Industrial and logistics real estate in Europe - statistics & facts
The European industrial and logistics real estate market has grown rapidly over the past decade. The COVID-19 pandemic accelerated that trend: As the performance in the office sector worsened, investors capitalized on the growing e-commerce sector and the demand for warehouses to service it. That resulted in industrial and logistics property prices growing faster than those in any other property type. According to Green Street’s Pan-European Property index, prices for industrial real estate continued to rise, despite the commercial real estate market slowing.
Europe’s industrial and logistics real estate sector has grown immensely over the past decade. According to industry experts, it enjoys favorable investment and development prospects. Nonetheless, to continue to grow, it must address occupiers’ needs for high-quality, efficient, and affordable space.
What makes European industrial and logistics real estate attractive?
Europe’s advanced infrastructure, mature financial market, and strategic location between Asia, Africa, and the Americas make it an important hub for international trade. Additionally, Europe boasts a stable economy and a strong demand for e-commerce. Key hubs such as the United Kingdom’s Golden Logistics Triangle, Germany’s Big 5 (Berlin, Hamburg, Munich, Cologne, and Frankfurt), and Paris and Lyon in France have long been popular investment destinations. In 2023, other countries with large industrial and logistics real estate investment markets included Sweden, the Netherlands, and Italy. Investors and occupiers in these markets boast a strong appetite for high-quality spaces, such as logistics and distribution centers, warehouses, manufacturing plants, or urban logistics. While the sector enjoys a positive outlook, a tough lending environment and overall uncertainty on capital markets have led to the value of industrial real estate investment plummeting in 2023.What are the main challenges for the industrial and logistics real estate sector in Europe?
The main concerns among industrial and logistics developers involve overcoming supply constraints and keeping up with demand because of the lack of development sites and the length of acquiring permits . On the occupiers’ side, the biggest challenges are the rising rents, access to labor, and the lack of supply of new buildings. That is no surprise, considering inflation’s devastating effect on businesses’ operational costs and the increased importance of managing supply chain risks in a tense geopolitical climate. Reorganizing supply chains to reduce the reliance on imports and shortening supply chains are growing themes among logistics companies and retailers. Amid these challenges, automation emerges as an obvious answer. Electric vehicles and warehouse robotics are some of the most popular solutions among logistics companies and retailers.Europe’s industrial and logistics real estate sector has grown immensely over the past decade. According to industry experts, it enjoys favorable investment and development prospects. Nonetheless, to continue to grow, it must address occupiers’ needs for high-quality, efficient, and affordable space.
