Our latest European Logistics update reports that there has been low momentum in take-up, yet there are some signs of improvement in capital markets.
Take-up
Below its five-year average, the market is sluggish. Occupier concern about cost control in a still weak economy inhibits expansion.
Market fundamentals remain healthy despite rising supply in some countries. The lack of new developments remains supportive of rental growth in prime sectors although weaker demand offsets its momentum.
- Take-up decreased by 5% in H1 2024 to reach just 8.8 million sqm in the six leading European countries.
- GDP growth started to pick up in the Euro area at the beginning of the year from +0.5% in 2023 to +0.8 % forecast in 2024.
- Prime rents rose by 5.2% in the last 12 months in a panel of 48 markets in 21 countries, but overall, the market slowdown resulted in slower rental growth over the past six months.
- The vacancy rate in Europe rose to 5.9% in H1 2024. The lack of new developments still contributes to rental growth in prime sectors.
Investment
Strong repricing helped the market to find its way back to moderate growth in some markets. Yield decompression is effectively drawing to a close and stabilisation was recorded in most countries over the past two quarters.
- Industrial and logistics investment increased by 6% in Europe during H1 2024 to reach €16bn at mid-year.
- Prime yields rose by two bps during Q2 2024 in Europe and by four bps over the past six months.
- Logistics prime yields are expected to stabilise throughout Europe by H2. This reflects the anticipated downward changes in interest rate policy over the second half of 2024.
Download the full European report below, or contact Eoghan Morgan for more information.
