The European logistics real estate market is witnessing a resurgence of confidence and activity as we approach the latter part of 2024, according to Ben Segelman, Head of Portfolio Management – European Logistics at Brookfield. Segelman highlights that improving economic conditions, marked by declining inflation and interest rates, have led to a wave of large asset portfolios entering the market. This trend is bolstered by rising occupancy rates, primarily fuelled by built-to-suit projects catering to substantial corporate clients. Businesses are evolving their supply chain strategies to align with modern demands, necessitating high-quality spaces that emphasise automation, digitisation, and sustainability.
As confidence returns, competition for warehousing and logistics space is intensifying. This transformation in perception sees supply chains regarded not merely as operational necessities but as strategic assets. The growing demand for facilities that can accommodate the burgeoning artificial intelligence sector is contributing to this competition. The report indicates that as so-called ‘connected land’ becomes increasingly scarce, rental prices for such spaces are likely to rise. Additionally, firms face stiff competition for skilled labour, prompting them to make strategic decisions in 2025 that consider the long-term operational needs spanning the next 10 to 20 years.
Furthermore, the thawing economic climate has allowed previously stalled projects, particularly in regions such as Poland, to regain momentum. Trends that had been anticipated but not fully realised, such as nearshoring, are expected to see renewed interest. Businesses across the supply chain are prioritising automation, digitisation, and sustainability as key components of their logistics strategies moving forward.
The role of landlords is also shifting in this competitive landscape. As space becomes limited, landlords will increasingly act as strategic partners rather than mere property owners. This partnership model is anticipated to enhance the functionality of spaces, with asset managers playing a crucial role in leveraging ‘connected networks’ for improved operational outcomes.
There is a notable focus on campus locations that offer efficient, low-carbon transport routes. These sites, often situated near major highways or transport hubs, are becoming essential in attracting talent, addressing the growing competition for skilled labour. Multi-functional logistics parks that facilitate shared resources, such as electric vehicle charging stations and solar power, are indicative of a trend towards sustainability in logistics strategies.
The decisions made by businesses in 2025 are expected to significantly influence their success well into 2035. The logistics asset market in Europe is on the verge of heightened activity, and companies strategising with future trends in mind will establish a solid foundation for sustainable supply chain operations. Businesses that embrace these changes, fostering strategic partnerships and adapting to the evolving landscape, are poised to secure their place in the rapidly transforming logistics market.
Source: Noah Wire Services