The intent behind the government’s economic growth agenda is encouraging, with strong signals for the Industrial and logistics (I&L) sector. For example, the Modern Industrial Strategy and the National Planning Policy Framework (NPPF) recognise the role I&L plays in key growth sectors and the need to facilitate development activity.

But a growth agenda without a decisive action plan is ultimately empty rhetoric. It is why a priority policy focus must be on a market which has been chronically overlooked, yet has a clear economic role: small to mid-box I&L.

This is not a marginal subsector of the economy. The I&L market contributes £128bn a year to the UK economy and supports 4.5 million jobs, while 95% of all I&L units are under 100,000 sq ft.

There is huge potential in this segment, and reforms which mean a more joined-up, informed local and national planning system could unlock immediate growth.

The overlooked driver of economic growth

The latest BIG Things SMALL Boxes (BTISB), a report authored by Potter Space, in partnership with Savills, explores the chronic undersupply of small to mid-box I&L, and the resulting missed opportunities.

For more than a decade, sub‑100,000 sq ft availability has sat below the 8% equilibrium required for a stable, responsive market. It is currently just 6.1%. This has suppressed demand by 35%, meaning businesses in Britain would have taken 60m sq ft more space over the last decade had it been available. The lost economic opportunity from this shortfall amounts to £3.3bn in gross value added and 48,000 jobs.

We are fundamentally an SME‑powered nation. SMEs account for 99% of all UK businesses and around half of private sector employment. Small to mid-box is a growth incubator for SMEs. When they cannot expand due to a lack of modern, well‑located space, the whole economy suffers.

The demand is there from occupiers despite the wider business headwinds and ongoing uncertainty. What’s missing is a system capable of delivering the space.

Planning reform must recognise small to mid-box

A more sophisticated planning approach is needed. Regional planning priorities must be aligned with local and national economic needs. To date, many local plans have relied on employment land reviews (ELRs) that don’t consider unmet demand due to supply constraints, ignoring the invisible need for small to mid-box I&L.

The result is that undersupply is inherently baked into local planning policies. The proposals in the December 2025 NPPF consultation aim to address this by creating a more responsive planning system through acknowledging market signals in land allocations.

However, without explicitly embedding suppressed demand into local plans, the intent is meaningless. Tools that enable a more forward-looking approach by estimating future demand already exist, so it is essential that they are fully utilised to make plans for the future and not the past.

Underpinning these reforms is joined-up thinking between national, regional and local planning systems that better recognises small to mid-box and how it enables prosperity.

It is time for the government to explicitly recognise the economic role of small to mid-box as a facilitator of growth and make it a national priority. Housebuilding has a national target, so why isn’t there one for I&L floorspace and small to mid-box?

Next steps

Policy is moving in the right direction, but until it embraces small to mid-box I&L, Britain will keep missing out on growth opportunities. The upcoming Freight and Logistics Plan is a chance for the government to provide more clarity on its commitment to I&L. It will be interesting to see what will come, but what’s clear is that it is missing a trick if it does not address the undersupply of small to mid-box.