It is remarkable how resilient occupier activity continues to be in the multi-let industrial (MLI) sector, amid the wider macroeconomic slowdown.

Julian Carey

Julian Carey

The subsector has witnessed no material development since the global financial crisis and, at the same time, an explosion in its occupier base. Recent data from Savills showed that vacant space for warehouses under 100,000sq ft is currently at an all-time low, sitting at around 3%.

At the same time, demand has grown materially and shows no sign of abating. Historically, the occupiers of MLI space had mostly been from the manufacturing and service sectors, but over the past 10 to 15 years there has been an explosion of SME firms seeking MLI space for their new tech-enabled and online-orientated business. They have been joined by other new entrants from the leisure, healthcare and technology sectors, which when combined have transformed the modern occupier base within MLI property.

Flexible industrial space located close to densely populated areas offers businesses ready access to both customers and labour

These businesses increasingly realise that flexible industrial space located close to densely populated areas offers them ready access to both customers and labour. There is good demand from customers for simple, flexible terms, allowing them to remain nimble and grow quickly in the way that scalable, tech-enabled companies can. At the same time, MLI space remains highly affordable, usually accounting for just 2% to 3% of a company’s annual turnover.

We have seen this first hand when looking at the last 100 new lettings that occurred across our 7.1m sq ft UK portfolio over the past six months. The companies that took space operate across 14 different business sectors, from information technology to professional, scientific and technical activities and arts, entertainment and recreation. Wholesalers and retailers, a group that typically includes businesses that sell goods online, accounted for the largest percentage of new customers, with 34% of the lettings, while there was also good representation from manufacturers (24%), the construction sector (6%) and transportation (4%).


MLI units are simple and flexible in nature, meaning they easily accommodate new business types. During the pandemic, there was an influx of dark-kitchen and last-mile grocery operators, but in the last 100 lettings these have been replaced by other modern user types such as an indoor virtual reality golf centre, e-bike hire, electric car sales and servicing and an environmental, social and governance technology firm providing real-time data on traffic and emissions.

We asked our 100 new customers why they needed their units and, encouragingly, 70% were let to companies taking additional space for expansion, with 29% relocating to different space that better met their requirements. Only one customer downsized its space, and in this case, a smaller unit on the same site was found.

These new customers prefer to conduct their search online. In fact, 66% of our customers came directly, mostly via Google, rather than through letting agents or online listing portals. Most of them (68%) also opted for a SmartLease, where they can sign a lease digitally without having to pay for a solicitor, saving them time and money. In a sector as management intensive as MLI, investment in technology is crucial to meeting modern occupier demands and to build a scalable business.

So, these 100 recent lettings tell us that the MLI occupier base continues to diversify and mature into new business areas, with the underlying SME sector proving resilient and showing signs of expansion. With supply of new MLI units remaining highly constrained and rents staying affordable, we expect to see continued upward pressure on rents in 2023 and for many years to come.

Julian Carey is managing director of Industrials REIT