The European logistics real estate markets are poised for a moderate but selective recovery by 2031. On a like-for-like basis, prime yields will fall from around 5.3 percent to 5.1 percent, which corresponds to yield compression of around 26 basis points. At the same time, prime rents will rise by an average of 2.0 percent per year. At the level of the individual markets, however, the expected development varies greatly. These are the results of GARBE Industrial's current forecast of the GARBE PYRAMID MAP, which was developed together with Oxford Economics and covers 88 of a total of 122 European logistics regions.
Germany and the UK stand out in a country comparison in terms of rent growth
German and British locations, which are among the comparatively mature markets and are represented among the top 30 with ten and three regions respectively, show a comparatively dynamic rental development. Prime rents are expected to grow by an average of 2.3 per cent per year in the United Kingdom and 2.1 per cent for Germany – both based on area-weighted rent levels.
At the level of the individual markets, Munich stands out: With a forecast rental growth of 3.2 percent per year, the Bavarian capital has the highest value among the European markets surveyed – while at the same time having the lowest prime yield of currently 4.50 percent. Close behind is Manchester with an expected rental growth of 3.1 percent per year, followed by Berlin City with 3.0 percent. For all three markets, yield compression of around 40 basis points is expected. At the same time, a look at the development of recent years shows how far the adjustment of yields has already progressed, especially in the United Kingdom. In Inner London, the prime yield has risen by 140 basis points since the second quarter of 2021. "This means that a significant part of the yield adjustment in the United Kingdom has already been made. This creates the basis for the next phase of growth," says Tobias Kassner, Head of Research and Member of the Executive Board at GARBE Industrial.
