David McGougan is director of South East at Panattoni
Definition of a mid-box warehouse: a warehouse that is typically between 50,000 and 100,000 square feet in size
The UK faces a difficult challenge— generating meaningful economic growth. While much attention has been given to factors such as residential housing acceleration and encouraging pension funds’ investments in UK plc, addressing the mid-box warehouse gap also presents an opportunity that should be seized. With demand outstripping supply by 30%, closing this gap has the potential to unlock local productivity and also help drive national economic growth.
Around 95% of the industrial and logistics property market operates from small to mid-box units, the backbone of the UK’s supply chain infrastructure, playing a crucial role in delivering goods efficiently around the country. Small and mid-box units employ approximately 2.1 million people and contribute £124 billion in Gross Value Added (GVA) annually—7% of the total UK economy. While developers such as Panattoni are already working to meet the demand for mid-box sites, policies that prioritise a growth-oriented approach are much-needed, especially in regions such as the South East.
Why mid-box matters
The South East has a dense population with a pressing need for last-mile logistics solutions. Mid-box warehousing plays a fundamental role here, bridging the gap between large distribution centers and end consumers. Unlike BIG BOX warehouses, mid-box units—ranging from 20,000 to 100,000 sq ft—can be developed on smaller plots of land, often on repurposed industrial estates or redundant office spaces parks.
These facilities are essential for SMEs, which are crucial drivers of the South East economy. SMEs require high-quality, energy-efficient spaces that offer the same superior specifications as larger warehouses. Mid-box units provide flexible, scalable options that can accommodate multi-let tenancies, enabling diverse businesses to thrive. Their consistent performance year after year highlights their critical role in regional economies.
Balancing complexities with growth
In the South East, land availability is constrained by areas of national heritage and importance, along with the southern coastline. In this region, developers frequently have to rely on brownfield sites, which can be time-consuming to redevelop, further slowing down the growth of mid-box warehouse facilities. However, this approach is particularly beneficial for reducing the environmental impact and speeding up the delivery of development, by avoiding extensive new construction and upgrading obsolete industrial estates to match new-build standards while retaining the strategic benefits of locations.
Environmentally conscious developers like Panattoni are actively identifying and transforming underutilised sites in locations like Brighton, Burgess Hill, Crawley, and Bognor Regis, as part of their strategy. Other regulations also pose a notable challenge. For example, 85% of smaller logistics buildings need refurbishment to comply with energy efficiency standards set for 2027. In this case, the absence of a clear and universally agreed-upon timeline for meeting these standards creates uncertainty. This lack of clarity discourages investment, as developers and property owners are hesitant to commit resources without a reliable framework for planning.
While the creation of free ports offers some promise, their impact has been mixed, particularly in constrained urban areas due to land-use competition and regulatory hurdles. However, with Brexit reshaping trade patterns, mid-box warehousing near free ports can play a vital role in facilitating efficient import-export operations, reinforcing the sector’s importance in the UK’s evolving logistics network.
Unlocking mid-box potential
New strategic policies play a role in unlocking the potential of mid-box warehousing. A comprehensive reassessment of the current business rates system, for example, can help ensure that the tax framework supports rather than stifles the growth of mid-box facilities by not penalising logistics and warehouse developments disproportionately.
Establishing clear timelines for energy efficiency refurbishments is equally important. By providing a definitive schedule for these upgrades, investors and property owners would gain the certainty required to make informed planning and investment decisions. This clarity would reduce hesitation in the market and encourage more consistent development.
Another effective approach is the designation of specific zones for warehouse development. By creating these zones with streamlined planning permissions and fewer regulatory obstacles, it would be possible to fast-track the growth of mid-box warehouses. Such zones would be particularly beneficial if located near key transport hubs, where accessibility and logistical efficiency are paramount.
Investment in transport and logistics infrastructure also plays a pivotal role. Improving roads, railways, and ports would enhance access to mid-box warehouses, thereby increasing their attractiveness to businesses seeking efficient supply chain solutions. These infrastructure enhancements would not only support the growth of mid-box facilities but also contribute to the overall strength of the logistics sector.
Furthermore, revising zoning laws to introduce greater flexibility would enable mid-box warehouses to be developed in both urban and suburban areas. This adaptability would ensure that logistical operations remain efficient while simultaneously supporting local economies.
Finally, providing financial incentives to local authorities could significantly accelerate the approval process for warehouse developments. Grants and other forms of financial support would encourage councils to prioritise such projects, fostering faster development timelines and enabling essential infrastructure improvements.
Future of mid-box warehousing
The rise of e-commerce and growing demand for rapid delivery in densely populated areas will only continue to drive up demand for mid-box warehousing, and closing the supply-demand gap is essential.
Developers such as Panattoni that are capitalising on this demand by securing strategic sites in key locations in the UK, are helping close the gap. Indeed, regions like the Midlands—the “golden triangle” of logistics—will continue to thrive, but regulatory support is critical for other regions, such as the South East, to ensure its unique last-mile delivery needs are met. Mid-box is here to stay—its role will only become more significant in the future. Panattoni will continue to source new opportunities in this sector of the market alongside its core big box strategy.
