The cycle of soaring rent rates in Europe’s top logistics markets has ended, shows research by Garbe. During H2 2024, the average prime rent increased by just 6 cents, rising from €7.30 to €7.36 per sqm.
This is the equivalent of 0.9 percent and thus trails the inflation rate in the Eurozone, which was 2.4 percent at the last count.
The forecast by Garbe and Oxford Economics covers the prospective trend in prime rents in 30 European top markets over the next five years. On average, analysts project an annual growth by 2.7 percent or 24 cents, which would narrowly exceed the inflation rate of 2.4 percent.
The biggest rent hikes were registered in the UK (+26 cents) and the Netherlands (+9 cents). Prime rents also remained largely stable in Italy, France and the CEE region while going up by 5 cent in Spain.
Tobias Kassner, Head of Market Intelligence and Sustainability at Garbe Industrial Real Estate, said that the slow growth is attributable primarily to the economic situation in Europe.
“Many companies have stopped expanding for the time being and are consolidating instead,” he said. “We need to remember that the pandemic saw tremendous demand for logistics facilities. That cycle has now run its course.”
Kassner added that the current vacancy rate of around six percent is normal, historically speaking.
“The regionally different developments are attributable to specific market conditions,” he said. “In Germany, we are seeing a stabilisation after years of dynamic growth, whereas prime rents in the United Kingdom continued to grow, fuelled by higher rates of consumption and robust demand for logistics facilities.”
Generally speaking, the forecast underlines that the leading markets will continue to see robust growth, albeit without matching the dynamic growth rates of previous years.
