Property Report - European Logistics Market - September 2023

Take-up

Take-up decreased significantly in H1 2023 in Europe. Despite the economic slowdown, market fundamentals remain healthy as demand is holding up, ready to pick up quickly. Vacancy rates remain low and the scarcity of new products is still putting pressure on rents.

• Take-up softened in H1 2023 to reach just 9 million sqm in the 6 leading European countries. It compares well with the volumes recorded in H1 2019 and 2020. 
• GDP growth contracted sharply in the Euro area  from +3.5% in 2022 to +0.4 % forecast in 2023.
• Prime rents rose by 6.2% in the last 12 months in a panel of 48 markets in 21 countries.
• Vacancy rates are still low under 4% in most countries. The lack of new developments still contribute to rental growth in prime sectors.

Investment

H1 experienced significant slowdown in investment. It is the result of rapid adjustment in the macro financial environment with bond yield expansion and rising interest rates. Yield decompression is now slowing down in most European countries. This could unlock investment activity in the next quarters.
 

• The volume of investment contracted sharply from €34bn in H1 2022 to nearly €12bn in H1 2023.
• Prime yields rose by 90 bps in the past 12 months in Europe (+10 bps over the past quarter)
• Stabilisation of logistics prime yields is expected throughout Europe over H2. This will reflect the changes in interest rate policy in 2023 as terminal rates are reached.