Real Estate for a changing world

European Logistics Market - November 2023


Market fundamentals remain healthy

Take-up decreased significantly in 2023 in the leading European countries. The manufacturing sector feels the effect of slower demand and new orders weakening. However, market fundamentals remain healthy with vacancy rates below 4% in most countries and the lack of new developments still contribute to rental growth in prime sectors. 


Slowdown in 2023 for logistics investment 

2023 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.


Economic resilience is fading

After a slightly positive first half-year, eurozone activity is likely to stall in the second half-year.
The labour market should also lose momentum. However, the extent of this decline and an increase in the unemployment rate should be relatively limited given persistent recruitment difficulties. 


The rate hike cycle is coming to an end

The further weakening of economic activity and lower inflation that we expect to see by the end of this year should prompt the Fed, like the ECB and the BoE, to stop raising their policy rates. However, a further tightening cannot be ruled out. 


Strong potential of growth for online sales

Online accounts for 11% of total retail sales in Europe. There are great differences between countries though, with northern European countries tending to have greater share. Changing shopping habits is a structural demand driver for warehousing space. As online shopping grows, so does reverse logistics, increasing the space needed.


The choice of location remains paramount

As retailers develop omni-channel solutions, the choice of location for last mile delivery along with regional delivery network is of fundamental importance. The main challenge faced with both is land availability.


European Logistics Market - November 2023
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