Where logistics demand is still moving in 2026

UK construction demand is not weak in a neat, even way. The latest ONS construction output bulletin shows total output up 0.4% in Q1 2026, but new work down 1.9% and new orders down 10.5% against Q4 2025. The S&P Global UK Construction PMI for April 2026 was sharper again, with the headline index at 39.7 and civil engineering at 35.3.

That is the demand problem. The useful part is knowing where it is not the whole story.

Industrial and logistics is still producing work, but it is not the broad speculative shed market of 2021 and 2022. The demand that matters in 2026 is more selective: build-to-suit units, Grade A warehouses, cold chain space, power-heavy automation, vehicle yards, and live-site upgrades where the occupier has a clear operational reason to spend.

For civil engineering contractors, that means the groundworks package is changing. The opportunity is not just “more warehouses”. It is heavier yards, better drainage, more power infrastructure, tighter programme interfaces, and projects that only work if the enabling package is designed properly at the start.

Demand is still there, but it is pickier

Lambert Smith Hampton’s Industrial and Logistics Market Report 2026 called 2026 a turning point for the UK market. Its headline numbers are worth separating from the wider construction mood: UK take-up rose to 40.2 million sq ft in 2025, and LSH predicts 44 million sq ft in 2026. It also expects only 8 million sq ft of speculative starts this year, the lowest level since 2017.

That combination matters. Demand has not disappeared, but developers are less likely to build generic empty space and wait for the market to catch up. Where projects move, they are more likely to have a named occupier, a defined operational requirement, or a location where supply is tight enough to justify the risk.

BNP Paribas Real Estate’s Industrial and Logistics Insider Q1 2026 points the same way. It reported 7.6 million sq ft of Q1 take-up, the highest Q1 level since 2022, with almost three quarters of leasing activity in Grade A units.

That is a different signal from the general PMI figure. The market is not healthy everywhere. It is rewarding the best space, the best locations, and the schemes that solve a specific occupier problem.

Build-to-suit changes the groundworks package

Speculative warehouse groundworks is about repeatability: strip the site, form the slab, build the estate road, install drainage, hand over a clean unit. Build-to-suit work is more demanding because the tenant’s operation shapes the ground package from day one.

An automated warehouse needs tighter floor tolerances, better formation control, heavier service coordination, and more reliable power routes. A food logistics facility needs cold chain resilience, wash-down areas, separate drainage runs, interceptors, and yard layouts that keep vehicle movements clean. A third-party logistics hub needs HGV circulation, dock approach slabs, trailer parking, gatehouse civils, and phased access that can cope with commissioning before the building is fully settled into operation.

The civils value per square metre can rise even when headline start volumes are lower. One well-specified logistics facility can contain more drainage, ducting, concrete, hardstanding, and service coordination than a larger but simpler box.

That is why early contractor involvement matters. If the groundworks contractor arrives after the planning drawings and slab assumptions are fixed, the project has already lost the chance to remove avoidable risk. The right time to test falls, outfall routes, substation positions, duct corridors, fire access, yard falls, turning circles, and phasing is before tender, not once the steel frame is booked.

Power is now part of the civils conversation

LSH’s report makes a point that lines up with what we see on industrial sites: competition for power is becoming as important as labour in site selection. That is not a small statement.

Automation, refrigeration, EV charging, security systems, lighting, battery storage, heat pumps, and future tenant upgrades all push more load into the same site. The visible kit may sit above ground, but the programme risk usually sits below it: duct routes, draw pits, substation bases, transformer compounds, easements, HV routes, access for DNO works, and clashes with drainage or foundations.

The wider infrastructure market is pulling in the same direction. The government’s March 2026 Infrastructure Pipeline update said energy remains the largest sector by planned investment, at £365 billion over ten years. That does not mean every logistics site gets a fast connection, but it does mean power demand is no longer a back-office utility issue.

For clients, the practical point is simple: do not leave electrical capacity and duct coordination until late design. A warehouse that cannot get enough power is not a Grade A asset. A yard that needs EV charging in two years but has no spare ducts or substation space is already carrying a retrofit cost.

Yards and drainage decide whether the building works

The building gets the attention. The yard decides whether the operation works.

Modern logistics sites need external areas designed for repeated heavy vehicle movements, not just occasional access. That means HGV pavements, dock approach slabs, trailer bays, marshalling lanes, gatehouse approaches, security fencing, lighting column bases, and drainage that can handle large impermeable areas without flooding the lowest point of the site.

This is where false economy shows up quickly. Thin sub-base, weak formation, poor falls, undersized attenuation, or a yard profile that sends water toward dock doors will not wait ten years to become a problem. It will show up in the first winter, during the first peak trading period, or when the first tenant tries to run 24-hour vehicle movements across a pavement designed like a car park.

The same applies to vehicle storage and automotive logistics. Car transporters, forklifts, recovery vehicles, and high-turnover customer movements are hard on surfaces. Drainage has to account for oil interceptors, fire-water risk, and extensive hardstanding. Security infrastructure needs proper foundations, not late-stage bolt-ons.

Existing sites are part of the demand story

When speculative starts slow down and occupiers favour Grade A space, older assets either upgrade or fall further behind. That creates a different kind of civils demand.

It can be smaller than a new-build package, but it is often more difficult. Yard strengthening while the site remains live. New drainage runs through an operating estate. Dock leveller alterations. EV charging duct routes across existing hardstanding. Fire access improvements. Extra trailer parking. Gatehouse relocation. Substation upgrades that have to be completed without shutting the tenant down.

This work suits contractors who can phase properly and communicate clearly with occupiers. It does not suit a team that assumes an empty site, full possession, and no operational constraints. The value is in planning the sequence as much as placing the concrete.

How clients should buy the work

If you are developing or upgrading logistics space in 2026, the procurement approach needs to match the market.

First, separate demand from certainty. A strong occupier market does not remove planning, funding, power, or cost risk. It just tells you there is a reason to progress the right schemes.

Second, get the civils assumptions checked early. Formation levels, drainage strategy, attenuation volume, duct routes, substation position, HGV pavement design, and yard falls are not details to tidy up after the main building package is priced. They are core commercial decisions.

Third, price the live risks clearly. Power connection timing, material cost movement, drainage approvals, Section 278 works, and phasing around an operating occupier should be visible in the tender. If they are hidden in a lump sum, they will come back as delays, claims, or quality pressure.

Finally, do not treat every industrial unit as the same product. The demand is in the specification. A cold chain unit, an automation-heavy distribution centre, a vehicle storage yard, and a standard trade counter terrace all need different groundworks thinking.

The logistics market in 2026 is not giving contractors easy volume. It is giving well-prepared clients and capable delivery teams a more specific opportunity. Where the demand is real, the civils package has to be real too: proper power planning, proper drainage, proper yards, and a programme that respects how the site will actually operate.

Connor Lyons is commercial director at Rospower Projects, MRICS. We deliver warehouse groundworks, automotive and logistics facilities, drainage, utilities, and heavy-duty external works across the UK. Contact us to discuss a planned industrial or logistics package.

Sources and further reading

• Construction output in Great Britain: March 2026 (ONS, 14 May 2026)
• S&P Global UK Construction PMI: April 2026 (S&P Global, 7 May 2026)
• Industrial and Logistics Market Report 2026 (Lambert Smith Hampton, 9 March 2026)
• Industrial and Logistics Insider Q1 2026 (BNP Paribas Real Estate, 11 May 2026)
• Infrastructure Pipeline update signals future workforce needs (GOV.UK, 9 March 2026)