London and South East logistics development pipeline has contracted by 41%, with 79% of H1 2026 transactions involving second-hand space, according to Savills data cited by specialist developer Padrock.

The squeeze is reshaping how operators, developers and policymakers approach the capital's last-mile real estate, and lifting the strategic value of every available square metre inside the Metropolitan Green Belt.

What is a micro hub?

Padrock co-founding partner Mark Symonds told Waybill Wire the term has no single statutory definition. He pointed to Transport for London's working description of a micro-consolidation centre: a facility closer to the delivery point, usually serving a smaller area and lighter goods, with onward delivery often by cargo bike or small electric van.

"Location comes first," Symonds said. "We use micro hub in that practical sense, rather than as another name for any small warehouse."

Finmile, which grew from 20 parcels a day to 55,000, has built its routing and micro-site strategy on the same data set that powers its AI logistics execution platform.

When does a micro hub pay for itself?

Co-founder and CEO Rich Pleeth set a sharp commercial test for any prospective site.

"A site is commercially viable when the savings it creates downstream are greater than the additional cost and complexity of operating the hub," Pleeth said. "It needs sufficient daily volume to spread the rent, labour and infrastructure costs, while being close enough to delivery demand to reduce mileage and increase the number of stops each vehicle can complete."

He listed the operational must-haves:

• Ground-floor operational space near dense delivery areas
• Direct vehicle access with room to receive, sort and stage parcels
• Secure bike storage and safe EV charging capacity
• Quick access into the delivery zone

Why does proximity beat a cheaper rent?

Symonds argued the maths punish peripheral sites once mileage, driver hours and emissions enter the equation.

"A cheaper building farther out can be more expensive once mileage, driver time, reliability and emissions are counted," he said. "The catchment should be designed from journey data, not a radius on a map."

Pleeth added a counterpoint on capacity: a slightly farther hub running full can outperform a half-empty central site, provided downstream route density is high enough.

Can old buildings be turned into vertical warehouses?

With new-build pipeline shrinking, conversion is back on the table. Heavy-duty lifts, cube storage and automated storage and retrieval systems are opening previously marginal assets to high-rack configurations.

"Some buildings can be adapted, but in many cases the opportunity is redevelopment or intensification rather than simple conversion," Symonds said, noting that obsolete single-occupier sites can sometimes yield modern multi-let schemes on the same footprint.

He warned that yards, gates, vehicle separation and on-site waiting space determine throughput — not floor area.

Who is buying London logistics?

Two large institutional moves have redrawn the demand side:

• British Land has assembled a £1.3 billion urban logistics pipeline in recent years, betting that occupier demand is outrunning supply.
• LondonMetric Property lifted the urban logistics share of its portfolio from 29% in 2024/25 to 38% in 2025/26.

The capital rotation signals where institutional capital expects rent growth and lease length to support new asset allocations.

What should the Draft London Plan do next?

Both executives want the plan, now out for consultation, to move beyond land-use zoning and into operational infrastructure.

"London needs a joined-up strategy across boroughs rather than a patchwork of different rules," Pleeth said. "Loading space and power infrastructure are just as important as the warehouse."

Symonds called for consented sites with workable access and credible power delivery dates, and for grid connections to be prioritised against published readiness criteria rather than first-come-first-served queues.

The Draft London Plan separately addresses industrial land and data centres. The Urban Logistics Exhibition 2027 at Excel London on 9-10 June will press boroughs, developers and operators on whether consultation turns into consented micro-hub sites before H2 2027.