All posts by fletcher@cijeurope.com.

Amsterdam’s Ageing Offices Are Becoming the City’s Next Big Investment Test

Amsterdam’s office market is developing an increasingly visible imbalance. Companies are prepared to pay high rents for the buildings they consider best suited to their businesses, while a growing amount of older space is struggling to compete for the same occupiers. Office vacancy in Amsterdam stood at approximately 9.6% during the second quarter of 2026, yet rents at the top of the market reached around €625 per square metre a year. Those two figures reveal more than a simple change in supply and demand. They indicate that the performance of the market is increasingly dependent on the quality and location of individual buildings.

Companies looking for new offices are placing greater emphasis on energy performance, accessibility, workplace quality and amenities. Modern buildings in strong locations can therefore operate within a much tighter market than the citywide vacancy figure suggests. The difficult question concerns the properties that fall outside that category. Amsterdam contains a substantial stock of offices developed for an earlier generation of occupiers. Some remain perfectly usable, but others face increasingly expensive decisions over their future. Owners must determine whether additional investment can return them to competitive office use or whether the property would be worth more after a fundamental change.

For many buildings, refurbishment will be the first option. Modernising an office can involve much more than replacing interiors. Heating, cooling and ventilation systems may require significant investment. Insulation and façades can need improvement, while lighting, building controls and other technical systems may have to be replaced. Companies also increasingly expect attractive communal areas, bicycle facilities and workplaces capable of supporting more flexible patterns of occupation. An older building can potentially provide all of these things, but the cost of getting there matters.

A property in a highly desirable location may justify substantial expenditure because the refurbished building can command higher rents and attract stronger tenants. The same investment in a weaker location may produce a very different return. The challenge is therefore not simply identifying which buildings can technically be renovated, but determining which ones can be renovated economically. A building may remain structurally sound and capable of functioning as an office for decades, but if the expenditure required to attract modern occupiers becomes greater than the additional value created by refurbishment, its future as an office becomes increasingly difficult to justify. At that point, the underlying property and its alternative development potential become more important than its existing use.

Housing inevitably becomes one of the possibilities. Amsterdam continues to face substantial residential demand, creating an obvious argument for transforming unwanted commercial space into homes. The Netherlands has considerable experience converting non-residential buildings, and national housing policy continues to regard transformation of existing property as one route towards increasing housing supply. However, an empty office is not automatically a future apartment building. Location, structure, planning and development economics all determine whether transformation is realistic.

An office may have floorplates that make residential layouts difficult, inadequate natural light or a façade requiring major reconstruction. Noise, traffic or surrounding commercial activity can also make some locations less suitable for housing. Planning permission must allow the new use, while larger transformations can require changes to the surrounding neighbourhood. Areas originally designed around daytime office populations may need shops, schools, public space and other services if they are to accommodate permanent residents.

The financial calculation is equally important. Conversion expenditure, financing costs, the value of the existing property and the achievable income or sale price of the completed homes all influence whether a project works. Affordable-housing requirements can further affect the economics. Amsterdam therefore cannot solve unwanted office stock simply by converting every vacant building into apartments.

Some properties may be suited to other uses. Hotels could work in particular circumstances, although Amsterdam’s restrictive approach to additional hotel capacity sharply limits this option. Education, healthcare and other forms of accommodation may provide alternatives for individual buildings where planning, location and demand support them. Laboratories and research facilities present another possibility for selected properties, particularly around established medical, scientific and technology clusters, but converting a conventional office into specialist research space can require extensive technical work. Ventilation, structural capacity, electricity availability and specialised installations can make such projects significantly more complicated than conventional office refurbishment.

For larger properties, complete redevelopment may ultimately offer more value than conversion. An office complex developed several decades ago can occupy valuable urban land inefficiently. Replacing part or all of it could allow a denser combination of housing, offices, leisure, services and public space. Such projects change the investment proposition from improving an existing office to unlocking the wider potential of the site. This approach also fits Amsterdam’s broader movement towards mixed urban districts rather than areas dominated exclusively by offices. A property that is becoming less competitive as a standalone workplace may still occupy land capable of supporting a much more valuable combination of uses.

Yet redevelopment will not work everywhere. A significant category of offices may sit between all of these strategies. They are not attractive enough to compete with the best buildings, but their locations or structures may not support profitable conversion. Major refurbishment could require too much capital, while demolition and redevelopment may fail to create sufficient additional value. These properties present the greatest long-term investment risk.

Such buildings may remain occupied by smaller companies willing to accept lower-quality space in return for cheaper rents. Owners can continue receiving income, but the competitive gap between these properties and Amsterdam’s strongest offices may gradually widen. Maintaining occupancy could eventually require lower rents, greater incentives and increasing expenditure. This is where physical obsolescence can become financial obsolescence. The building may still function, but the amount of capital required to preserve its income could increase while its relative attractiveness to occupiers continues to decline.

The problem matters because office valuation is closely connected to rental income, occupancy and expected future expenditure. If maintaining that income requires increasingly large refurbishment programmes, investors and lenders must incorporate those costs into their assessment of the property. Environmental performance adds another layer. Buildings receiving substantial investment today must be prepared not only for current occupier expectations but also for standards that are likely to continue evolving. Spending heavily to make a property acceptable now may prove insufficient if another major upgrade becomes necessary before the initial investment has generated an adequate return.

For some investors, this creates opportunity. Older offices acquired at sufficiently attractive prices can provide compelling repositioning possibilities. Buyers with expertise in refurbishment, planning and redevelopment may be able to unlock value from properties that existing owners are unwilling or unable to modernise. But the purchase price becomes critical. An ageing office bought at a valuation reflecting the capital expenditure and development risk ahead can become a viable refurbishment, residential or mixed-use project. The same property acquired on the assumption that its historic rental performance will continue indefinitely may become extremely difficult to reposition profitably.

This is why Amsterdam’s headline vacancy figure reveals only part of what is happening. The city’s strongest buildings can continue achieving high rents while weaker properties struggle. Those outcomes are not contradictory. They indicate that Amsterdam’s office market is increasingly separating according to building quality, location and the amount of capital required to keep individual properties relevant.

The next major investment opportunities may therefore be found outside the prime office market. They could emerge among properties where the existing use is no longer necessarily the most valuable use, including buildings capable of refurbishment, conversion, demolition or incorporation into larger mixed-use developments. There will also be offices for which none of those options currently produces an acceptable return. Identifying the difference between those properties and genuine repositioning opportunities could become one of the most important investment decisions in Amsterdam real estate.

The city’s office challenge is therefore no longer simply about how much space is vacant. The more important question is how much of Amsterdam’s ageing office stock can economically be given another competitive purpose, and what ultimately happens to the buildings that cannot.

Source: CIJ.World Research & Analysis Team

Norway’s Office Recovery Remains Selective as Financing Costs Restrict Buyers

Norway’s office market continued its gradual recovery during the second quarter of 2026, with stronger leasing and a significant increase in investment activity. However, rising vacancy in Oslo and financing costs that remain close to prime property yields are keeping investors selective and increasing the divide between the strongest buildings and secondary assets.

Oslo recorded 177,670 sqm of office leasing during Q2, an increase of 18% compared with the same period last year. Leasing for the first six months reached approximately 341,000 sqm, indicating that occupiers remain active despite more cautious conditions in the investment market.

Rental performance was less uniform. The city’s top office rent remained unchanged at NOK 6,700 per sqm annually, while the average declined by 0.6% year-on-year to NOK 3,100. Vacancy increased by 134 basis points to 7.51%, suggesting that stronger leasing has not been sufficient to prevent additional space becoming available.

This divergence is creating increasingly different conditions across the Oslo market. Buildings capable of meeting occupiers’ requirements for location and quality are maintaining stronger rental levels, while the decline in average rents points to greater pressure elsewhere. Higher vacancy also gives tenants more alternatives when considering relocation or renegotiating existing leases.

