Market Insight-Europe Logistics Real Estate Market Overview 2025

urope Logistics Real Estate Market Was Valued at USD 18.60 Billion in 2024 and is Expected to Reach USD 33.45 Billion by the End of 2033, Growing at a CAGR of 6.50% Between 2025 and 2033.- Bossonresearch.com

Logistics Real Estate refers to the sector of commercial real estate dedicated to assets that support the storage, distribution, and management of goods within the supply chain. In essence, these properties include warehouses, distribution centers, fulfillment centers, cold storage facilities, cross-dock facilities, and other specialized logistics hubs. They are strategically located near major transportation nodes such as highways, ports, rail terminals, and airports to optimize operational efficiency and reduce transit times. In addition, these facilities are designed with features like high ceilings, ample loading docks, and integrated automation and IT systems, which together provide the necessary infrastructure to support rapid inventory turnover and real-time supply chain visibility.

In 2024, industry indicate that the overall annual rental income market for European logistics real estate was estimated at USD 18.60 Billion and is expected to reach USD 33.45 Billion by the end of 2033, growing at a CAGR of 6.50% between 2025 and 2033. This growth is driven by several interlinked factors. For example, the rapid expansion of e-commerce and omni-channel retailing has heightened the demand for fulfillment centers and urban last-mile delivery hubs, while at the same time, the ongoing restructuring of supply chains and just-in-time inventory practices have increased the need for sophisticated distribution centers and warehouses. Moreover, advancements in automation technology and digital tracking systems have boosted asset operational efficiencies and rent escalations. In addition, supportive government policies and infrastructure investments have provided further impetus to the market's expansion. Consequently, these dynamics collectively suggest a robust outlook for the European logistics real estate market, characterized by diversified asset types, steady demand growth, and resilient investment opportunities.
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Driving Factors

E-commerce growth

The continued growth of e-commerce continues to be a key driver of demand for logistics real estate across Europe. As online retail penetration continues to increase, companies need larger and more efficient warehouse space to manage inventory, fulfill orders and process returns (reverse logistics). Changing shopping habits are a driver of structural demand for warehousing space. As online shopping grows, reverse logistics also grows, increasing space requirements. The complexity of e-commerce logistics (such as same-day delivery expectations and seasonal peak demand) exacerbates the need for larger facilities. Online retailers such as Amazon, Zalando and Shein are building automated warehouses in or around urban cores to reduce shipping distances and improve customer satisfaction.

Forrester predicts that e-commerce sales in the five largest economies of Europe (France, Germany, Italy, Spain and the United Kingdom) will grow at a compound annual growth rate (CAGR) of 7.8% over the next five years, from €389 billion in 2024 to €565 billion in 2029. According to the Nielsen IQ research report, in the first half of 2024, the European e-commerce market continued to expand, with the number of online channel users increasing by 1% and the frequency of online shopping increasing by 4%. According to a report released by the European cross-border e-commerce platform "European Cross-border Commerce", in 2023, the online sales of European business-to-consumer (B2C) goods reached 741 billion euros, a year-on-year increase of 13%; among them, the cross-border e-commerce market reached 237 billion euros, a year-on-year increase of 32%. Poland, Bulgaria and other countries are the fastest growing countries in the European e-commerce market. According to the latest data from the "Basic Link" platform, an online sales management and automation system in Central and Eastern Europe, in June 2024, Poland's online sales increased by 12.6% year-on-year. At present, Central and Eastern European countries are constantly accelerating the promotion of digital transformation, and the penetration rate of mobile payments in the region has increased significantly, which further promotes the development of e-commerce. BLIK is one of the largest payment systems in Poland. From January to August 2023, the payment system completed 1 billion transactions, setting a new record for online transactions on the platform.

Supply Chain Reconstruction

Since the COVID-19 pandemic, the global supply chain has exposed the vulnerability of being highly dependent on remote manufacturing bases (especially in Asia). Since then, European companies have begun to reconfigure their supply chain networks, shifting from a "single-point high-efficiency" model to a "multi-point security" and "decentralized" strategy, with an emphasis on flexibility, regional diversity and inventory security capabilities. This has driven a series of transformation trends, including "nearshoring", which has significantly increased the demand for local warehousing space in Europe.

For example, more and more manufacturing companies have moved some parts production links from China or Southeast Asia to Central and Eastern European countries such as Poland, Hungary and Slovakia, forming new industrial logistics corridors. At the same time, Western European countries such as Germany and the Netherlands have become regional distribution centers due to their well-developed transportation hubs (such as the Port of Rotterdam, the Port of Antwerp, and the Inland Port of Duisburg), attracting a large amount of logistics investment.

