Demand for industrial property is back on the up, driven by the big grocers.

National commercial property consultancy Lambert Smith Hampton reported this week that demand for distribution centres rose at the end of 2009, with retailers and particularly grocery retailers being the main customers.

However, LSH head of industrial and logistics Michael Alderton warned that the amount of vacant industrial space was continuing to grow as companies ran into difficulties.

"Our findings are certainly encouraging and we are starting to see real improvements in the industrial sector," he said. "However, there is still a huge oversupply of second-hand space in the market as inefficient businesses continue to suffer."

At the end of last year there was 320 million sq ft of industrial space available in the UK, which was a 22% increase on the previous year, he added.