The development pipeline remains relatively contained. The report records around 25,000 sqm of completions in 2026, with approximately 97,000 sqm forecast for the full year and 148,000 sqm indicated for 2027. Total Oslo office stock is approximately 10.56 million sqm.

Investment activity improved substantially during Q2, reaching NOK 6 billion, approximately twice the level recorded during the first quarter. Two sizeable transactions involving portfolios containing several property types contributed to the quarterly result.

Offices nevertheless represented only 24% of total Norwegian commercial real estate investment, considerably below their ten-year average share of 36%. On a trailing 12-month basis, Norwegian office investment was approximately NOK 23 billion, broadly unchanged from the comparable figure a year earlier.

The principal obstacle to a broader investment recovery remains the relationship between property pricing and financing costs. Prime office yields increased by 25 basis points year-on-year to 4.75%, while five-year swap rates were around 4.7% in mid-August. That leaves a very narrow margin before lenders’ financing costs and other expenses are considered.

The result is a difficult acquisition environment for investors relying heavily on debt. According to CBRE, foreign and leveraged buyers are likely to remain less active unless borrowing benchmarks decline or sellers become prepared to transact at adjusted pricing levels.

Higher financing costs are also affecting the distinction investors make between property quality levels. Secondary offices are now priced at yields at least 100 basis points above the prime level, while fewer buildings are regarded as capable of attracting the strongest investment pricing.

Conditions outside Oslo provide a different picture. Bergen recorded a 6.5% year-on-year increase in prime office rents and the strongest first-half leasing activity among the regional cities covered by CBRE, supported by tighter availability. Stavanger remained relatively stable, helped by demand associated with oil services, while Trondheim experienced moderate rental growth.

Transactions during the quarter included Olav Thon Eiendom’s acquisition of Anthon Eiendom through a portfolio deal spanning several property sectors. Østbyen AS also acquired 65,000 sqm of office space in Trondheim.

The Norwegian office market therefore enters the second half of 2026 with two contrasting signals. Occupiers continue to sign substantial amounts of space and investment volumes have recovered from the lows of 2022 and 2023, but higher Oslo vacancy and expensive debt prevent the improvement from becoming a broad-based upswing.

The next phase is likely to depend heavily on financing conditions. A decline in swap rates would improve acquisition economics and could encourage leveraged and international buyers to return. Without that adjustment, sellers may need to reconsider pricing, leaving the market increasingly divided between properties capable of attracting equity-rich buyers and secondary offices requiring higher returns to compensate for greater leasing and capital expenditure risks.

Norway Begins Major Modernisation of World’s Longest Road Tunnel

Norway is preparing for a major upgrade of the 24.5-kilometre Lærdal Tunnel after Skanska secured a contract worth approximately NOK 1.6 billion from the Norwegian Public Roads Administration. The project will modernise a critical section of the E16 connecting eastern and western Norway, with construction scheduled to begin in November 2026.

The contract, equivalent to around SEK 1.5 billion, will be included in Skanska’s Nordic order intake for the third quarter of 2026. The programme is expected to run for approximately three years, with completion planned for 2029.

The Lærdal Tunnel holds particular significance for Norway’s transport network. Extending for 24.5 kilometres, it is the world’s longest road tunnel and forms part of an important overland connection between Oslo and Bergen. The route supports passenger journeys as well as the movement of commercial traffic between the country’s eastern and western regions.

Rather than constructing additional road capacity, the investment will concentrate on extending the performance of existing infrastructure. Skanska will undertake substantial rehabilitation work and renew technical installations, with particular attention given to systems supporting safe and dependable tunnel operations.

The complexity of the project will be increased by the requirement to maintain traffic access for much of the construction period. Working inside a tunnel of this length while limiting disruption to an important national transport route will require construction activities and traffic arrangements to be closely coordinated.

The contract reflects a wider infrastructure challenge facing European transport authorities as ageing tunnels, bridges and roads require increasingly substantial investment. Upgrading existing assets can involve complex engineering and significant expenditure, particularly where infrastructure must continue operating while construction is underway.

For Norway, maintaining the Lærdal Tunnel is particularly important because of the country’s geography and the limited number of major east-west road connections. Reliable transport links influence freight movements, regional business activity and accessibility between economic centres on opposite sides of the country.

Work is due to start in November 2026, with the upgraded tunnel scheduled for completion in 2029.

Russia’s Next Retail Property Cycle Will Be About Reinventing the Malls It Already Has

Russia’s shopping-centre market is moving away from an era defined by continuous expansion. After decades in which developers added large amounts of modern retail space to Moscow, St Petersburg and major regional cities, the development pipeline has contracted sharply. The result is a market in which the future of existing shopping centres is becoming more important than the construction of new ones.

Only around 109,000 square metres of shopping-centre space was completed across Russia during the first half of 2026, according to industry estimates, roughly half the volume delivered during the same period a year earlier. Although additional projects are expected to open during the second half, total annual development is forecast to remain below 2025 levels. The change is about more than volume. The type of retail property being developed is also evolving, with large destination shopping centres becoming less prominent while smaller neighbourhood schemes and retail incorporated into residential or mixed-use developments account for a growing proportion of new projects.

In Moscow, much of the development scheduled for 2026 follows this smaller and more locally focused model. These centres are designed primarily to serve surrounding residential populations rather than attract consumers from across the metropolitan area. That represents a significant departure from the large regional malls that characterised earlier stages of Russia’s retail-property expansion. High construction costs, expensive financing and uncertainty surrounding retailer demand all make large speculative developments harder to justify. Building another major shopping centre requires confidence that enough retailers will commit to space and that consumer spending will support the project for many years. In the present environment, that calculation has become considerably more difficult.

For owners of existing shopping centres, however, reduced development does not automatically mean stronger performance. Less competition from new projects should theoretically protect established properties, but vacancy data during the first half of 2026 shows that the market is becoming more challenging rather than uniformly tighter. Vacancy in Moscow shopping centres increased during the period, with different market estimates placing availability above the levels recorded a year earlier. Further increases are possible during the remainder of 2026 as retailers continue reviewing their store networks and landlords compete for occupiers.

Rental conditions also demonstrate that the scarcity of new development has not yet translated into widespread pricing power for landlords. Retailers have become more selective about locations, store sizes and lease terms, particularly where existing centres cannot demonstrate sufficient customer traffic. This is creating a widening divide between successful shopping centres and properties that increasingly struggle to remain relevant.

The strongest centres have several advantages. Established locations can offer large catchment populations, proven consumer traffic and transport connections that would be expensive for a new competitor to reproduce. When few new shopping centres are being developed nearby, these characteristics become even more valuable. But age is becoming increasingly important. Many Russian shopping centres were developed during earlier waves of retail expansion and are now approaching the point at which cosmetic refurbishment may no longer be enough. Layouts designed around the shopping habits and tenant structures of ten or fifteen years ago do not necessarily correspond with the requirements of retailers and consumers in 2026.

The transformation of the tenant base since 2022 has accelerated that challenge. Domestic retailers have expanded into some locations previously occupied by international chains, while brands from other markets have entered selectively. Yet the replacement process has not produced a simple one-for-one substitution of former international tenants. Retailers are increasingly making decisions building by building. Successful centres can attract new concepts and encourage existing tenants to expand, while weaker centres may discover that even substantial rent incentives are insufficient to persuade retailers to occupy large units.

Fashion provides a good example. Clothing retailers remain an important source of leasing demand and accounted for a substantial proportion of new openings during the second quarter of 2026. At the same time, fashion has also been responsible for numerous store closures. The apparent contradiction reflects a sector in which retailers are simultaneously opening in stronger locations and withdrawing from weaker ones. For shopping-centre owners, this means tenant demand increasingly depends on asset quality rather than simply the availability of space.