In addition, due to concerns about supply uncertainty and fluctuations in raw material prices, companies tend to increase safety stocks, requiring larger and more efficient warehousing facilities to ensure the operation of the "just-in-case" model. This structural change is rewriting the warehouse site selection and area standards that were previously dominated by "just-in-time", and is driving developers to build modern logistics centers with larger net heights and higher levels of automation.

Automation and Smart Technology

The rapid application of automation and smart technology in logistics operations has also enhanced the attractiveness of logistics assets. It is expected that by 2025, the demand for smart warehouses will grow by more than 15%. These trends not only create new opportunities for developers and investors, but are also reshaping the landscape of the industrial real estate market.

The accelerated deployment of automation and smart technologies is redefining the value and attractiveness of logistics real estate.

As labor costs rise and the aging population in Europe intensifies, more and more companies are beginning to deploy automation technology in warehousing operations to improve efficiency and reduce manual dependence. This includes the use of innovative solutions such as automated sorting systems (AS/RS), AGVs (automated guided vehicles), robotic picking systems, digital twins and warehouse management systems (WMS). The higher standards of floor height, power capacity, floor load capacity and network connectivity required for smart facilities drive new demand for "future-oriented" logistics real estate.

Properties with a high degree of automation will significantly outperform traditional facilities in terms of rental levels and return on investment. For example, leading developers such as Segro in the UK, Goodman in the Netherlands, and VGP in Belgium have included robot-friendly warehouses in the standard planning of their new projects. In core markets such as Germany, the Netherlands, and France, logistics parks with automation pre-conditions are rented out more than 20% faster than traditional warehouses, and attract more e-commerce, third-party logistics, and high-tech manufacturing companies to settle in. More importantly, automation investment improves tenant stickiness, lengthens the lease period of high-standard warehouses, increases rent increase space, and further enhances the long-term value of assets. This makes industrial real estate with automation conditions or reserved upgrade space a hot target in the capital market, attracting global investment institutions such as Blackstone, GLP, and Prologis Europe to continue to increase their investment.

Improvement of the European Economic Environment

The gradual improvement of the European economic environment provides macro support for the demand for logistics real estate.

After experiencing the impact of high inflation, energy crisis and interest rate hike cycle, the economic indicators of many countries in the eurozone began to stabilize from 2024. The European Commission forecaster expects the average annual real GDP growth rate to be 0.9% in 2025, 1.2% in 2026, and 1.3% in 2027. In addition, the easing of inflationary pressure may make the European Central Bank start to gradually cut interest rates in the second half of 2024, which will reduce the financing cost of logistics real estate and boost investment sentiment. At the same time, indicators such as the recovery of consumer spending, the improvement of retail trade data, and the recovery of manufacturing PMI also show that the momentum of domestic demand recovery is obvious, driving e-commerce and retail companies to expand their warehouse layout.

In addition, many European governments are promoting "re-industrialization" and infrastructure upgrade plans, such as France's "Industrial Revitalization Plan", which require stronger supply chain infrastructure support to further promote the construction of warehousing and logistics facilities. Especially in the Ruhr area of Germany, the vicinity of the Port of Antwerp in Belgium, and Central and Eastern European countries such as Poland and the Czech Republic, industrial investment and logistics demand have shown a linked upward trend. Developers and investors are also more actively entering the market. For example, companies such as GLP, Segro, VGP, and Prologis will continue to maintain their development project reserves and capital investment in Europe in 2024.

The Rise of Urban Logistics

Urbanization is driving the need for proximity, while the pressure of "last mile" delivery is accelerating the adoption of innovative real estate solutions.

As consumer demand for faster and more accurate delivery services rises, urban logistics has become an emerging hotspot for logistics real estate in Europe. About 75% of Europe's population lives in cities, and there is an increasing demand for logistics facilities close to population centers. This trend is reshaping the real estate market, with developers and investors targeting smaller, well-located warehouses to support efficient delivery. In cities such as London, Paris and Berlin, the number of urban logistics hubs is surging, driven by the need to shorten delivery times and deal with traffic congestion.

In addition, municipal policies such as low-emission zones (such as London's Ultra Low Emission Zone) have prompted logistics providers to build warehouses for electric vehicle fleets in city centers, further driving demand for logistics real estate.



Key Development Trends

Leasing Activity Gradually Picks up

As economic growth picks up and companies implement expansion plans that were postponed due to previous uncertainty, leasing activity is expected to increase, especially in the second half of 2025. This is also confirmed by CBRE's outlook, which predicts that the leasing market will grow. Despite a sharp decline in new completions, the average vacancy rate in the first three quarters of 2024 still increased by 77 basis points to 4.4%. By the third quarter, the vacancy rate growth rate had slowed down and is expected to stabilize further in 2025, but a sharp decline is unlikely. The industry will temporarily shift from a landlord market to a tenant market. This will facilitate some tenants to start expansions in 2025 that were previously postponed due to market conditions.

