Global supply chain challenges and e-commerce boom to sustain growth of European logistics real estate market in 2022

According to Savills, investment into the European logistics sector has again remained strong so far in 2022, reaching €14.3bn in the first quarter, following a record year in 2021 (€11.5bn).

The largest investment volumes have been observed in Germany (€4.1bn), outperforming the UK (€2.9bn), and altogether accounting for almost 50% of total European activity in the first quarter. The Netherlands (€2.0bn) and France (€1.1bn) also recorded strong levels of investment in Q1 2022.

With 10 million sq m of warehouse space leased across Europe in Q1, take-up is 28% above the five year average and Germany (2.4m sq m), the Netherlands (2.2m sq m), Poland (1.5m sq m) and the UK (1.3m sq m) have driven the majority of leasing activity so far this year.

Following a record decline in vacancy rates in 2021, undersupply across the continent will also continue to reinforce investor appetite for industrial assets, says Savills. Dublin (1.1%), Denmark (1.5%), Barcelona (1.7%), Czech Republic (2.0%), the UK (2.7%) and the Netherlands (3.2%) continue to be among some of the most undersupplied markets.

Chris LaRue, head of industrial agency, Savills CZ&SK, adds: “Due to the extremely low vacancy levels, the speed of delivery and availability of land will dictate the market balance. However, ongoing effecting supply chain disruptions and scarcity of some key materials are already affecting new developments and delivery timeframes are delayed in most cases by 3-6 months. Tenants interested in new construction are advised to start searching for their new location at least 16-24 months in advance of their required occupation date.”

Kevin Mofid, Head of Industrial & Logistics Research, Savills EMEA, concludes: “Our outlook is still extremely positive for the year ahead. All of the metrics looking at the occupational market remain strong with vacancy trending downward and take-up trending upwards. Compared with other sectors, the fundamentals around logistics remain strong. With this in mind, we anticipate logistics investment transactions in the region of €60bn to be completed this year, comparable to last year’s record setting €62bn.”