Savills: H1 2025 last chance to shop around for logistics assets

H1 2025 could be “the last opportunity to shop around” and buy logistics assets before the market picks up, Sam Quellyn-Roberts, global occupier services director, EMEA Logistics Markets, Savills, told Real Asset Insight.

Sam Quellyn-Roberts, Global Occupier Services Director, EMEA Logistics Markets, Savills

As we move into 2025, the market fundamentals in Europe’s industrial & logistics market paint a mixed picture. “On the one hand, leasing activity has remained muted, with processes taking longer than anticipated,” he said. “On the other hand, Q3 2024 saw average vacancy rates across Europe decline for the first time in two years. Up until now weaker demand and higher supply have taken much of the fire out of rental growth in Europe.”

This could be about to change as sentiment improves across the continent. If the peak for vacancy rates has been reached, as Savills believes, “the opening half of 2025 could be the last opportunity for occupiers to shop around before the market finally thaws,” Quellyn-Roberts said.

Savills expects four key trends to drive the occupier market this year. The first is improving economic conditions. “More positive sentiment is something that was observed throughout 2024,” Quellyn-Roberts said. “In fact, Savills and Tritax’s 2024 European Logistics Census showed that more than half of occupiers (53%) believed that current business conditions were more favourable than 12 months ago, compared to just 41% in 2023.”

Also, requirements that were put on hold during the recent period of economic uncertainty will now become a greater priority for businesses as they look to secure the best possible space to suit their needs.

The second trend is power. Investment in technology is likely to become more viable in 2025 as looser monetary policy lowers borrowing costs, while further advances in digitalisation and AI promise greater efficiency and cost reductions. “However, occupiers are increasingly aware of the need to ensure they have adequate power supplies, whether through the grid or on-site generation to allow for these upgrades,” Quellyn-Roberts said.

The third trend that will remain top of the agenda is ESG. “With the spectre of the net-zero transition looming ever closer for occupiers, it is going to continue to be a significant factor when it comes to decision making,” he said.

While this is a focus across Europe, in Italy, for instance, stricter ESG targets have driven occupiers to decarbonise their warehouses. Also, in the Czech Republic ESG considerations are becoming more pronounced with businesses gravitating towards stock with solar panels, heat pumps and electric vehicle chargers.

The fourth trend is location, which will remain a top priority. For example, in Spain occupiers are increasingly choosing well-located stock in proximity to highways and populated areas to ensure an adequate labour supply and efficient logistics.

Poland is poised for significant growth in 2025, driven by its strategic location and a comparatively robust economic environment. Positioned at the crossroads of Western Europe’s developed markets and Eastern Europe’s emerging economies, Poland offers a compelling investment opportunity, and this has helped to attract multinational corporations looking to nearshore their operations.

“Ultimately, the European industrial & logistics market is set for a transformative year”, said Quellyn-Roberts. “Despite recent subdued leasing activity, the decline in vacancy rates and stabilisation of rental growth suggests a potential market revival. Economic improvements and technological advancements, such as warehouse automation and AI, are anticipated to boost occupier activity. What’s more, the focus on ESG regulations and the demand for modern, efficient warehousing will continue to influence market dynamics. We should expect to see greater traction in 2025 as the recovery accelerates.”

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