With a new market cycle emerging in logistics, a shortage of space offers a window of opportunity – and integrated platforms can take advantage, says Ingo Steves.

The European logistics real estate market is at a turning point. After a period of price correction and restraint, a window is opening for investors and developers to position themselves. But one thing remains unchanged: logistics is, and will remain, the backbone of economic activity in Europe.

The structural fundamentals of the asset class are intact. Logistics properties typically convert a high share of rental income into cashflows, while requiring low capex. Rental costs account for a small proportion of total supply-chain costs, leaving room for rental growth and reinforcing the asset class’s appeal.

Swiss Life Asset Managers continues to see a robust foundation for long-term investments in this environment. As a leading institutional investor in Europe, Swiss Life Asset Managers is well-positioned to take a long-term view.

Our focus is a pan-European approach that combines local market knowledge with an overarching strategic perspective, which is crucial in Europe’s fragmented logistics landscape to identify opportunities early and execute them sustainably.

Demand is driven by long-term trends. E-commerce continues to grow steadily. Companies are increasing inventories to make supply chains more resilient. Automation, digitalisation and ESG requirements are accelerating the need for modern, efficient space. Logistics service providers and industrial users continue to drive demand for high-quality real estate.

New market phase opens up opportunities for selective investments

Against this backdrop, a new market cycle is emerging. Many developers have been cautious amid higher financing costs and uncertainty, and the pipeline of new developments has thinned noticeably. Approval procedures remain complex and development timelines long. As a result, a supply shortage is likely if demand picks up again. This points to an attractive investment window, especially in markets and segments where supply and demand are diverging.

‘Successful projects today require more than capital. What is needed are integrated platforms that can cover all steps along the value chain and bring deep local market knowledge.’

Ingo Steves

This momentum is visible in the European rental market. Despite economic uncertainty, vacancy rates remain low and in many markets, below historical averages. Differentiation is increasing between regions and asset qualities. Modern space is sought-after in established logistics regions along central transport corridors.

Germany plays a key role within this European framework. As Europe’s largest logistics market, it benefits from its central location and efficient infrastructure. Transaction activity is picking up again, especially in the mid-cap segment. At the same time, yields are stabilising, while modest compressions may again be possible for high-quality core assets.

Integrated platforms as the key to market success

Successful projects today require more than capital. What is needed are integrated platforms that can cover all steps along the value chain and bring deep local market knowledge. Swiss Life Asset Managers follows this approach: as part of a pan-European platform, we combine investment, development and asset management expertise across all phases of the real estate life cycle. This integrated model makes it possible not only to identify and finance projects, but also to actively develop, let and manage them over the long term.

A key advantage is our strong European positioning. With local teams in core markets, we understand regional specificities while also benefiting from a Europe-wide network. In working with clients, we take a customer-first mindset and focus on enabling their business, building partnerships that can grow over time across several European markets. This helps identify opportunities along major logistics corridors at an early stage and implement them efficiently.

Our solid equity base allows us to advance projects even in volatile phases and to act countercyclically – an advantage in an environment of limited supply and rising demands on quality and sustainability.

Municipalities, occupiers and investors increasingly expect holistic solutions, not just functional buildings. Quality, sustainability and long-term perspectives are central. Modern logistics properties must combine economic efficiency with environmental responsibility, while meeting user requirements. This is where our approach comes together: European market knowledge, an integrated platform and specialist expertise that create logistics solutions fit for current and future needs.

Ingo Steves is Managing partner, logistics – Swiss Life Asset Managers, Germany