Property Report - European Logistics Market - August 2024

Take-up

Below its 5-year average, the market is sluggish. Occupier concern about cost control in a still weak economy inhibits expansion.
Market fundamentals remain healthy despite rising supply in some countries. The lack of new developments remains supportive of rental growth in prime sectors although weaker demand offsets its momentum.

• Take-up decreased by 5% in H1 2024 to reach just 8.8 million sqm in the 6 leading European countries. 
• GDP growth started to pick up in the Euro area at the beginning of the year from +0.5% in 2023 to +0.8 % forecast in 2024.
• Prime rents rose by 5.2% in the last 12 months in a panel of 48 markets in 21 countries, but overall, the market slowdown resulted in slower rental growth over the past 6 months.
• The vacancy rate in Europe rose to 5.9% in H1 2024. The lack of new developments still contribute to rental growth in prime sectors.

Investment

Strong repricing helped the market to find its way back to moderate growth in some markets.
Yield decompression is effectively drawing to a close and stabilization was recorded in most countries over the past two quarters. 

• Industrial and logistics investment increased by 6% in Europe during H1 2024 to reach €16bn at mid-year.
• Prime yields rose by 2 bps during Q2 2024 in Europe and by 4 bps over the past 6 months. 
• Logistics prime yields are expected to stabilize throughout Europe by H2. This reflects the anticipated downward changes in interest rate policy over the second half of 2024.