European Logistics Market Update Q3 2024
In our latest analysis of the industrial and logistics market, we examine occupier demand, rental performance, investment market and yields across Europe.
- Lisa Graham
- Alexandra Tornow
- Raphaele Naud
JLL’s latest market update highlights an expanding recovery in capital markets while reviewing current headwinds in occupational markets hampering activity.
Investment activity rose by 22% YoY during the first 9 months of 2024, as growing investment expands to include core capital and a growing share of portfolio deals. Meanwhile, Q3 take-up of nearly 5.3 million sqm decreased by 13% QoQ and 19% YoY as occupiers navigate higher costs, uncertain geopolitical and economic outlook, and weak consumption.
Development pipelines shrink further by 21% YoY. Speculative activity is mixed, growing in some markets and slowing in others. For this reason, the European weighted average vacancy rate continues to creep up for the seventh consecutive quarter to 5.1%. We expect market conditions to gradually start to improve during H1 2025 with the return of geopolitical/economic visibility and consumption. The rate of rental growth is expected to maintain a downward trend until occupier markets show some improvement next year.
Over € 9.5 billion was invested in European industrial and logistics assets during Q3 2024, pushing the year-to-date total to € 23.3 billion. Early yield compression in some prime markets signals that falling inflation and expected rate cuts are fuelling investor confidence. Meanwhile, growing capital flows targeting the sector support investors’ expectation that structural trends will support demand for warehouse space in the foreseeable future.
Top 3 Trends to look out for in Q4 2024 and Q1 2025:
Broadening investment flows to include core capital and the return of bigger portfolio deals.
Geopolitical concerns Impact of US election results on EMEA regional conflicts, economics, inflation, and consumption.
Continued prime rental growth:Slower pace of growth to continue until visibility improves regarding geopolitical and economic outlook. If inflation continues to decline/stabilize and rate cuts continue, demand for warehouse is expected to return with consumption.
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