Property Report - European Logistics Market - February 2024

Take-up

Transaction volumes have returned to 2019 levels. Supply remains limited, especially as land becomes scarcer and its allocation is increasingly regulated. 
Market fundamentals remain healthy with low vacancy rates in most countries and the lack of new developments still contribute to rental growth in prime sectors. 

• Take-up softened in 2023 to reach just 19 million sqm in the 6 leading European countries (28 million sqm in 2022). 
• GDP growth contracted sharply in the Euro area from +3.5% in 2022 to +0.5% for 2023 and +0.6% for 2024.
• Prime rents rose by 6.3% in the last 12 months in a panel of 49 markets in 22 countries.
• Supply has become scarce and speculative developments have been few. Vacancy rates remain generally low between 3% and 7% depending on the market. 

Investment 

The investment market bottomed out in 2023. While waiting for improvement in financial conditions which did not occur, all markets experienced a significant drop in investments of -40 to -70%. 
The likely cuts in policy rates by the ECB in 2024 should boost jumbo deals and encourage the return of pan-European portfolios.

• The volume of investment contracted sharply from €61bn in 2022 to nearly €32bn in 2023.
• Prime yields rose by 60 bps in the past 12 months in Europe (+18 bps over the past quarter)
• Stabilization of logistics prime yields is expected throughout Europe. This will reflect the changes in interest rate policy in 2024 as terminal rates are reached.