GARBE PYRAMID MAP: Europe's logistics real estate markets expect subdued momentum and selective growth until 2030

Significantly lower momentum in rental growth is expected over the next five years. Predominantly stable returns in the European core markets with selective market opportunities. Growing independence from European supply chains and production is leading to positive demand impulses.

The economic and geopolitical environment has become much more volatile in recent years; a sustainable calming of the framework conditions is currently not foreseeable. At the same time, no strong economic stimulus is expected in the short term from a broad upswing. Against this backdrop, market momentum on the European logistics real estate markets is expected to remain largely subdued in the coming years. While average annual rent growth over the past five years (CAGR Q4 2020 to Q4 2025) was still 5.7 percent, an increase of only 1.9 percent per year is expected for the next five years.

On the yield side, too, there are signs of a phase of stabilisation: since the turning point at the end of the last market cycle in Q2 2022, the average prime yield across 122 regions has risen from 4.6 per cent to 5.7 per cent, with slight compression tendencies already evident in recent quarters. By 2030, this moderate decline in yields to 5.2 percent is expected in the 88 forecasted markets. For the vast majority of European logistics real estate markets, a slight yield compression is forecast, while a sideways movement is expected in individual regions.

These are the results of GARBE Research's forecast of the current GARBE PYRAMID MAP, developed together with Oxford Economics, which contains 88 of a total of 122 European logistics regions.

What is striking is an increasing decoupling between geopolitical events and their direct impact on the European logistics real estate markets. Market reactions are more often delayed and develop very differently from region to region. "A fundamental calming of the geopolitical environment, which many have long hoped for, is not in sight. However, market players are increasingly adapting to this new reality, putting aside their wait-and-see attitude and getting back into action," comments Tobias Kassner, Head of Research & ESG at GARBE Industrial. "After the market corrections of recent years, we do not expect any further nationwide adjustments. Stability is maintained and growth takes place – albeit selectively and strongly depending on the location."

At the same time, the increasingly non-transparent and unpredictable market environment is increasing the demands on investors and operators of logistics properties. Therefore, a clear strategic orientation, in-depth local market knowledge and consistent implementation at location and portfolio level are crucial for success. "In a market with high uncertainty, it is not so much the cycle that decides as the quality of asset management. Stable cash flows, active contract and tenant management and close control at the property level are the key success factors today," says Tom Herrschaft, Head of Real Estate Management at GARBE Industrial.