Chapter 4
Logistics
European Real Estate Market Outlook Mid-Year Review 2025
January 2025 Forecast
Leasing activity to strengthen in H2
Demand has fluctuated at lower levels relative to recent years, but a clearer macroeconomic landscape should unlock some postponed occupier expansion plans. Leasing activity is expected to pick up from current levels, particularly in the second half of 2025.
Mid-year review
- Take-up has stabilised, and expectations for improved performance in the second half of the year remain. However, take-up is resulting in lower net absorption due to occupiers' rationalisation and relocation strategies.
- The recent agreement on tariffs between the U.S. and the EU is expected to reduce uncertainty for European logistics occupiers, potentially supporting the abovementioned market strengthening in the second half of the year. However, findings from our European Logistics Occupier Survey 2025 suggest that many occupiers had already factored in such geopolitical risks, or did not view tariffs as an immediate constraint to their real estate requirements.
January 2025 Forecast
Vacancy rates to stabilise
Despite a significant slowdown in the delivery of new stock, the average European vacancy rate increased during the first three quarters of 2024, though it is expected to stabilise during 2025. This new market equilibrium gives tenants more negotiating power, especially outside the prime segment and core locations.
Mid-year review
- The vacancy rate continued to rise during the first months of 2025 and now exceeds 5% for the first time in over a decade. Our forecasts still point to a stabilisation later in 2025.
- Annualised new stock deliveries have reached their lowest level since early 2018, while the volume of space under construction (mostly pre-committed) has stabilised at c. 4% of total stock, down from nearly 7% in 2022. However, there are significant discrepancies in vacancy rates and development activity across countries, and even within individual countries.
- Logistics occupiers have not yet fully capitalised on the new market conditions, largely due to internal challenges in securing approval for real estate expansions or upgrades amid ongoing market instability.
January 2025 Forecast
Building specifications will increase in importance
Building selection is becoming a key factor as occupiers have more options available and start to implement strategies to future-proof their supply chains. This includes ensuring that their warehouses’ specifications are fit for current and future needs.
Mid-year review
- Average prime rental growth rebounded above the historical average at the beginning of the year, driven by increases in prime locations such as Manchester, Warsaw, Paris, Madrid, and Schiphol. This result exceeded market expectations and underscores the strength of the prime segment, which is increasingly defined not only by location, but also by asset quality and specifications.
- As occupiers adopt a more strategic approach to real estate, they are placing greater emphasis on assets that deliver broader operational value. Higher rents are more easily justified when portfolios contribute to overall business efficiency, through improvements in areas such as transportation, labour, or supply chain resilience.