The changing role of physical retail is also forcing landlords to reconsider what consumers expect from a shopping centre. A property consisting predominantly of shops is competing not only with other malls but also with online retail. Consumers require additional reasons to visit. Food and beverage concepts, entertainment, fitness, health services and other activities are consequently becoming more important. Food halls and restaurant areas can increase the amount of time customers spend within a property, while entertainment facilities can attract visitors who might otherwise have little reason to travel to a shopping centre.

For some assets, the transformation will require considerably more than replacing individual tenants. Large units may need to be subdivided, former department stores can require entirely new uses, and circulation areas, entrances and public spaces may need redesigning. Food, entertainment and leisure components can also require expensive changes to ventilation, servicing and building infrastructure. This creates a new capital requirement across the sector. During the expansion phase of Russian retail property, investment was largely directed towards acquiring land and constructing additional shopping centres. The next cycle could direct considerably more money into rebuilding and repositioning existing properties.

That change creates opportunities as well as risks. Owners of dominant malls may be able to strengthen their competitive positions precisely because fewer large projects are being developed. A well-located centre with strong traffic and an adaptable building can potentially capture retailers that would previously have considered new developments.

Neighbourhood centres may also prove resilient. Their dependence on supermarkets, pharmacies, services, restaurants and everyday consumer requirements provides a different demand profile from destination malls heavily exposed to discretionary spending. Smaller centres integrated into densely populated residential districts can therefore remain attractive even as the wider retail market changes.

The difficult segment could be the middle of the market: shopping centres that are too large to operate primarily as convenience destinations but insufficiently strong to function as dominant regional malls. These properties may require the greatest investment to remain competitive. Some will be capable of repositioning through new tenant mixes and refurbishment, while others may need more fundamental redevelopment.

Excess retail space can potentially accommodate fitness centres, medical facilities, educational uses, entertainment, offices or other commercial activities. Where planning and site conditions permit, parts of older shopping-centre properties could eventually be redeveloped for residential or mixed-use purposes. The value of some retail assets may therefore increasingly depend on their real-estate potential rather than their existing shopping-centre income alone. Investors assessing older malls will need to consider the land, location, transport connections and redevelopment possibilities alongside conventional measures such as occupancy and rental income.

This could reshape investment strategies. A fully occupied dominant mall may represent a relatively defensive income asset. An ageing centre with declining traffic could instead become a repositioning opportunity requiring substantial capital and active management. A poorly performing property on strategically located land might ultimately be more valuable as a redevelopment site than as a shopping centre.

Russia’s reduced development pipeline therefore does not mean that the retail-property market is becoming static. It could produce precisely the opposite effect. With fewer new centres being constructed, competition increasingly shifts inside the existing stock. Landlords must compete through refurbishment, tenant selection, entertainment, food, services and the overall quality of the customer experience rather than simply through adding more retail floor space.

The outcome is likely to be greater differentiation between assets. Strong centres can become stronger because competing supply is limited. Average properties will require investment to protect their positions, while weak malls risk falling further behind unless their owners are prepared to reconsider what the buildings should become.

Russia’s next retail-property cycle may consequently be defined less by how many shopping centres it builds than by how successfully it reinvents the hundreds already operating across the country. For investors, the opportunity is shifting with it: from financing expansion to identifying which existing properties possess the location, customer base and physical flexibility required for a second life.

Source: CIJ.World Research & Analysis Team

Regional Cities Are Claiming a Bigger Role in Spain’s Logistics Market

Spain’s logistics property sector is developing beyond the familiar concentration of warehouses around Madrid and Barcelona. The country’s two largest markets remain firmly at the centre of national distribution, but activity during the first half of 2026 shows that a substantial part of occupier demand is now being captured by regional cities.

Approximately 1.5 million sqm of logistics space was taken up across Spain during the first six months of the year. Madrid and Catalonia continued to dominate, together generating more than 70% of the total. However, regional markets accounted for roughly a quarter of activity, demonstrating that occupiers increasingly require facilities across a broader geographical network.

This is not a story about Madrid and Barcelona being displaced. Their enormous consumer bases, established infrastructure and concentration of businesses make that unlikely. Instead, Spain appears to be developing a deeper second tier of logistics locations capable of supporting increasingly sophisticated distribution networks.

Valencia is particularly important to this development. Its major Mediterranean port connects the region with international trade routes, while road and rail connections provide access to domestic markets. A substantial local population and industrial base add further sources of warehouse demand.

Zaragoza has emerged for different reasons. Its location between several of Spain’s largest economic centres gives logistics operators the ability to serve Madrid, Barcelona, northern Spain and connections towards France from a single regional base. This geographical advantage has helped establish the city as one of the country’s most important inland distribution locations.

Available modern logistics space in Zaragoza has become extremely scarce. With availability reported at below 1% during the first half of 2026, companies looking for suitable facilities have relatively few immediate options. Such conditions increase the importance of the development pipeline and could support further construction where land, infrastructure and occupier demand align.

Bilbao is similarly constrained. The wider Basque market combines a strong industrial economy with port infrastructure and connections towards France and northern European markets. Availability has also been reported at exceptionally low levels, highlighting the limited choice facing occupiers requiring modern facilities.

Southern Spain is contributing another dimension to the changing logistics landscape. Málaga has experienced significant population and economic growth, expanding the consumer base that distribution networks must serve. Although the city is more commonly associated with tourism, residential development and technology businesses, its growth also creates demand for the physical infrastructure required to move food, retail goods, parcels and other products through the metropolitan area.

Seville offers access to another of Spain’s largest urban populations and provides an important distribution location for western Andalusia. The potential for more competitive development economics than in Spain’s largest logistics markets can make the region attractive for occupiers requiring larger facilities, provided transport connections and delivery times fit their operational requirements.

The forces driving these regional markets are therefore different. Valencia and Bilbao benefit from their ports, while Zaragoza gains from its strategic inland position. Málaga and Seville serve large southern population centres. Manufacturing supports demand in several northern and inland markets, while international trade, e-commerce and increasingly complex supply chains are creating requirements for facilities across a wider range of locations.

The expansion of online retail reinforces this trend. Distribution networks increasingly require several types of property rather than a single national warehouse. Large distribution centres can be complemented by regional facilities and smaller buildings positioned closer to major concentrations of consumers.

At the same time, finding suitable modern logistics space in some established markets remains difficult. Catalonia recorded low availability during the first half of 2026, illustrating the limited choice facing occupiers around one of Spain’s most important logistics centres. Suitable land, development times and competition for well-connected sites can further restrict the ability of supply to respond quickly.

Regional markets could benefit from those constraints, but the investment case requires more than simply identifying cities with low vacancy. A regional warehouse market may have very little available space because demand is strong, because development has historically been limited, or because the overall market itself is relatively small. Those conditions have very different implications for investors.

The depth of the occupier base therefore becomes crucial. Investors need to understand how many companies could realistically replace an existing tenant, how quickly space can be re-let and whether future development could change the supply-demand balance.

This is particularly important in smaller markets. Several large speculative developments arriving simultaneously could materially increase available space and weaken landlords’ negotiating position much faster than would be possible in Madrid or Barcelona.

Conversely, regional cities combining limited existing supply with strong infrastructure, population growth, industrial activity and barriers to new development could offer attractive conditions for rental growth. That makes Zaragoza and Bilbao particularly interesting markets to watch, while Valencia’s scale and port infrastructure give it a different institutional investment profile. Málaga and Seville provide exposure to the expansion of southern Spain’s consumer and business economies.

Madrid and Barcelona will nevertheless remain fundamental to Spain’s logistics system. Madrid provides unmatched access to the national market, while Barcelona combines a large consumer base with manufacturing, international trade and proximity to continental Europe.

