A tale of two halves for the South East Industrial & Logistics market
Figures for the first half of 2026 tell two different tales across the South East Industrial & Logistics market, with take up in core South London areas stalling while, outside of the M25, take up is much stronger, with rents rising in some regions.
SHW’s Q3 South East Industrial & Logistics Focus indicates that occupier activity strengthened across the region during the first half of 2026. Away from South London, a marked change has seen increased activity in the large and mid box sectors of units over 60,000 sq ft with a number of transactions already completed or close to going under offer.
Tim Hardwicke, SHW’s partner and head of agency, says: “Although we have seen good levels of enquiries, vacancy rates outside of the M25 have increased in most centres with older second-hand stock making up the majority of this space as occupiers look to upgrade or rationalise their holdings.
“Though quoting rents have increased in some areas, such as Crawley/Gatwick, we have seen a move to an occupier’s market and, as a result, in some locations there has been downward rental pressure and greater incentives being offered to secure tenants. Elsewhere, rents have broadly remained static across the South East, although in some cases have reduced marginally, especially where optimistic rents were being quoted, due to occupier push-back. In this market it’s important not to over quote or units will stick.”
Green buildings with lower running costs remain attractive for occupiers, however the main concern has now switched to affordability, especially for small to medium sized companies, due mainly to higher operating costs from business rates and NI increases. Occupiers are typically also taking longer to make any decision to move.
In H1 of this year, occupier take up (over 5,000 sq ft) in SHW’s core South London region (Croydon, Coulsdon, Mitcham & Merton) reached just 70,675 sq ft, (196,500 in the whole of 2025), still significantly down from the levels seen across 2020 to 2023, where the norm was around 450,000 sq ft for the full year. It is worth noting that typically the second half of each year, usually sees a greater take up. The highest rent achieved has increased slightly to £22.50 per sq ft (from £22 per sq ft in 2025), and logged demand is still headlining at 4.8m sq ft for the first 6 months however, if occupiers are able to stay put, they will.
Crawley & Gatwick, on the other hand has seen a rise in quoting rents to £25 per sq ft, up from £21.50 per sq ft in 2025. Leasing has also shot up, with the first six month of this year showing take up at 248,800, almost 100,000 sq ft above the whole of 2025. Availability is now relatively low at 667,000 sq ft, compared with a logged demand of 3.5 million in this year. Link 23 in Handcross is catering for demand at smaller end of the market, with Unity, Horley and Gatwick 33 catering for the mid-range (33,000 sq ft to 87,752 sq ft).
In Elmbridge, Kingston & Richmond, rents have jumped by £1 per sq ft to £21, with a highest quoting rent of £24 per sq ft. Demand of over 4 million sq ft far outweighs availability.
Across Sutton, Chessington, Epsom & Leatherhead, rents have dropped slightly from a high of £25 per sq ft in 2025, to £24 per sq ft this year. Take up is encouraging, with 61,500 sq ft already transacted this year (117,000 sq ft for the whole of 2025), and demand is ten times that of availability.
In Brighton & Hove, rents remain level at £17 per sq ft. Although demand remains high, take up is stalling at just 6,000 sq ft transacted so far this year as occupiers search for the right type of building from slim pickings with just 108,500 sq ft available. Freshfield Estate in Brighton is catering for trade centre demand and Fairway Trading Estate about to undergo a refurbishment to offer units from 53,321 to 73,000 sq ft.
Tim adds: “Looking forward, we expect occupier-led conditions to persist into the second half of the year, with continued demand for larger units, and growing availability of second-hand stock promoting further refurbishment opportunities. Rental pressure will continue with incentives remaining central to deal structures.”
Statistics in this Focus report assume lettings over 5,000 sq ft. SHW’s Q3 2026 Industrial & Logistics Focus also covers: Redhill, Merstham & Salford; Guildford, Horsham, Haywards Heath & Burgess Hill; Bognor & Chichester; Rustingon & Littlehampton; Worthing; Woking, Kent, Shoreham & Lancing; Lewes, Newhaven & Peacehaven; Eastbourne, Hailsham & Polegate; Hasting, St Leonards & Bexhill and Blackwater Valley. The report also covers new changes in ratable values for each region.
Access the interactive report here https://www.shw.co.uk/industrial-and-logistics-focus?utm_source=linkedin&utm_medium=social&utm_campaign=2026_q3_focus_report&utm_content=industrial_and_logistics