Vacancies in the Gatwick industrial market look to have finally peaked after a prolonged period of growth, marking a turning point for one of the South East’s most strategically located logistics hubs, according to commercial real estate analytics firm CoStar.
The surge in availability, driven by unprecedented construction activity and a slowdown in occupier demand, appears to have reached its zenith, setting the stage for a gradual recovery.
The sharp rise in vacancies over the past two years was fuelled by a combination of factors: a significant increase in logistics stock and a post-pandemic decline in online retail demand.
This dynamic resulted in strong negative net absorption as occupiers focused on consolidating existing space rather than expanding footprints. Full-year take-up in 2025 is expected to be the lowest since 2020, with many businesses delaying relocation or expansion decisions amid economic uncertainty, high operating costs and global volatility.
The vacancy rate now stands at 9.2%, significantly higher than its 2021 level of 2.2%, with 2 million square feet of space currently available – over half of which is good-quality stock rated four or five stars.
While availability remains at record highs, forecasts suggest vacancies will fall by around 300 basis points in 2026 before stabilising in 2027. However, a return to pre-Covid levels appears unlikely in the short to medium term.
Construction activity has slowed dramatically. After nearly 2 million square feet of starts between 2021 and 2024 – equivalent to more than 11% of existing stock – just 10,000 square feet commenced in 2025.
Construction levels are set to fall to 10-year lows once work finishes at Panattoni Park Crawley, where almost 200,000 square feet is nearing completion.
The dwindling supply pipeline will help boost rental growth, which has slowed to around 3% from almost 8% at the beginning of 2024. Growth will accelerate next year as options for tenants become fewer.
Leasing activity has been subdued, with most deals concentrated around Gatwick Airport, Crawley and business parks near Burgess Hill.
Large transactions have been particularly scarce: only three lettings above 20,000 square feet have been completed this year.
The largest was Honeywell-owned Trend Control Systems’ acquisition of 31,800 square feet at Foundry Lane in Horsham in March. Notably, there have been no big-box deals since DHL’s 120,000-square-foot pre-let at St Modwen’s Barbour Drive development in October 2022.
However, the fundamentals of Gatwick’s industrial market remain strong. E-commerce and last-mile delivery continue to underpin demand, supported by robust air cargo growth.
Air cargo volumes at Gatwick are projected to rise by 5.8% in 2025, with further upside potential from the Northern Runway plan, which could significantly boost freight capacity and drive long-term demand for warehouse space.
With vacancies peaking and speculative development curtailed, the Gatwick industrial market is poised for a period of recalibration – one that will hinge on the pace of economic recovery and the transformative impact of airport expansion.
