European logistics real estate markets set to stabilise this year
After large decreases in 2023, take-up of logistics real estate in key European markets is forecast to stabilise this year.
Net prime rent rates will increase across Europe in the next 24 months to 10% or more, with substantial differences between the logistics hot spots in Europe.
These are among the conclusions of two surveys carried out by Buck Consultants International, a supply chain logistics and location/real estate consulting firm, published in January. The first survey focused on Europe’s leading logistics real estate developers, investors and experts; the second polled pan-European tenants of warehouses (shippers, logistics services providers). The surveys centred on 11 countries and 27 logistics hubs across Europe.
Take-up to stabilise
Take-up in the 11 countries is expected to be more or less stable (-2%) in 2024 after a 2023 which showed an unseen decrease in take-up of 26% compared with 2022. The logistics real estate markets in Spain, Netherlands and Romania are doing poorly, while Poland and the UK are doing relatively well, according to the findings.
Rent levels will be up by an average of 10% in 2025 compared with 2023, but with substantial differences between countries and between regions within a country. Net prime yields will be between 4.5% and 5.5% in 2024 on average, showing uncertainties in the markets. But the developers, investors and experts surveyed expect that logistics real estate will remain an attractive asset class.
Half of warehouse tenants in Europe expect the availability of workers to become the most important location factor for distribution centres in the next three years. With labour shortages across Europe, they expect substantial increases in labour costs, particularly in Poland, Hungary and the Netherlands.
Tenants are prepared to pay higher operational costs if labour dependency reduces through warehouse automation, the survey found.