The number of discussions we’ve had concerning the UK's extra-large (XL) big-box warehouse market - units of above 400,000 sq ft - has risen dramatically recently.
UK occupiers favouring fewer but larger warehouses
Demand driven by a need for resilience
This is a segment of declining supply but increasing demand. The need for larger distribution centres isn’t a short-term trend but a fundamental shift in how occupiers manage supply chains after the shocks of Brexit, Covid-19, and wider global conflicts . It focuses on resilience — a key Shedmasters 2026 theme — as occupiers consolidate older facilities into a single, more efficient centre.
The Midlands is the centre of XL demand. Deals in Lutterworth, Rugby, Derby, Newark, and Fradley demonstrate the appeal of the Golden Triangle and M1/M6 corridors. The trend is also clear among defence occupiers, with emerging clusters expanding, demonstrated by the MoD's 538,000 sq ft commitment at Panattoni Park Swindon in the South West.
The rise in demand also highlights the challenges faced by the built-to-suit (BTS) market. As development becomes more difficult, occupiers are turning to existing stock, which explains why BTS activity accounts for only 11% of XL take-up so far this year, significantly below its historical H1 average of around 35%.
This has consequently increased competition and deal-making, as it allows occupiers who normally wouldn't consider sheds over 400,000 sq ft to do so through flexible leases, without making long-term commitments. That's why we've seen 3PLs choosing larger buildings than usual: the stock is available.
One – or no – XL buildings left in some regions
But what about supply? Availability is becoming increasingly scarce according to our latest analysis highlights shortages. By the end of H1 2026, out of 304 units available nationwide, only 21 exceed 400,000 sq ft, with just 13 Grade A. Regionally, the East Midlands has only one completed Grade A XL unit available. The West Midlands has no Grade A supply above 500,000 sq ft; the North West and South West have just one building each.
But because this shift is itself a reaction, what seems tight today is, by historical standards, nearly a record high: those 21 available XL units is more than double the long-term average of around 10. Still, supply remains limited in absolute terms, and is a very thin buffer relative to growing demand.
What does this indicate? It points to a rapidly developing shortage, particularly as the speculative pipeline stays limited and challenging funding conditions, along with weaker confidence, make speculative or built-to-suit projects over 400,000 sq ft more difficult to deliver. Currently, only six units over 400,000 sq ft are under construction nationwide, but as that supply is absorbed, those developers capable of delivering well-located, power-rich, ESG-compliant XL facilities will be best positioned.
Overall, the UK XL logistics market is entering a new phase of fewer, larger, and more sophisticated facilities. Occupiers seek scale, efficiency, automation, and network optimisation, all of which favour XL warehouses. With limited Grade A stock and selective pipelines, conditions favour ongoing competition for the country's largest logistics assets.
We currently have 1.15 years' supply left. XL boxes are running out, and running out quickly.
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