The emerging opportunity is therefore complementary rather than competitive. Spain is developing a logistics network in which regional cities can perform increasingly specialised roles alongside the two dominant hubs. For occupiers, that creates more options for designing distribution networks. For developers, it opens additional locations where modern warehouse stock may be required.

For investors, the challenge will be distinguishing regional markets experiencing lasting structural demand from those simply benefiting from temporary shortages. That distinction could determine where the strongest opportunities in Spain’s next logistics investment cycle emerge.

Source: CIJ.World Research & Analysis Team

Budapest’s Office Numbers Suggest Choice, but the Best Buildings Tell a Different Story

Budapest entered the second half of 2026 with what appears to be a comfortable supply of office space. Around 12.2% of the city’s modern stock was vacant at the end of June, a level that would normally give companies considerable negotiating power and plenty of options when considering a move.

Look more closely, however, and the picture becomes considerably more complicated. Budapest had approximately 4.47 million sqm of modern office accommodation at the end of the second quarter. Yet the available space is distributed unevenly between locations, building generations and quality levels. For a company simply looking for an office, there is substantial choice. For a large employer seeking several thousand square metres in one modern, efficient and well-connected building, the selection can be much narrower.

That distinction is becoming one of the most important features of Budapest’s office market. The city added no significant new office buildings during Q2. Instead, almost 9,000 sqm disappeared from the measured inventory as a property moved to another use. At the same time, the amount of speculative development expected over the next few years remains small compared with previous construction cycles.

Around 110,000 sqm of speculative offices are currently expected to reach the Budapest market by the end of 2028, according to Colliers. Most of that future supply is concentrated around the Váci Corridor. This creates both a timing problem and a geographical one. A company requiring a large office cannot necessarily wait several years for a development to be completed. Nor will every occupier want to relocate to the Váci Corridor simply because that is where much of the future construction is concentrated.

The differences between Budapest’s office districts are already substantial. Vacancy in Central Buda was around 6.4% at the end of Q2, while North Buda stood at approximately 8.9%. At the other end of the market, vacancy in peripheral locations was above 20%. A single Budapest vacancy rate therefore combines districts experiencing very different conditions.

The division becomes even more pronounced when building quality is considered. Older offices can contribute thousands of square metres to available supply without necessarily competing directly with newer properties. International companies increasingly assess buildings according to energy consumption, operating costs, transport connections, workplace facilities and environmental performance as well as rent. For some companies, these considerations are corporate requirements rather than optional improvements.

The result is that two empty office buildings of similar size can have very different prospects. A recently completed or extensively upgraded property close to public transport can attract companies that would not seriously consider an ageing building elsewhere, even if the older property offers substantially cheaper rent. Evidence of this divergence was already visible before Q2, with buildings offering stronger environmental credentials, newer properties and higher-quality offices recording lower vacancy than the Budapest market as a whole.

The development slowdown could intensify that difference. Budapest is no longer receiving the regular flow of speculative office projects that characterised earlier periods. Developers now face higher construction and financing costs, while occupiers have become more cautious about committing to new premises. Starting a large building without substantial advance leasing has consequently become a more difficult proposition.

That caution can eventually produce its own shortage. If developers wait for tenants before beginning construction and tenants wait for buildings before committing, the supply of newly completed space can remain limited even as demand for the best accommodation gradually accumulates.

Large companies are particularly exposed to this problem because they need more than an empty floor. A major occupier may require several floors within one property, suitable floorplates, sufficient parking, strong public transport, modern mechanical systems, employee amenities and environmental certification. Once those requirements are applied simultaneously, a city with hundreds of thousands of vacant square metres can suddenly offer surprisingly few realistic choices.

The leasing figures from Q2 underline the cautious mood. Total demand reached approximately 84,800 sqm during the quarter, around 29% below the corresponding period of 2025. Renewals accounted for approximately 62% of activity, while new leases represented about 27%. Net take-up fell to around 31,900 sqm, approximately 36% below the previous year’s level.

Companies are therefore showing a strong preference for remaining where they are. Economic uncertainty and relocation costs are undoubtedly part of the explanation. Hybrid working has also changed the way companies calculate their office requirements. But limited availability of clearly superior alternatives may increasingly contribute to decisions to extend existing leases rather than relocate.

For landlords, the implications differ dramatically according to the building they own. Modern properties with good transport access, efficient systems and sizeable contiguous vacancies could find themselves in an increasingly favourable position. The overall market may still show double-digit vacancy while competition for individual buildings becomes considerably stronger.

Older offices face the opposite challenge. Some can remain competitive by offering lower occupancy costs. Others will require significant investment if owners want to attract companies whose property strategies now include energy efficiency and sustainability requirements. The economics of refurbishment will therefore become increasingly important. Owners must decide whether investing in building systems, energy performance, common areas and amenities can produce rents capable of justifying the expenditure.

Where that calculation no longer works, alternative uses may become more attractive. The reduction in Budapest’s office inventory during Q2 demonstrates that buildings can leave the office market entirely when owners identify better opportunities elsewhere.

There is another important detail behind Budapest’s 12.2% vacancy figure. Within speculative office buildings, where companies actually compete for commercially available accommodation, vacancy was closer to 15.7%. Rather than weakening the argument, this makes the market’s emerging division even more striking.

Budapest can simultaneously have a large amount of commercially vacant accommodation and a relatively limited selection for occupiers seeking the highest specifications. The problem is therefore not a straightforward shortage of square metres. It is a mismatch between what exists and what companies increasingly want.

That mismatch could shape the next phase of Budapest’s office cycle. Older properties may experience prolonged vacancy and pressure to modernise, while the strongest buildings maintain occupancy and rental resilience. Developers could become increasingly dependent on advance tenant commitments, and major occupiers may need to begin property searches much earlier than they did in previous cycles.

The most useful measure of Budapest’s office market may consequently no longer be the citywide vacancy rate. The figures that matter increasingly are how many large blocks are available, where they are located, how modern those buildings are and whether they satisfy the operational and environmental requirements of major employers.

Budapest has plenty of office space available. What it may not have for much longer is enough of the right space in the right buildings.

Source: CIJ.World Research & Analysis Team

From Piraeus to Thriasio: The Inland Property Corridor Behind Greece’s Logistics Growth

The Port of Piraeus may sit on the waterfront, but much of the property required to support the movement of goods through Greece is located kilometres inland. Across western Attica, a network of warehouses, distribution centres and industrial properties has developed around the connections between the port, Athens and Greece’s principal road infrastructure. The Thriasio Plain has become central to this geography, with Aspropyrgos, Magoula, Mandra and surrounding locations containing the country’s largest concentration of logistics activity and benefiting from access to the Athens metropolitan market, Piraeus and the motorway system connecting the capital with the rest of Greece.

Demand for modern facilities remains strong. Market research published during 2026 places rents for prime logistics properties in the Thriasio area at approximately €5.50 to €6.00 per sq m per month, while availability of high-quality buildings remains limited. Other research on the Greek warehouse market has produced a similar rental range for newly developed properties. The figures reveal an important distinction within the sector. Greece has substantial industrial and warehouse stock, but much of it was constructed for an earlier generation of occupiers. Companies seeking large distribution facilities increasingly require buildings capable of handling higher volumes, more intensive vehicle movements and increasingly sophisticated operational systems.

This creates a premium for modern property. Large occupiers typically need efficient loading areas, appropriate building heights, fire-protection systems, energy-efficient equipment and sufficient external space for vehicle circulation. Older warehouses can remain useful, but location alone does not guarantee that they meet these requirements. The result is growing investment in purpose-built facilities. Around 800,000 sq m of new logistics space has been projected for delivery across Greece during 2026, with investment associated with the development pipeline estimated at more than €800 million. A significant proportion of this activity is concentrated around the country’s established logistics locations, particularly western Attica.

