2025 to Transform Europe’s Logistics and Industrial Occupier Markets

FM newsroom – industry, logistics, Europe. The year ahead is shaping up to be pivotal for Europe’s industrial and logistics (I&L) markets. Looser monetary policies, cutting-edge technologies, and ambitious ESG goals are set to transform the landscape, offering fresh opportunities and challenges for occupiers and investors alike.

Europe’s I&L markets are sending mixed signals stepping into 2025. Leasing activity remains subdued, yet recent trends suggest a potential rebound is on the horizon. Europe’s average vacancy rates dipped in Q3 2024 for the first time in two years.

This could be a pivotal moment. Weaker demand and rising supply have cooled rental growth over the past two years. Still, if vacancy rates have indeed peaked, the first half of 2025 may be the final window for occupiers to negotiate favourable deals before the market heats up again, Savills experts suggest in their recent report.

The Drivers of Demand

Behind this market shift are several key factors reshaping occupier priorities.

Better business conditions are boosting confidence. According to the 2024 European Logistics Census, 53% of occupiers see business conditions as improved compared to the previous year.

Automation and AI are revolutionising warehouses, driving efficiency and reducing costs. As borrowing costs fall with looser monetary policies, investment in these technologies becomes more accessible.

Sustainability is no longer optional. Stricter regulations and the push for net-zero emissions have made ESG compliance a top priority for occupiers, fueling demand for energy-efficient, high-tech warehousing.

Regional Insights: Winners and Opportunities

Each European market tells its own story as we look ahead to 2025.

Italy is holding its ground with stable demand and take-up levels expected to match 2024’s performance. Occupiers here are driven by ESG goals, decarbonising warehouses alongside transportation to achieve cost savings. High demand persists in major hubs, with sectors like food, pharmaceuticals, and cosmetics leading the charge.

The Czech Republic continues to benefit from onshoring and nearshoring trends, maintaining stable rents and steady take-up. With one of the tightest labour markets in the EU, the country is also seeing growing demand for facilities equipped with solar panels, heat pumps, and EV chargers.

Germany’s I&L market is projected to remain stable, with some potential for a recovery in 2025, heavily influenced by the broader economic environment. Due to tight space availability, core cities like Berlin, Hamburg and Munich are set for moderate rental growth. While second-hand space continues to return to the market, the flow of grey space has declined compared to 2023. The market is expected to stabilise, with large take-up deals remaining limited due to economic uncertainties and high construction costs.

Poland is rapidly becoming a logistics powerhouse thanks to its strategic location and improved infrastructure. eCommerce is set to expand significantly, with a forecast growth of 25% by 2029. As a result, Poland’s logistics sector is expected to see increased occupier demand, particularly in well-located areas near major transport hubs. The market’s resilience and strategic advantages make it a key player in the European logistics landscape.

Technology, ESG, and the Future

Beyond regional trends, 2025 will be defined by broader shifts in technology and sustainability. Automation and AI are no longer just buzzwords but practical solutions that occupiers are adopting to remain competitive. Meanwhile, ESG regulations are forcing companies to rethink their real estate strategies, prioritising facilities that align with their environmental goals.

Modern Grade A spaces with renewable energy capabilities, smart technology, and efficient designs are becoming the gold standard. Occupiers who act quickly to secure these properties could find themselves ahead of the curve in a tightening market.

For businesses willing to embrace change and think strategically, 2025 is shaping up to be a year of transformation and opportunity. Whether it’s adopting cutting-edge automation or finding the perfect energy-efficient warehouse, the race is on to meet the demands of tomorrow.

 

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