RLB recently hosted a business networking breakfast at The Wolseley City in London, bringing together clients from across the logistics and manufacturing sectors to discuss the key challenges and opportunities shaping the market today.
The discussion highlighted a sector that remains fundamentally optimistic, but one that is also navigating an unusually complex operating environment defined by global economic pressures, geopolitical uncertainty and infrastructure constraints.
While the outlook is positive, one theme dominated the conversation: uncertainty is currently the only certainty.
A Market Waiting for Stability
Over the past year, the sector has experienced fluctuating levels of activity. The market slowed during Q3 2025, before experiencing a significant rebound in Q4 as confidence returned and projects restarted.
However, this renewed momentum remains fragile. Developers, occupiers and investors alike are closely watching the macroeconomic environment, particularly interest rates and global political developments, which continue to influence investment decisions.
The expectation that interest rates will fall has created a sense that activity could accelerate again. Yet volatility remains a concern. Even small changes in economic outlook or geopolitical developments can quickly shift sentiment and delay decision-making.
For many in the sector, the biggest challenge is not necessarily negative conditions, but the absence of consistent conditions. Businesses are finding it difficult to commit to projects when the underlying economic assumptions could change in a matter of months.
Stability, even if not immediately favourable, would allow the industry to plan with greater confidence.
What’s Driving Activity Right Now
Despite these headwinds, the sector continues to evolve rapidly, with several clear development trends emerging.
Multi-Level Logistics in Urban Locations: In dense urban markets such as London, land scarcity is driving innovation in warehouse design. Multi-level mezzanine logistics facilities are becoming increasingly common as developers seek to maximise space within constrained sites. Rather than the traditional large-format warehouse seen in regional logistics hubs, urban logistics assets are becoming smaller, more vertical and more complex.
Warehouses as Business Hubs: Warehouses are no longer viewed purely as storage facilities. Increasingly they are evolving into multi-functional business hubs, integrating office space, employee amenities and operational infrastructure. As a result, the quality of office accommodation within logistics facilities is becoming a more important consideration for occupiers.
Growth in End-User Development: Another shift is the move away from purely speculative development. Instead of building large “big shed” warehouses in the hope of attracting tenants, developers are increasingly delivering facilities tailored to the needs of specific end users. This approach reflects both tighter financing conditions and occupiers’ desire for facilities designed around their operational requirements.
Mixed-Use and Shared Assets: Land scarcity is also encouraging more creative approaches to development. Participants discussed emerging models that combine logistics with other uses, such as residential or commercial space above industrial functions, allowing sites to deliver greater value and maximise land efficiency.
The Financial Tightrope
Despite strong demand for logistics and manufacturing space, development viability remains extremely sensitive to market changes.
Construction costs continue to be under pressure, driven by global demand for materials, labour shortages and wider geopolitical influences. At the same time, financing costs have increased significantly over the past two years.
This creates a situation where project viability is often balanced on a knife edge. A small reduction in interest rates could unlock stalled developments, while a comparable increase in construction costs could make projects unviable.
As a result, developers are increasingly seeking to secure occupiers before committing to construction, but market conditions do not always allow for this.
Power: The Sector’s Defining Challenge
If one issue dominated the discussion, it was power infrastructure.
Access to reliable power is becoming one of the most critical constraints facing logistics and manufacturing development today. Projects are increasingly delayed, repurposed or shelved because developers cannot secure sufficient grid capacity for new sites.
At the same time, the sector is actively pursuing sustainability goals and is well positioned to contribute to renewable energy generation, for example, large warehouse roofs offer significant opportunities for solar PV installations.
However, a key challenge remains: the ability to utilise or export the energy generated. In many locations, grid limitations mean surplus energy cannot easily be fed back into the network, limiting the benefits of on-site generation.
The process of securing power has also changed significantly. Historically, developers would finalise site design before seeking utility quotes. Today, power availability must often be established before land acquisition, fundamentally altering development strategies.
Infrastructure timelines are also longer, with grid connections taking significantly more time to energise. Developers must now consider easements, land agreements and network constraints much earlier in the planning process.
Rethinking the Approach to Utilities
The discussion highlighted a broader shift in how power strategies are being approached.
Traditionally, utility procurement has been treated as a linear, transactional process, something addressed after design is complete. In today’s constrained energy market, this approach is no longer viable.
Instead, power planning needs to be dynamic and integrated into early development strategy. Developers must consider staged capacity requirements, flexible infrastructure solutions and alternative energy strategies that work within existing network limitations.
Equally important is considering the whole lifecycle of utilities infrastructure. Power strategies should not only focus on upfront capital investment but also on long-term operational costs, performance and obligations.
The Role of Collaboration
Despite the challenges, the mood among industry leaders remains constructive. There is clear demand for new logistics and manufacturing space, and strong willingness across the sector to support sustainability and energy transition goals.
However, unlocking that growth will require closer collaboration between developers, utilities providers and government.
The logistics and manufacturing sectors are critical to the UK economy. Supporting their growth, particularly by addressing infrastructure constraints such as power, will be essential to enabling future development.
Looking Ahead
The logistics and manufacturing sector is innovative, resilient and ready to grow, but is currently navigating a complex set of external pressures.
Demand for space remains strong, development models are evolving, and the industry is embracing new approaches to sustainability and infrastructure planning.
Progress will depend heavily on the ability to manage uncertainty, and on creating the stable conditions that allow businesses to invest with confidence.
For now, the sector continues to move forward carefully, balancing optimism with pragmatism as it navigates one of the most dynamic periods in its recent history.
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