Aspropyrgos demonstrates how the market is changing. Large distribution centres occupied by major Greek companies are increasingly becoming institutional-scale property assets. The development of facilities measured in tens of thousands of square metres represents a considerable shift from the fragmented, smaller-scale industrial property historically found across parts of Greece.

Piraeus is an important reason why this western corridor matters, although it is not the only one. The port provides Greece with a major connection to international maritime trade. From there, surrounding transport infrastructure provides onward connections towards Athens, the rest of Greece and the wider Balkan region. Properties positioned within this network can therefore serve both imported goods and domestic distribution.

At the same time, much of the demand for logistics property would exist even without growth in port traffic. Supermarkets require distribution centres, retailers need warehouses, manufacturers need storage and production facilities, third-party logistics operators require space for multiple customers, while e-commerce has increased the importance of rapid access to the Athens metropolitan population. Western Attica sits at the intersection of these different requirements.

This is why measuring the influence of Piraeus simply by distance from the port can be misleading. A warehouse does not necessarily become less attractive because it is several kilometres farther inland. What matters is how efficiently trucks can reach the port, Athens and the national motorway network. Travel time can therefore be more important than geographical distance.

A site located farther from Piraeus but immediately beside an efficient motorway connection may offer better logistics economics than a closer property affected by congestion or poor local roads. Land cost, development potential, labour availability and the ability to accommodate large vehicles also influence location decisions. These factors have helped create a wider property economy across the Thriasio Plain rather than an industrial cluster concentrated immediately beside the port.

The next challenge is land. Modern logistics buildings require substantial sites. In addition to the warehouse itself, developers need space for loading areas, truck movements, parking, access roads and other operational infrastructure. Suitable plots in established logistics areas are therefore considerably more limited than the total amount of nominally industrial land might suggest. As the strongest locations become more intensively developed, competition for appropriate sites can affect acquisition prices and development economics.

That raises an important question about how far the established logistics geography can expand. Developers seeking larger or less expensive plots may increasingly examine locations farther from the traditional core. Moving outward can reduce land costs and provide opportunities to construct larger facilities, but every additional kilometre can also increase transport costs and journey times. The next generation of Greek logistics locations will therefore depend on finding the point where these competing factors remain in balance.

Motorway access will be critical. Sites capable of providing efficient connections to Piraeus, Athens and the national distribution network could become more attractive even when they sit outside today’s most established logistics zones. Infrastructure improvements can change this calculation further. A new junction, upgraded road or improved freight connection can alter travel times and effectively bring previously peripheral land closer to the logistics market. This means infrastructure can create property value well beyond the immediate area where the investment takes place.

The same process can broaden the types of property required across the corridor. Conventional warehouses are only one component of modern supply chains. Temperature-controlled storage, specialised distribution facilities, light industrial premises and buildings supporting food, pharmaceutical and manufacturing businesses can all form part of the wider logistics economy.

For investors, building specification is becoming as important as location. An older warehouse in an established part of Aspropyrgos may benefit from excellent connectivity but still require substantial capital expenditure. A newer facility farther away could offer lower energy consumption, greater operational efficiency and better expansion possibilities. The investment decision therefore increasingly involves comparing the strength of the location with the quality and future competitiveness of the building itself.

This evolution is also changing the type of capital capable of entering Greek industrial property. Historically, much of the sector consisted of privately held or owner-occupied buildings that were difficult to package as conventional institutional investments. Larger modern facilities leased to established companies create a different proposition, offering scale, longer-term income and assets that are easier for professional property investors to assess.

If development continues, the institutional logistics market could consequently expand even without dramatic changes in port throughput. That distinction is important. The property story surrounding Piraeus should not depend on an assumption of continually rising container traffic. The port already provides a major piece of infrastructure around which international trade, domestic distribution and the Athens consumption market interact.

The more significant property question is what happens as that network matures. Aspropyrgos and the Thriasio Plain have established themselves as the centre of Greek logistics property. Scarcity of modern buildings supports development, while the requirement for larger sites creates pressure to consider new locations. Some of those locations will prove too distant or insufficiently connected to compete. Others could eventually become extensions of the existing western Attica logistics corridor.

Piraeus therefore represents more than a collection of terminals beside the sea. Together with Athens’ enormous consumer market and Greece’s transport network, it helps anchor an industrial and logistics property system stretching progressively inland. For investors, the opportunity lies in understanding where that influence begins to weaken.

The next major Greek logistics market may not emerge beside the port. It may emerge at the point farther inland where cheaper land, modern buildings and motorway connectivity still outweigh the additional distance from Piraeus.

Source: CIJ.World Research & Analysis Team

Italy’s Rarest Hotels Are Becoming Global Investment Prizes

Italy’s hotel investment market is attracting a different kind of attention in 2026. The country’s strength as a tourism destination remains important, but international buyers are increasingly looking beyond visitor growth and hotel operating performance. For some investors, the attraction lies in owning exceptional real estate in locations where comparable properties may rarely, if ever, become available. Hotel transactions accelerated during the first half of the year, with one major property adviser recording approximately €838 million of investment during the second quarter alone and around €1.4 billion for H1. Other market measures use narrower definitions and produce lower totals, but they point in the same direction: substantial capital continues to target Italian hospitality, while redevelopment and conversion projects are adding another layer of activity.

One of the more significant changes is the growing interest from Middle Eastern investors. Buyers from the region are examining opportunities both in Italy’s leading cities and in its internationally recognised leisure destinations. Their arrival expands a buyer pool that already includes hotel groups, institutional investors, private-equity firms, family offices and wealthy private investors. The importance of this shift lies not simply in where the capital originates, but in what different investors are trying to buy. Italy offers hotels that can be viewed simultaneously as operating businesses and scarce pieces of real estate. A luxury property overlooking Lake Como, occupying a historic building in Rome or positioned beside the water in Venice has characteristics that cannot easily be recreated through conventional development.

That scarcity can change the way a property is valued. A traditional hotel investor may concentrate on room revenue, occupancy, operating margins, renovation costs and the price at which the asset could eventually be sold. A long-term private investor can consider those same factors while also placing significant value on controlling a unique property in a location expected to remain globally desirable for decades. This does not remove the importance of hotel performance, but it can extend the investment horizon far beyond a conventional property cycle.

Rome illustrates the combination particularly well. The city attracts international leisure visitors, religious tourism, government activity, business travel and major events, while its historic centre places substantial physical and planning constraints on new development. A large luxury hotel in a prime location is therefore more than an accommodation business. It represents control of a sizeable piece of central Rome that may be extremely difficult to reproduce. Milan offers a different investment proposition, with demand supported by fashion, design, finance, exhibitions, corporate activity and international events as well as leisure travel. Properties in the strongest locations can also benefit from competition among international hotel brands seeking greater representation in the city.

Venice takes scarcity to another level. The physical limitations of the city, its historic building stock and restrictions surrounding development mean that opportunities to create genuinely new luxury supply are inherently limited. Existing hotels in exceptional locations can consequently possess a form of scarcity value extending beyond their immediate operating performance. Florence shares some of these characteristics. Historic buildings in central locations can be repositioned as high-end hotels, but they also attract competing demand from residential and other hospitality uses. Investors seeking substantial luxury assets may therefore have to acquire buildings requiring extensive renovation rather than wait for completed hotels to reach the market.

Italy’s resort destinations make the long-term ownership argument even more compelling. Lake Como has become one of the clearest examples of a hospitality market where location itself is a major component of value. Large waterfront properties suitable for luxury hotels are inherently limited, while international demand for the destination has strengthened its global profile. The Amalfi Coast has similar characteristics but even greater physical constraints. Its geography limits the amount of developable land, while environmental and planning considerations make large new projects difficult. Existing properties combining scale, views and access to the most desirable locations can therefore attract interest far beyond what might normally be expected from their number of rooms.

