Rise of ‘small box’ economy reshaping UK industrial property demand
Rise of ‘small box’ economy reshaping UK industrial property demand
27 May 2026
The rapid growth of digitally-led small businesses is reshaping demand across the UK industrial and logistics sector, with medium-sized warehousing increasingly evolving into hybrid business and fulfilment space rather than traditional storage alone.
Speaking during a panel discussion at UKREiiF 2026, investors and operational real estate specialists highlighted how social commerce platforms such as TikTok are creating a new generation of occupiers seeking flexible industrial space close to urban populations.
The discussion explored how the sector has evolved far beyond its historic “big shed” image, with strong growth now emerging within smaller and mid-sized industrial assets as digital retail, online entrepreneurship and changing consumer habits reshape occupier requirements.
Simon Martindale, fund director at Swiss Life Asset Managers, said social commerce businesses were becoming an increasingly important source of demand for medium-sized logistics units.
Highlighting one occupier operating from a 40,000 sq ft facility, he said: “They sold £2 million of products in 14 hours through TikTok.”
Panellists argued that these rapidly scaling digital businesses are helping drive demand for more flexible urban and edge-of-town industrial space capable of combining warehousing, fulfilment, operational and office-style functions within a single location.
James Lass, head of UK operational real estate at Swiss Life Asset Managers UK, said self-storage operators were increasingly seeing smaller businesses use facilities as fulfilment hubs for online retail operations.
“We see a significant amount of space occupied by small businesses trading through TikTok and similar platforms, giving them frictionless access to a global marketplace while needing somewhere to store inventory,” he said.
Lass added that the sector was rapidly diversifying beyond traditional storage uses.
“Self-storage is diversifying into becoming business centres,” he said. “People are also taking office space and using them as micro-business fulfilment centres.”
According to the discussion, business occupiers now account for 37% of floor space within Big Yellow facilities, with commercial demand becoming the fastest-growing segment.
The panel also highlighted wider structural drivers supporting industrial demand, including urbanisation, online spending growth, near-shoring and changing supply chain requirements. Participants argued that constrained supply of urban and last-mile logistics space is likely to continue supporting rental growth and investor demand across the sector.
Alongside operational flexibility, occupiers are also increasingly prioritising power availability, sustainability credentials and energy efficiency within industrial buildings as landlords seek to modernise ageing stock and reposition assets for evolving tenant requirements.
