Lower average vacancy rates, higher rents and reduced obsolescence risk are all factors making taller warehouses an increasingly attractive opportunity for landlords and investors.
That was the main takeaway from Knight Frank's 2026 Future Gazing report presented to warehousing and logistics experts in London's Grand Connaught Rooms on Thursday as the agency outlined trends for the year ahead.
In a nod to De La Soul's 80s hip hop album, Knight Frank's head of UK and European industrial research Claire Williams described the country's warehouses as "30 feet high and rising", as she presented the numbers behind a pattern of increasing warehouse heights.
According to the adviser, the average clear height of UK warehouses over 20,000 square feet has risen by more than 50% over the past two decades, from 7.6 metres to 11.5 metres.
For units build or under construction last year, the average clear height was 11.5 metres, or 37 feet, compared with 8.5 metres, or 28 feet, a decade ago, and 7.5 metres, or 25 feet, two decades ago.
Looking at how heights for different size bands of warehouses have changed, Williams noted that units of more than 400,000 square feet have recorded the largest increase, rising from 12.7 metres, or 42 feet, to 17.5 metres, or 57 feet, over the past decade. This reflects a 37% increase.
Places where warehouse clear heights have grown the most include Yorkshire, London and the South West, in that order, although this could reflect a change in market dynamics or location preferences, with larger, more modern developments rising in these areas.
Automation's impact
Driving this growth of warehouse heights is automation, Knight Frank's research explains, labelling it a "great enabler" of taller buildings. It argued technology such as automated storage and retrieval systems, autonomous mobile robots and automated guided vehicles all "make ultra-high-bay storage feasible, unlocking efficiencies that manual operations cannot achieve".
Rising land costs, particularly in urban locations, are also making vertical expansion more cost-effective than expanding on the ground. While it added that competing pressures for land in London and other cities have "eroded the supply of industrial land".
Williams told delegates: "In some locations, planning policy has favoured taller buildings as a way to offset competing land pressures. From an occupier perspective, a push for taller buildings is primarily driven by a need to minimise costs while maximising operational efficiencies."
She added: "From an operational perspective, taller structures can reduce land costs and enable significantly great pallet capacity, but accommodating multiple layers of racking within the same footprint. This is especially important for ecommerce, where diverse product ranges and fluctuating inventories demand high-density storage solutions."
The trend is also changing estimates of how much space is needed for the country's increasing ecommerce use, with online retail sales set to rise £151 billion by 2030, according to data from market intelligence provider Mintel.
Knight Frank data suggests this would usually translate into an additional 35 million square feet of warehouse requirements. But, with taller buildings being developed, it suggests that the amount of space that could actually be needed is more like 28 million square feet.
Standing tall
During the presentation, Knight Frank argued that a shift towards higher warehouses has "significant implications" for occupiers, landlords and investors, such as lower vacancy rates.
The agency's data shows that units built before the end of 2024 measuring over 400,000 square feet with clear heights in excess of 40 feet have an average 3.3% vacancy rate, half that of sheds with maximum clear height of 40 feet, at 6.6%.
Taller units are also commanding higher rents, with each additional foot of clear height adding around £0.08 per square foot on average to rents. The consultancy also found that increasing ceiling heights from 20 feet to 30 feet resulted in an increase of circa £1.58 per square foot, while 30 feet to 40 feet a circa £1.04 increase.
With increased clear height also supporting automation, higher throughput and operational flexibility, Knight Frank said taller warehouse could see stronger tenant covenants and reduced obsolescence risk.
Williams said that trends in the industrial sector, namely ecommerce and the adoption of automation technology, have boosted the importance of warehouse height and cubic capacity.
'Key focus point'
"Understanding cubic capacity and how best to utilise height have become a key focus for operators seeking to improve their supply chain efficiencies, but they are not well understood as property metrics.
"Given their increasing value to occupiers, investors need to better understand the reason behind this, and better data and metrics can measure and quantify their impact on values, both now and in the future."
Johnny Hawkins, partner at Knight Frank, who joined Williams on stage to launch the report, said in a statement: "Height is increasingly a defining feature of logistics facilities, playing a key role in driving value and performance.
"For investors, taller buildings can improve income resilience, support long-term value growth and reduce obsolescence risk. Those who integrate vertical thinking into their investment, development, and operational decision-making will be best placed to mitigate cost increases and land availability challenges, as well as capitalising on the opportunities presented by a warehouse market that trends increasingly skyward."