At the same time, JLL's report released in 2025 also predicts that the market will return to moderate growth. Although the full-year leasing volume of logistics activities in Europe in 2025 is 5% lower than in 2023, it is expected that leasing volumes will stabilize or grow moderately in various regions over the next 12 months as idle capacity is absorbed and delayed transactions are completed. As transaction conversion times continue to lengthen, vacancy rates are expected to continue to rise in the first half of 2025, and then stabilize as new supply decreases. In markets with higher vacancy rates, landlords will show greater flexibility and offer more concessions to attract and retain tenants.

Below is the trend of European logistics real estate vacancy and completions from 2015 to 2024.

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Source: CBRE Research

Rent Growth

In the fourth quarter of 2024, European logistics rent growth slowed, with the Savills European Prime Rent Index showing no quarterly growth for the first time since 2017, although annual growth was still 3.8%. Average rents were up 2.2% compared to the end of 2023, with significant annual growth in Lisbon, Brussels and London.

Looking ahead, rents are expected to continue to grow, but at a slower pace in the long term. The new supply and demand environment will have an impact on rents, as tenants in more well-supplied markets have greater bargaining power, which will put pressure on logistics rent trends. Market dynamics are affected by the lack of new development projects, which supports rent growth in major areas, although weak demand offsets the growth momentum. Given the current level of available stock, rent growth is still better than historical trends; however, its growth is declining towards the long-term trend.

However, due to the trend of seeking high-quality properties and the efficiency and operating benefits that this brings, the market in prime locations is slightly more protected than other markets. CBRE forecasts that prime rents in Europe's top logistics centres are expected to rise by an average of 1.8%, a slower pace than in previous years but still stable after adjusting for inflation.

Building Preferences for Quality

As the commercial real estate landscape continues to evolve, warehouses are at the forefront of the technological revolution. Just as the leasing dynamics of the office market are driven by the trend for quality, the same is true for industrial space. As the rapid development of technology dominates the demand for manufacturing space, the priorities of corporate tenants have also changed, and the warehouses of the past are no longer suitable. Tenants prioritize modern, future-proof warehouses that are not only efficient in operation but also meet sustainability standards. Most tenants prefer modern/optimized warehouse space over traditional warehouse space. Tenants are increasingly focusing on sustainability certifications such as BREEAM, LEED or WELL, which are increasingly regarded as market standards for new buildings and are crucial to their location decisions.

In addition, investors are also showing the same trend. According to CBRE's 2024 and 2025 surveys, investors clearly value location over building age. The 2025 survey shows that 73% of investors will target facilities in major markets, while about 60% of investors focus on modern buildings.

Nearshoring

"Nearshoring will be a continuing theme in the logistics industry over the next five years or so," said John Harcourt, managing director of Kajima Properties Europe, at the March 2024 International Real Estate Fair (Mipim) in Cannes, France.

Nearshoring refers to the relocation of production and supply chain activities from remote locations to locations closer to target markets. In recent years, nearshoring has gained increasing attention in European logistics and manufacturing, driven by factors such as global supply chain disruptions, geopolitical tensions, and the need for greater supply chain resilience. According to fDi Markets, foreign direct investment (FDI) in logistics in Europe has exceeded $30 billion each year since 2021, a record high. The reshoring of manufacturing requires more warehousing and logistics facilities to receive, store and distribute inputs and final products. The COVID-19 pandemic, geopolitical conflicts (such as the Russia-Ukraine war), and other emergencies have exposed the fragility of global supply chains. In order to reduce risks, companies have begun to relocate production and warehousing facilities to areas closer to consumer markets to reduce transportation time and costs. Although production costs are lower in places such as Asia, factors such as long-distance transportation and tariffs increase overall costs. Central and Eastern Europe, such as Poland and Hungary, have become popular choices for nearshore outsourcing due to their relatively low labor costs and geographical advantages close to the Western European market. Gustavo Lupi, general manager of Panattoni's Spanish and Portuguese operations, said: "After 2022, demand from e-commerce declined. But then, demand picked up due to the relocation of industrial activities or nearshore outsourcing."

Sustainability

Sustainability is a key concern, with tenants demanding facilities that meet environmental standards. This is in line with PwC's 2025 trends, which emphasize that operational real estate, including logistics, is a way to create value through sustainable practices.

Logistics real estate tenants generally require new or renovated facilities to obtain green building certifications such as BREEAM (Building Research Establishment Environmental Assessment Method), LEED (Leadership in Energy and Environmental Design) or DGNB (German Sustainable Building Council).

