European warehousing demand is improving, but the headline figures can appear contradictory. Leasing activity is picking up, yet vacancy is still rising in many markets. The reason is that much of today’s demand is coming from relocation, not expansion. Companies are moving from older warehouses into newer ones, rather than taking significantly more space overall.

In the UK, CBRE reported Q4 2025 take-up of 4.3m square feet and full-year take-up of 25.6m square feet (+22% year-on-year), but vacancy still rose to 7.1%, driven by second hand space returning to market.

In essence, a “trade-up” is not just moving into a newer building, it is moving into a warehouse that is more efficient. That can include a layout that supports more storage, racking that is installed to tighter standards, aisle widths that suit specialist forklifts, and a site design that reduces congestion and delays. It can also mean buildings that are easier to adapt to warehouse automation, which is becoming key across the sector.

A better planned warehouse should improve throughput, reduce handling time and make it easier to maintain service levels during peak periods. That is increasingly important for occupiers who are under pressure to improve productivity without committing to a much larger footprint.

This matters because many warehouse problems are created at the design and installation stage. If layout, racking and equipment choices are not aligned, operators can lose productivity and face avoidable rework costs.

Stricter energy standards are also becoming a practical reason to relocate. Across Europe, occupiers are paying closer attention to energy performance because it affects running costs, reporting requirements and, increasingly, leasing risk. Older warehouses can be harder and more expensive to bring up to modern efficiency standards, especially where insulation, lighting, heating and power capacity need upgrades. This is pushing demand towards buildings that are more efficient, and easier to upgrade to modern standards and regulations.

Demand is still there, but it is becoming more selective. The next cycle is less about who needs more space, and more about who needs space that performs better.

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