The market remains subdued, with take-up below the five-year average, but limited new developments continue to support rental growth in prime sectors despite weaker demand. Investment in industrial and logistics is recovering from its 2023 low, while logistics prime yields in Europe have largely stabilised as inflationary pressures ease.
Prime Rents
- Prime rents rose by 2% (y-o-y) in 2024 in a panel of 49 markets covering 22 countries.
- Some cities continue to see rents expand but overall, the market slowdown in 2024 resulted in limited rental growth.
- The vacancy rate remained low in most markets, but supply has been increasing whilst demand slowed down.
- This contributed to an increase in rents, but at a slower rate.
Take-Up
- Below its five-year average, the market is sluggish.
- Market fundamentals remain good 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.
Investment
- Industrial & logistics investment hit its lowest point in 2023 and has been picking up in 2024.
- This reflects an improvement in financial conditions.
- More adjustments by central bank key rates are expected in 2025 before stabilising.
Prime Yields
- Throughout 2024, prime yields in all European countries have adjusted gradually towards stabilisation.
- They increased by just 2 bps during Q4 2024 in Europe (versus the last quarter).
- Logistics prime yield expansion over the past two years has ceased with moderating inflationary pressure and long-term government bond yields hitting a ceiling.
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