In CBRE and Analytiqa's 2024 survey of investors' logistics tenants, although sustainability factors are under pressure in the current tight funding environment, most respondents are still willing to consider renovating existing assets to meet sustainability standards. In addition, some investors are still willing to pay a premium to acquire assets that meet sustainability standards.

Some tenants explicitly require buildings to achieve net zero carbon emissions standards within a certain period when signing long-term leases. For example, in February 2023, H&M Group partnered with Panattoni to develop an 82,000 square meter facility in Poland with the goal of achieving at least BREEAM Excellent certification. Prologis Europe has committed to achieving net zero emissions across our entire value chain by 2040.

Technological Advancements

Technological advances, especially artificial intelligence, are expected to have a significant impact over the next five years, improving operational efficiency and requiring modern infrastructure. More and more businesses are adopting automation, IoT, robotics, drones, and warehouse management systems (WMS). Emerging technologies such as AI and blockchain are revolutionizing operations. For example, Exotec's autonomous mobile robots can access items up to 12 meters high, optimizing storage, increasing productivity, and space efficiency.

AI tools are transforming operations by enhancing predictive analytics, enabling more accurate demand forecasts, and optimizing supply chain logistics. These technologies can help businesses reduce costs, improve accuracy, ensure on-time delivery, and minimize disruptions.

For investors, facilities equipped with automated features and a strong digital infrastructure command higher rents and are in greater demand. Properties equipped with features such as advanced racking systems and charging stations for autonomous vehicles are increasingly seen as future-proof investments.

The convergence of automation and AI is not only about operational efficiency, but also about meeting tenants' expectations for advanced facilities. By prioritizing technological advancements, investors and managers can ensure their properties remain competitive in a rapidly evolving market.

Meanwhile, the trend toward high-bay, multi-story warehouses is already well established in Asia, especially in cities like Hong Kong, and is now gaining momentum in the U.S. and Europe. Multi-story, high-rise, hyper-connected warehouses are becoming the norm, and their capacity will increase tenfold.

Capital Allocation and Market Liquidity

The resilience of the logistics and industrial sectors makes them a favored destination for capital, with investors increasingly attracted to their stability and growth potential. Following the recent market repricing, industrial assets currently offer attractive returns relative to other types of real estate.

Core and core-plus strategies remain popular as investors prioritize stable, income-producing assets, but more managers are turning their attention to value-added strategies amid a decline in new construction.

At the same time, sale-leaseback transactions are becoming a popular entry point for acquiring key logistics real estate. This approach not only allows investors to obtain a long-term income stream, but also provides corporate tenants with funds to support their growth plans.

Light industrial, urban logistics and small and medium-sized warehouses are particularly attractive to many large private equity funds. These assets offer diversification advantages, strong tenant retention, growing demand drivers, and opportunities to implement value-added initiatives such as sustainability upgrades. Compared with large-scale logistics, the relatively stable pricing and more convenient sublease of this sector further enhance its appeal.



Europe Logistics Real Estate Market: Competitive Landscape

The European logistics real estate market remains moderately concentrated, with the top five players-Prologis, Panattoni, Logicor, Segro, and P3 Logistic Parks-holding a combined market share of 27.35% in 2024. Prologis continues to lead the market, although its share slightly decreased from 8.22% in 2023 to 7.95% in 2024. Panattoni has maintained a stable position, thanks to its strong expansion in Central and Eastern Europe, while Segro and P3 have seen slight increases in their market shares, indicating strong momentum in urban logistics and value-added warehousing. The Herfindahl-Hirschman Index (HHI), a measure of market concentration, reaches 1.65% in 2024, suggesting that the market remains relatively unconcentrated, especially as e-commerce and nearshoring trends create new regional opportunities. Key players in the European logistics real estate market include Prologis, Panattoni, Logicor, Segro, P3 Logistic Parks, CBRE, CTP NV, Warehouses De Pauw, Garbe Industrial Real Estate, Tritax Big Box REIT, Catena AB, Montea, Brookfield, GLP Europe, VGP Group, Colliers, Logistics Capital Partners (LCP), PLP, NREP Logicenters, Goodman Group, MLP Group, Merlin Properties, European Logistics Investment (ELI), Urban Logistics REIT, and Hines.

Key players in the Logistics Real Estate Market include:

Prologis

Panattoni

Logicor

Segro

P3 Logistic Parks

CBRE

CTP N.V

Warehouses De Pauw

Garbe Industrial Real Estate

Tritax Big Box REIT

Catena AB

Brookfield

GLP Europe

VGP Group

Montea

Colliers

Logistics Capital Partners (LCP)

PLP

NREP Logicenters

Goodman Group

MLP Group

Merlin Properties

European Logistics Investment (ELI)

Urban Logistics REIT

Hines

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