Sardinia offers another model. Its highest-end coastal destinations can accommodate larger resort properties, attracting investors interested in luxury leisure platforms rather than individual urban hotels. Seasonality remains an important consideration, but scarcity of prime coastal locations and the strength of international luxury demand can make the best properties attractive to investors with long holding periods. Tuscany broadens the definition of hospitality investment further, with hotels sometimes forming part of larger estates combining accommodation with vineyards, restaurants, wellness facilities and extensive land. The underlying property can become as important to the investment proposition as the rooms themselves, particularly for private capital seeking both financial exposure and ownership of distinctive European real estate.

Italian Alpine markets provide another category. Mountain hospitality has traditionally depended heavily on winter demand, but investment increasingly considers wellness, summer tourism and the possibility of extending the operating season. The strongest resorts can offer scarcity similar to coastal destinations, although performance and development potential vary substantially between individual locations. Taken together, these markets give Italy an unusually broad hospitality investment landscape. Global capital can choose between business hotels in Milan, historic properties in Rome, Venice and Florence, lakeside assets, Mediterranean resorts, countryside estates and Alpine destinations without leaving the country.

International hotel brands are an important part of this evolution. A globally recognised operator can increase a property’s international visibility, provide access to reservation networks and loyalty programmes and support premium positioning. For an owner, the right management or franchise arrangement can transform a historic building into an internationally marketable hospitality asset while ownership of the underlying real estate remains separate. This creates opportunities for investors that want to own the property without operating the hotel themselves. Long-term capital can control the real estate while an international hospitality company manages the guest experience, a structure that can be particularly attractive for family offices, sovereign-linked capital and other investors seeking exposure to trophy assets without developing their own hotel operating organisations.

Renovation is consequently becoming an important part of the investment market. Many of Italy’s most desirable potential hotels are older properties requiring extensive work before they can compete at the highest international level. Buyers may need to invest heavily in rooms, restaurants, wellness areas, building services and energy efficiency while preserving historically significant architectural features. Conversions provide another route into the sector. During the first half of 2026, substantial capital was associated with projects transforming properties originally intended for other uses into hotels. In cities where existing luxury hotels rarely trade, acquiring an office, institutional building or historic property can provide an alternative means of creating a hospitality asset.

Such projects can be expensive and complicated. Historic protections, planning requirements and structural limitations can substantially increase construction costs. Investors must therefore decide whether the finished hotel can generate enough income and capital value to justify both the acquisition price and the redevelopment programme. This is particularly important as competition for suitable properties increases. A building capable of becoming a luxury hotel may also be attractive for residential development, serviced apartments or other uses. Hotel investors are therefore not competing only with each other but can find themselves bidding against buyers using completely different assumptions about the future value of the same property.

Scarcity can nevertheless support unusually long investment horizons. Some international investors may have little reason to sell an exceptional property simply because a conventional investment cycle has ended. If the hotel generates income, the location remains desirable and comparable properties remain difficult to acquire, ownership itself can become strategically valuable. That distinguishes trophy hotels from much of commercial real estate. An office building can become technologically outdated, a warehouse can eventually be replaced elsewhere and a shopping centre can lose its competitive position. A historic hotel overlooking an internationally recognised lake, coastline or city landmark derives part of its value from something that cannot be manufactured: its precise location.

This does not mean Italian hotels are becoming passive stores of capital. Hospitality remains an operationally intensive business. Poor management, excessive costs, weak positioning or inappropriate branding can undermine even an exceptional property, and investors still need to generate sufficient returns to justify substantial acquisition and renovation costs. Nor does the growing interest from Middle Eastern buyers mean they dominate Italy’s hotel transactions. Institutional funds, hotel companies, private equity and European investors remain active. The more significant development is that the range of buyers is widening, bringing different investment horizons and different definitions of value into the same market.

That can influence pricing. An investor planning to improve a hotel and sell it within several years calculates value differently from a family office or long-duration investor willing to hold an exceptional property for decades. When both compete for the same scarce asset, the buyer with the longer horizon may be prepared to accept a lower initial return because future scarcity forms part of the investment case. Italy may therefore be developing two overlapping hotel investment markets. One remains focused on improving operations, repositioning properties, increasing profitability and eventually selling. The other is increasingly concerned with acquiring real estate that global investors may want to retain for generations.

Rome, Milan, Venice and Florence provide one side of that opportunity, combining international demand with difficult-to-replicate urban property. Lake Como, Sardinia, the Amalfi Coast, Tuscany and selected Alpine destinations provide another, where geography and development constraints can make the best sites exceptionally scarce. The next phase of Italian hotel investment may consequently be determined as much by ownership strategy as by tourism growth. Rising visitor numbers can improve hotel earnings, but they do not fully explain why global capital is interested in controlling particular Italian properties.

For the rarest hotels, the building, land and location are becoming inseparable from the operating business. Investors are not simply buying rooms that generate nightly income. They are acquiring pieces of Italy that may never be available in quite the same form again. If that approach becomes more widespread, Italy’s most exceptional hotels could increasingly behave like other global trophy assets, valued not only for what they earn today but for their scarcity, international recognition and ability to preserve value across generations.

Source: CIJ.World Research & Analysis Team

England’s Pandemic Warehouse Boom Faces Its First Serious Investment Test

The enormous logistics expansion that transformed England’s property market during the pandemic is entering a different stage. Warehouses developed, leased and acquired during the extraordinary conditions of 2020 to 2022 are now operating in a market with higher borrowing costs, more selective occupiers and considerably less speculative development. This does not mean England is approaching a wave of empty pandemic warehouses. Nor are most leases agreed during the boom suddenly reaching expiry. Many major distribution centres were leased for ten, fifteen or even twenty years. The more immediate test is financial and operational: whether the rents, valuations, tenant requirements and financing assumptions made during the pandemic remain sustainable under very different economic conditions.

The scale of what happened between 2020 and 2022 explains why the question matters. UK warehouse demand exceeded 50 million sq ft during 2020 as retailers, logistics operators and online businesses raced to increase distribution capacity. Activity remained exceptionally strong through 2021 and 2022, while developers responded with one of the largest construction waves the sector had experienced. Approximately 37 million sq ft of logistics accommodation was completed during 2022 alone. Industrial land values surged as developers competed for sites, while investors pushed warehouse yields to exceptionally low levels. At the most aggressive point in the market, some long-income logistics properties were changing hands at yields close to 3%.

Those prices reflected expectations that several pandemic trends would continue. Online retail would keep expanding rapidly, distribution space would remain scarce, warehouse rents would continue increasing and institutional investors would maintain intense competition for logistics assets. Most importantly, cheap debt would remain available. By 2026, some of those assumptions have changed significantly.

Online shopping remains structurally important, but the exceptional growth recorded during lockdowns has not continued at the same rate. Retailers have reviewed their distribution networks, some businesses have returned surplus accommodation and investors face borrowing costs considerably above those available during the boom. Buyers also now demand higher returns from property acquisitions. Yet the occupational market has proved much more resilient than a simple post-pandemic correction might suggest.

During the second quarter of 2026, logistics take-up remained healthy, with different market surveys recording approximately 10 million to 12 million sq ft of activity depending on the buildings included. The number of transactions also increased, while overall available space declined during the quarter in some datasets. The significance is clear. England does not appear to have constructed an enormous portfolio of warehouses for which there is no longer any demand. Instead, the market is becoming increasingly selective about which warehouses it wants.

Modern accommodation is capturing a disproportionately large share of leasing activity. More than half of logistics space taken during the first half of 2026 was high-quality accommodation in one major market survey, considerably above its historical share. This changes the way pandemic-era development should be viewed. A distribution centre completed in 2021 is only five years old in 2026. If it was built to a high standard, it can still rank among the best logistics accommodation available within its market.

