of the 2026 Rating List and the reduction of several business rates reliefs have increased costs for many occupiers. This has created additional pressure during lease renewals and rent reviews, with tenants often unable or unwilling to absorb significant rental increases. Across the market, landlords are responding with more pragmatic solutions to maintain occupancy. We recently agreed a stepped rent structure for a landlord at 41 Artillery Lane, Spitalfields, allowing a 35% rental increase to be phased in over five years. Equally, a rent review instruction in Winchmore Hill highlighted increasing vacancies within the food and beverage sector, demonstrating the continued pressure on occupiers in some secondary retail locations.
• Industrial Demand Continues to Support Rental Growth: Industrial property remains one of the strongest sectors in the market, with rental growth continuing across many locations. Demand for smaller units, particularly in the 3,000-5,000 sq ft range, has remained strong as occupiers seek well-connected premises while carefully managing costs. This trend is reflected in the Royal Docks, where we continue to see strong demand and rising rents across a portfolio of light industrial units, supported by limited supply and excellent transport connectivity.

Looking Ahead: Two Predictions for the Remainder of 2026

• Shorter Lease Terms Will Become More Common: As the market adapts to the upcoming rent review reforms, landlords and tenants are likely to continue to favour shorter lease terms that allow rents to be reassessed more regularly and reduce exposure to potentially onerous review mechanisms.
• Industrial Occupiers Will Seek Greater Certainty: With industrial rents continuing to rise, occupiers are expected to secure longer-term commitments in strategically important locations, while landlords will review portfolios to ensure rents remain aligned with market evidence.
• Business Rates Reform Will Become More Targeted: The Government is likely to focus future business rates measures more heavily on large distribution warehouses and multi-national operators, with increasing pressure to refine the current approach and better target those most able to absorb additional costs.