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.
Poland with a wide regional spread
In Poland, the market is developing positively, supported by the overall economic situation, without prices catching up accordingly so far. One reason for this is, among other things, the existing vacancy buffer, which is gradually being reduced in some regions. For 2026 to 2031, average rent growth of around 1.7 percent per year and yield compression of around 22 basis points are expected – each on a like-for-like basis. However, the development varies greatly from region to region. “Poland is not one market, but eight. The differences between the individual locations are considerable,” says Tobias Kassner. For Warsaw, rental growth of 2.5 percent per year is expected with yield compression of 20 basis points. Gdansk has rental growth of around 2.4 percent and compression of 26 basis points. Łódź and Poznań are significantly lower with rent growth of around 0.8 and 1.2 percent respectively.
Italy as a mirror image of Poland
Italy is in parts the mirror image of Poland. According to current market information, the vacancy rate is already low at around 3.7 percent, and in some sub-markets it is close to zero. At the same time, user demand is developing significantly positively. The low logistics space per capita also points to structural pent-up demand.
However, the existing shortage of space is only reflected in the forecast to a limited extent in rising rents and falling yields. For 2026 to 2031, average rental growth of around 1.6 percent per year and yield compression of around 15 basis points are expected. Here, too, there are differences between the locations: Milan and Genoa are expected to have the strongest rental growth at around 2.1 and 2.0 percent per year, respectively. In Piacenza and Turin, it is significantly lower at around 1.0 and 0.8 percent respectively. “Yield compression remains limited in Italy. For investors, the main focus is therefore on current cash flow, rather than on the prospect of rising real estate values,” says Tobias Kassner.
Selective recovery and generally low rental momentum
The forecast speaks for a selective recovery. “Established markets often benefit from rent growth while at the same time compressing yields. In Poland and Italy, on the other hand, the focus is more on the entry level, the available space and the existing market activity. The differences within individual countries also show why the selection of a specific location remains crucial,” says Tobias Kassner.
However, across the differences between the individual markets, a common pattern emerges: rental momentum in Europe remains too low overall – even in markets that are currently experiencing comparatively stronger rental growth. As a result, new construction projects can only be presented selectively and selectively economically in many markets, given the currently high construction, financing and development costs. As a result, new construction activity is declining, although demand for logistics and industrial space remains stable or is picking up again. This does not yet indicate a nationwide shortage of space in the current market figures, but the pattern is becoming increasingly entrenched and will require a stronger increase in rents in the medium term if a structural supply deficit is to be avoided.
Detailed figures and methodological information can be found in the interactive GARBE PYRAMID MAP. The data referred to in the press release comes from the PYRAMID project.