Age alone therefore tells investors relatively little. The more important questions concern what the building can actually do. Modern occupiers increasingly require substantial clear internal heights, efficient loading areas, large yards, appropriate floor strength, good insulation, strong environmental performance and layouts capable of supporting increasingly automated operations.

Electrical capacity is also becoming much more important. Warehouses are consuming greater quantities of electricity as occupiers introduce automated storage, robotics, conveyor systems, refrigeration, vehicle charging and other technology. Distribution centres may also eventually need to support much larger fleets of electric commercial vehicles. A warehouse can therefore be physically modern while becoming operationally constrained by its electricity connection.

This creates a new form of logistics obsolescence. The buildings most capable of adapting to technological and energy requirements should retain their competitiveness, while properties requiring expensive upgrades could struggle even if they were constructed relatively recently. The growing divide between modern and second-hand accommodation is already visible.

Some of the increase in warehouse availability over recent years has come not from newly constructed speculative buildings but from occupiers returning older or surplus facilities as they consolidate distribution networks or move into better accommodation. This is particularly important when examining the pandemic leasing boom. During 2020 and 2021, warehouse availability became so restricted that occupiers sometimes prioritised securing capacity over finding the perfect property.

The negotiating environment is different in 2026. Businesses generally have more choice. Where two buildings can serve the same location, an occupier may prefer the property offering lower energy costs, stronger environmental credentials, better loading, more power and greater operational efficiency. The headline rent may not be the deciding factor if a newer building reduces the total cost of operating the distribution network.

That could create an increasingly pronounced two-tier market. Modern warehouses with strong specifications may continue to experience rental growth and relatively low vacancy. Secondary buildings could require incentives, capital expenditure or rental adjustments to remain competitive.

Location adds another layer to the divide. The Midlands remain particularly important because of England’s geography. Distribution centres around the M1, M6, M42 and related motorway networks can reach a large proportion of the national population within a relatively short driving time. Activity during the first half of 2026 reinforces that advantage. The East and West Midlands captured a substantial proportion of major logistics transactions, with particularly strong leasing recorded in the East Midlands during the second quarter.

For large national distribution operations, the ability to reach consumers efficiently remains difficult to replicate. Warehouses within the established Midlands logistics corridors should therefore retain strategic importance even as individual occupiers change. However, location alone cannot protect every property.

A warehouse constructed around the highly specific requirements of one retailer may be difficult to relet even within a strong logistics market. Automated systems, unusual internal configurations, insufficient yard space or specialist infrastructure can reduce the number of potential replacement tenants. The safest logistics assets are increasingly those capable of serving several different categories of occupier.

This is particularly relevant because warehouse demand has become more diversified since the pandemic. Third-party logistics companies remain major users of space. Retail and e-commerce businesses continue expanding selected networks, while Asian online retailers have become increasingly visible within the UK logistics market. Manufacturing, food distribution, defence-related activity and businesses seeking greater supply-chain resilience are also contributing to demand.

The future of England’s logistics market therefore depends on considerably more than the growth rate of online shopping. A flexible building in a strong location can potentially move between retailers, logistics operators, manufacturers and distributors over its lifetime. A highly specialised building dependent on one particular operating model carries much greater risk when the original occupier leaves.

Tenant quality will consequently become more important. During the pandemic, rapid expansion sometimes encouraged businesses to secure far more accommodation than they had previously occupied. Some later discovered that their networks had become oversized once consumer behaviour normalised. Landlords are now discovering that a modern building and a long lease do not automatically eliminate risk. If the tenant no longer requires the property, subleasing, assignment or eventual consolidation can introduce competing second-hand space into the market.

For lenders, the financial strength of the occupier becomes particularly important when refinancing approaches. This is where the real pandemic-era test is likely to emerge.

Many logistics properties acquired between 2020 and 2022 were purchased when interest rates were exceptionally low and investor competition was intense. Prime warehouse yields fell towards levels rarely seen historically, particularly for buildings with long leases and inflation-linked income. The investment market of 2026 looks very different.

Prime logistics yields have moved to around 5% or slightly above in several market assessments. Borrowing costs have also risen substantially, with the combined cost of benchmark rates and lender margins making debt considerably more expensive than during the pandemic. That shift can have a dramatic effect on property values.

A warehouse can be performing perfectly well operationally. Its tenant can be paying rent on time and its rent may even have increased substantially since acquisition. Yet the property’s investment value can still be below what an owner expected because today’s buyer requires a higher return from the income. This creates one of the central paradoxes of the logistics reset. Rental performance can remain positive while capital performance disappoints.

Rental growth provides some protection. Industrial rents continued rising during the second quarter of 2026, with annual growth of several percentage points recorded across large distribution properties. For investors that acquired warehouses with rents significantly below today’s market levels, this growth can offset part of the valuation impact created by higher yields. But the protection is not uniform.

The greatest refinancing pressure is likely to fall on assets that combine several vulnerabilities: an acquisition near the peak of 2021 or early 2022 pricing, relatively high leverage, a weaker tenant, limited rental growth and a building requiring additional investment. If the property is also located in a market with substantial second-hand availability, refinancing becomes considerably more complicated.

An investor that acquired a prime warehouse at an aggressive yield but used conservative debt and secured a financially strong tenant may still have significant protection. An owner that paid a similar price for a secondary property using substantial leverage has much less room for error. This distinction is likely to become increasingly visible as pandemic-era loans mature.

Debt remains available for logistics property because lenders continue to regard the sector as fundamentally attractive. But financing terms increasingly reflect the quality of the underlying asset. A modern warehouse occupied by a financially strong tenant on a long lease in a major logistics location can attract significant lender interest. A secondary property facing a potential vacancy or major capital expenditure may require more equity, higher interest margins or alternative financing.

The reset could therefore create opportunities as well as problems. Investors with strong balance sheets may eventually acquire assets from owners that cannot refinance them comfortably. Some properties could be purchased below their pandemic-era values and then upgraded, relet or repositioned. This would represent a very different logistics investment strategy from that of 2020 and 2021. During the boom, investors competed primarily to own warehouses. The next phase could reward investors capable of improving them.

Development activity has already adjusted to the new environment, reducing the risk of a severe oversupply problem. Logistics completions peaked around the pandemic development wave and subsequently declined. Speculative construction has fallen particularly sharply, with only a fraction of the accommodation delivered during the peak years expected to complete speculatively during 2026.

Developers have become more cautious, while a greater proportion of major projects require an occupier commitment before construction proceeds. This discipline provides an important support for existing property values. If developers had continued building at the pace seen during 2021 and 2022 while occupier demand normalised, England could now be facing a serious warehouse surplus. Instead, new supply has contracted while leasing demand remains comparatively healthy.

The investment question therefore becomes much more granular. The strongest pandemic-era warehouses may turn out to be excellent long-term assets. Buildings completed between 2020 and 2022 can combine modern specifications, good environmental performance and locations where new development has subsequently become harder or more expensive. Those properties may benefit from today’s preference for quality.

The weaker part of the pandemic development wave could face a different future. Some buildings were created rapidly in response to exceptional occupier demand. Others were acquired at prices that assumed years of aggressive rental growth. Certain warehouses were designed around highly specialised tenant requirements. Some may eventually require substantial investment in power, energy efficiency or operational infrastructure.

The distinction will become increasingly important as leases progress, break options approach and financing arrangements mature. This means the pandemic warehouse boom should not be judged simply by construction date. The important distinction is between adaptable real estate and buildings whose value depends heavily on one occupier, one use or one financial assumption.

England’s logistics market is therefore entering a period of price discovery rather than a post-pandemic collapse. The extraordinary conditions that produced the 2020–2022 warehouse boom have disappeared, but the fundamental requirement for distribution space has not. Goods still need to be stored, processed and delivered. Retailers still require national networks. Manufacturers need inventory. Logistics companies need hubs. New international occupiers are entering the market, while supply-chain resilience is creating additional requirements.

