The UK logistics sector has seen a 6% increase in occupier demand in Q3 compared with the same period last year, according to a report by advisory firm Newmark.

Newmark’s UK Logistics Conditions & Trends report reveals that national availability, the overall proportion of space currently available to let, fell to 7.9%. This was down from 8.6% in Q2, marking the first quarterly decline since the record low of 3.6% at the end of 2022.

The fall signals a “pivotal moment” in the occupier market, with demand broadening and a “renewed appetite” among occupiers to secure larger units, Newmark said.

Reduced availability was evident across all grades of units and was driven primarily by strong lettings activity and a rise in space under offer, according to the report.

Geographically, availability was lower across most UK regions in Q3, with the Midlands and the North West showing the most change.

However, Newmark cautioned that a rapid return to record lows was unlikely, as occupiers continue to upgrade into newer space and release older stock.

An increase in lease expiries, five years on from the exceptional 2021-22 pandemic-era surge, will also temper the rate of decline.

On the demand side, take-up is now almost back to its long-term average and trending higher on a yearly basis. Around 13.2m sq ft was let in Q3, just shy of Q2’s total and 6% above the same period last year.

The 100,000 sq ft-plus market is particularly active, with year-to-date take-up 17% up on the same period last year.

Meanwhile, expansion and operational efficiency remain the primary leasing drivers, focusing demand on modern, energy-efficient, well-fitted units.

Activity was particularly strong in the East Midlands, which accounted for 19% of all UK take-up over the past year and continues to attract both overseas entrants and domestic occupiers looking to optimise supply chains.

Prime rental growth was positive but slowed further to 3% year on year in Q3. Newmark said it expected availability to have now peaked, with new-build vacancy having been stable at around 4% for over a year.

Nick Ogden, head of industrial and logistics capital markets at Newmark in the UK, said: “Value-add opportunities remain the focus for new capital. We think the signs of improvement in the occupational market make logistics a good buy right now. This is a rare point in the cycle when prime logistics assets can be acquired with very little competitive pressure, especially in core locations.”