Ecommerce growth and trade stability unlock confidence and opportunities in UK logistics market

Online expansion drives demand for scale

Based on the pre-pandemic growth trajectory for online penetration rates, and the latest monthly penetration figures, the post-COVID market recalibration now appears firmly behind us. As penetration rates begin to climb once more, ecommerce operators are increasingly confident in activating their growth strategies.

As ecommerce operators return to expansion mode, there has been a rise in activity in the largest size bands. In 2023, just 35% of take-up was in units over 250,000 sq ft. This rose to 44% in 2024 and reached 49% in Q1 2025. The trend appears to be continuing into Q2, with two units over 400,000 sq ft currently under offer and expected to close imminently.

Activity in the 400,000+ sq ft category, combined with relatively low levels of speculative development, is tightening availability and pushing down vacancy rates. Only seven units over 400,000 sq ft are currently under construction and available, compared with 31 units in the 50,000–100,000 sq ft band and 26 in the 100,000–250,000 sq ft range.

Excluding the two under offer, just 14 units over 400,000 sq ft are ready for immediate occupation nationwide—only four of which exceed 600,000 sq ft. For occupiers seeking large-scale space, options are increasingly constrained, and many existing units may not meet specific locational or specification needs.

Speculative development typically targets smaller size brackets, leaving a shortfall in prime large-format stock. Of the 400,000+ sq ft units available, only ten are considered Grade A. For occupiers requiring a Grade A facility over 600,000 sq ft, just two "oven-ready" options exist.

With retailers and parcel carriers seeking to consolidate operations into larger, high-specification facilities, demand in the upper size brackets is expected to remain strong. As take-up continues to outpace availability—and with several large units already under offer—the supply-demand imbalance is likely to persist.

As the chart above illustrates, annual take-up in the four quarters to Q1 2025 totalled 12 units in the 400,000+ sq ft range—more than half of the 23 units currently available (including those under construction). This contrasts with smaller bands, where annual take-up represents just 34–36% of current availability.

Chinese online retailers, notably Shein and Temu, are actively expanding their UK supply chains in anticipation of the de minimis tax exemption being scrapped. This rule currently allows imports under £135 to enter the UK duty- and VAT-free, a policy now under review by the UK government.

Parcel carriers are also investing in larger, more automated facilities to handle increased parcel volumes, maximise efficiencies through automation and improve delivery times. DHL has invested £230 million in a new e-commerce hub in Coventry. While FedEx is consolidating five existing depots into two state-of-the art facilities, set to be operational in 2029, which will incorporate advanced automation and enhanced working conditions.

Supermarkets are also upgrading logistics infrastructure to support store expansion, improve efficiency, and meet sustainability goals. Aldi, for instance, is closing its 600,000 sq ft Sawley distribution centre and relocating operations to a new, 1.3 million sq ft highly automated facility in Bardon, Leicestershire, which boasts strong sustainability credentials.

US-UK trade reset offers certainty

Though limited in scope and with details yet to be finalised, the new framework agreement between the US and UK offers some promise for the UK’s automotive, steel, and aerospace sectors. While the deal places the UK on a weaker footing than last year, it represents a clear improvement on the tariff regime announced by President Trump in March and April.

Under the agreement, tariffs on British-made cars exported to the US have been reduced from 27.5% to 10% for up to 100,000 vehicles annually, with exports beyond that quota still subject to the higher rate. The US has also eliminated its 25% tariffs on UK steel and aluminium imports, while British aerospace components—including Rolls-Royce engines—are now exempt from US import duties.

For context, the UK exported approximately 106,000 cars to the US in 2024, meaning the new cap is unlikely to significantly affect export volumes. However, the 10% tariff, though lower than the March rate, remains well above the 2.5% applied under the previous US administration. As a result, manufacturers reliant on the US market may need to temper their profit and growth expectations.

Crucially, the framework agreement introduces a greater degree of predictability. In recent months, Trump’s tariffs and the uncertainty surrounding their implementation have caused instability in global trade and disrupted international supply chains. This has made it challenging for firms and investors to assess risk and value opportunities in the UK’s industrial and logistics sector.

With the UK now benefiting from improved trade terms and clearer market access to the US—especially as other US trading partners face ongoing disruption—the UK may be seen as a more stable and attractive destination for investment.