European Industrial & Logistics Sector Outlook 2024

SHIFTING LANDSCAPE

LEASING AVAILABILITY WITH CONTROLLED DEVELOPMENT SUPPLY In 2022, vacancy rates plummeted to unprecedented lows. The surge in demand during the pandemic, coupled with shortages in building materials and labour, led to tight availability in many markets. However, since the start of 2023, vacancy rates have begun to increase as demand has slowed. New development supply has continued to enter the market, with ongoing construction projects progressing and being delivered. Developers, driven by both occupier-led and speculative strategies, have expanded construction into new geographical areas over the past few years.

Despite this, some markets still require new supply, particularly where existing stock is older, and there has been limited speculative development to meet the demand for modern spaces. Consequently, there is a growing appetite for redevelopment and refurbishment options where feasible. Additionally, supply remains constrained in certain markets where a scarcity of development land and challenges in obtaining permits for logistics spaces hinder the potential for development, thus limiting the ability to capture occupier demand.

Yet, the supply of new developments is showing signs of moderation, both in terms of volume and pace. Speculative development is expected to slow, partly due to developers' cautious approach to prevent market oversupply following the deceleration in occupier activity. Challenges such as higher financing costs, elevated yield levels, and difficulties in securing capital for development have resulted in a slowdown in the delivery of new spaces.

LOGISTICS & INDUSTRIAL VACANCY RATES

"

16%

14%

12%

10%

The demand for logistics space to support retail supply chains is anticipated to persist into 2024 and beyond.

8%

6%

4%

2%

0%

Q1 ‘15

Q1 ‘16

Q2 ‘16

Q3 ‘16

Q4 ‘16

Q1 ‘17

Q2 ‘17

Q3 ‘17

Q4 ‘17

Q1 ‘18

Q2 ‘18

Q3 ‘18

Q4 ‘18

Q1 ‘19

Q2 ‘19

Q3 ‘19

Q4 ‘19

Q1 ‘20

Q2 ‘20

Q3 ‘20

Q4 ‘20

Q1 ‘21

Q2 ‘21

Q3 ‘21

Q4 ‘21

Q1 ‘22

Q2 ‘22

Q3 ‘22

Q4 ‘22

Q1 ‘23

Q2 ‘23

Q3 ‘23

Source: Cushman & Wakefield Research * Spain = Barcelona

CZECH REPUBLIC FRANCE IRELAND ITALY NETHERLANDS POLAND SPAIN* UK

8 LOGISTICS & INDUSTRIAL OUTLOOK 2024

THE TIDE IS TURNING SWIFTER | 9