Thursday, 18 June 2026
Europe’s logistics sector started 2026 with growing occupier demand, although investment activity slowed as investors remained selective amid geopolitical uncertainty and higher financing costs.
According to Savills, companies leased 6.58 million sqm of logistics space across Europe during the first quarter of 2026, representing a 6% increase compared with the same period a year earlier. Leasing activity was particularly strong in the Netherlands, the United Kingdom, Belgium and Spain, with Madrid and Barcelona together accounting for more than 540,000 sqm of take-up during the quarter.
The increase in demand comes despite a more cautious economic backdrop. A key factor supporting the market has been the limited availability of modern warehouse space. Developers have significantly reduced speculative construction over the past two years, resulting in fewer immediately available units across many European logistics hubs. This has created competition for high-quality space and supported rental growth in several markets.
Savills’ European prime logistics rental index increased by 1.3% during the first quarter and was 2.7% higher than a year earlier. Prime facilities in established logistics corridors continue to benefit from limited supply, while occupiers are increasingly planning their requirements further in advance to secure suitable space.
The current supply situation reflects broader changes in the development market. Higher construction costs, financing expenses and more cautious lender sentiment have reduced the number of speculative projects entering the pipeline. In several markets, development activity has fallen below long-term averages, limiting the volume of new space expected to reach the market in the near term.
While leasing activity strengthened, investment volumes moved lower. European logistics investment totalled €7.5 billion during the first quarter of 2026, a decline of approximately 19% compared with the same period last year. Nevertheless, the sector remains one of the most active areas of the European real estate market after reaching €43.3 billion in transaction volume during 2025, the strongest annual result since the pandemic period.
Market participants attribute the slowdown primarily to financing conditions and geopolitical developments rather than weakening fundamentals. Ongoing tensions in the Middle East, uncertainty surrounding interest-rate movements and a more cautious lending environment have encouraged investors to focus on assets with predictable cash flow and strong tenant profiles.
At the same time, several long-term trends continue to support demand for logistics facilities. E-commerce, supply-chain diversification, nearshoring strategies and increased inventory requirements are encouraging companies to maintain and expand distribution networks. Savills Investment Management notes that demand remains supported by structural factors despite the more moderate pace of economic growth seen across Europe. Average vacancy rates across core European logistics markets remain close to 5%, indicating that there is no widespread oversupply of warehouse space.
Central and Eastern Europe continues to attract attention from both occupiers and investors. Markets such as Poland, the Czech Republic, Romania and Hungary benefit from their strategic location within European supply chains, access to labour and modern logistics infrastructure. The region also offers higher yields than many Western European markets, which remains attractive to income-focused investors.
In Poland, the shortage of immediately available modern warehouse space is becoming increasingly visible. As available stock remains limited in several locations, occupiers are turning more frequently to build-to-suit developments or extending existing leases rather than relocating. This trend is supporting demand for customised facilities while encouraging developers to consider selective speculative projects in markets where vacancy levels remain low.
Investor preferences are also evolving. Capital is increasingly targeting prime logistics assets with strong occupancy, long lease terms and stable income streams. Income-oriented funds, net-lease strategies and institutional investors continue to be among the most active buyers, reflecting a broader emphasis on predictable returns in a more uncertain market environment.
Despite slower investment activity at the start of the year, the underlying fundamentals of the European logistics sector remain intact. Limited new supply, stable occupier demand and ongoing supply-chain restructuring continue to support the market. As financing conditions improve and economic confidence returns, logistics is expected to remain one of the most closely watched sectors within European commercial real estate.