What has changed is the price investors are prepared to pay for that demand and the standards occupiers expect from the buildings they use. The warehouses most likely to hold their value will combine strategic location, adaptable design, strong power availability, efficient operating characteristics and credible tenants. The properties most exposed will be those bought at aggressive pandemic valuations without enough rental growth or operational flexibility to compensate for today’s higher financing costs.

The great warehouse reset is therefore not primarily about whether England built too much logistics space during the pandemic. It is about whether investors paid the right price for the right buildings.

The answer will increasingly emerge as debt is refinanced, occupiers reconsider their networks and second-hand properties compete against modern alternatives. Some pandemic warehouses may prove considerably more resilient than their owners expected. Others may reveal that the extraordinary demand of 2020 and 2021 temporarily disguised weaknesses that become much harder to ignore in a normal market.

For investors, that separation between the two could define the next stage of England’s logistics property cycle.

Source: CIJ.World UK Research & Analysis Team

Vienna’s Logistics Recovery Is Running Ahead of New Construction

Vienna’s logistics property market is beginning to move in a different direction after a subdued period. Available warehouse space is declining, occupier activity has recovered from the weaker levels seen during 2025 and developers remain cautious about adding substantial speculative supply. Greater Vienna is not experiencing a logistics shortage today, but the relationship between demand and construction is beginning to change.

Vacancy across modern logistics and industrial properties in Greater Vienna declined to around 9% during the first half of 2026. That still represents a meaningful amount of available space and gives companies looking for warehouses a degree of choice. More important for the future market, however, is that vacancy has started moving down rather than continuing to increase. Occupier activity has strengthened at the same time. Around 108,000 square metres of logistics space was taken up in Greater Vienna during the first six months of 2026 when owner-occupied developments are included. Approximately 31,000 square metres of that activity related to owner-occupier projects, meaning the headline figure should not be interpreted entirely as conventional leasing. Nevertheless, the overall direction suggests companies are absorbing space again after the particularly subdued market of 2025.

Development has not responded with an equivalent increase. Approximately 70,600 square metres of logistics property was completed across Austria during the first half of 2026, with roughly 90% concentrated in Greater Vienna. New supply was substantially lower than during the comparable period a year earlier, demonstrating how cautious developers have become about launching additional projects. The explanation is largely economic. Construction remains expensive compared with the environment that existed before the inflation and interest-rate shock, while financing conditions continue to demand greater discipline from developers. Building a warehouse without knowing who will occupy it means carrying leasing and financing risk until tenants are secured.

Projects supported by committed occupiers therefore present a stronger development and financing case than purely speculative schemes. Developers can still build, but the threshold for committing capital has become higher. This caution has helped prevent Greater Vienna from accumulating excessive new supply, but it could also create the conditions for a tighter market later if demand continues recovering.

The timing of development is crucial. A logistics building cannot be delivered immediately when vacancy begins falling. Land must be secured, designs prepared, permissions obtained, financing arranged and construction completed. Even after developers decide that market conditions justify another project, there is an unavoidable delay before the resulting space becomes available. That creates the possibility of a period in which existing warehouses are absorbed faster than replacements can be delivered.

At around 9%, Greater Vienna’s vacancy rate suggests this is not an immediate problem. But the headline figure does not reveal whether every available property is suitable for the companies currently looking for space. Warehouse requirements have become increasingly specific. Location, motorway access, building height, loading facilities, yard configuration, energy performance and the ability to accommodate automation can all influence whether a property works for an occupier. Older buildings may technically be available while failing to meet the requirements of companies seeking modern distribution facilities.

The amount of genuinely competitive space can therefore tighten before overall vacancy reaches particularly low levels. This distinction matters because the Austrian logistics market contains buildings from very different generations. Modern facilities can offer efficient layouts, improved energy performance and infrastructure designed for contemporary distribution operations. Older industrial buildings may remain functional but become progressively less competitive as occupier requirements change. If demand continues recovering, pressure is therefore unlikely to appear evenly across the market. Modern warehouses in established logistics locations could become more difficult to secure while older or less efficiently located properties remain available.

Greater Vienna’s location adds another dimension to the investment case. The region sits close to Slovakia, Hungary and the Czech Republic and occupies an important position within Central Europe’s transport network. This makes it relevant not only to Austrian distribution but also to companies operating supply chains across several countries. A stronger regional economy could consequently create additional demand for logistics space, although the improvement recorded during the first half of 2026 should not yet be treated as proof of a sustained long-term expansion.

For investors, the changing balance between supply and demand makes existing modern logistics assets increasingly interesting. An occupied warehouse offers immediate income while avoiding the construction and initial leasing risks associated with development. If vacancy continues falling and little competing space is delivered, well-located modern assets could benefit from improving rental conditions. Development offers a different opportunity. Investors prepared to take construction risk could benefit if additional space is eventually required, particularly where sites already have planning certainty and strong transport connections. The difficulty is determining when to begin.

Starting too early exposes developers to the possibility that the recovery weakens and completed warehouses remain empty. Starting too late creates the opposite problem: occupiers require space before developers are able to provide it. That tension explains why pre-leasing is becoming so important. A tenant commitment reduces uncertainty and allows developers to proceed without relying entirely on forecasts about future demand. It also means that some projects entering construction may already be largely unavailable to other companies before they are completed.

Owner-occupied development creates a similar effect. A warehouse constructed for the company that will use it adds to Austria’s total building stock but does not necessarily increase the amount of space available to tenants searching the open market. This makes headline construction figures potentially misleading when assessing future availability. What matters to occupiers is not simply how many square metres are being built, but how much of that space will actually be available for lease when completed.

Land availability could become another constraint if the market tightens. Logistics developers compete for suitable sites with industrial users and, in certain locations, other property uses. Sites with motorway connections, appropriate planning and sufficient infrastructure are not unlimited. Development economics must also absorb the cost of land alongside construction and financing. If those costs remain high, rents may need to increase before speculative projects produce returns sufficient to justify the risk.

For the moment, Greater Vienna appears to be moving towards a healthier balance rather than a shortage. Available space accumulated during the weaker phase of the market has begun to decline, while occupier activity has strengthened. At the same time, restrained construction reduces the danger of another large wave of speculative supply arriving before it is needed. The more interesting question concerns what happens if these trends continue.

A sustained recovery in demand would gradually absorb the existing supply cushion. If developers remain reluctant to start projects until substantial pre-leasing has been secured, the pipeline available to the wider market could remain relatively thin even as vacancy falls. That would not necessarily produce a shortage across every part of Greater Vienna. Instead, tightening would probably emerge first among the buildings occupiers value most: modern facilities in established locations with strong transport connections and efficient specifications.

The market therefore sits at an important point in its cycle. Vacancy remains high enough to provide flexibility, but it is moving in a direction that deserves attention. Development remains active, but not at a scale that guarantees abundant future supply if occupier demand continues improving. Vienna does not have too few warehouses today. The investment question is whether developers will have enough new space ready when the market eventually needs it.

If demand continues recovering while construction remains restrained, the next logistics opportunity may emerge not from today’s vacancy but from the increasingly limited pipeline waiting behind it.

Source: CIJ.World Research & Analysis Team

front page info
LATEST NEWS
15 September 2026 Archicom plans up to PLN 600m land push as housing pipeline grows 15 September 2026 European Property Lending Expands as Offices Return to Financing Priorities 15 September 2026 Lithuanian Economy Accelerates in H1 2026 as Domestic Demand Supports Growth 15 September 2026 Murapol expects stronger apartment sales as affordability drives Polish housing demand 15 September 2026 Latvian Economy Accelerates in H1 2026 as Manufacturing and Consumer Demand Strengthen 15 September 2026 Italian Economy Records Modest Growth in H1 2026 as Employment and Exports Strengthen 15 September 2026 Ljubljana’s Commercial Core Expands Around Emonika