Europe faced with €150b logistics supply deficit

According to a new report from Prologis Research, Europe's €500 bn logistics real estate market is facing a significant and growing supply shortage, estimated at over €150 bn. 

Prologis Park Roosendaal

This "Persistent Supply Constraints Position Europe For Value Growth" white paper highlights that despite increasing demand driven by e-commerce, resilient supply chains, and urban growth, new development is severely restricted.
Key barriers include strict regulations, inadequate infrastructure, environmental mandates, and political opposition. Europe's logistics space per household is significantly lower than in the U.S. (30 vs. 75 on the MLC index), suggesting a substantial shortfall even when accounting for denser European cities.
The report notes that urban logistics development faces the biggest hurdles, pushing new facilities further from cities where demand is highest. This is evident in rental growth, with "City" and "Last Touch" sites outperforming the European average by 150-240 basis points over the last three years, and modern facilities commanding a 9% rent premium.
Even though overall vacancy rates have risen, modern, high-quality, and well-located logistics space remains scarce due to these structural barriers. Occupiers consistently prioritize sustainable, modern buildings in prime locations, a trend that is already fueling rental growth and is expected to ensure long-term outperformance for modern assets. 
The Netherlands serves as a prime example, where grid capacity issues, a nitrogen crisis, and public opposition ("boxification") have severely curtailed logistics construction. Compounding these issues are labour shortages, with the Netherlands having Europe's highest construction job vacancy rate at 7.5%. As a result of these structural barriers, construction permits for warehouses and similar structures have plummeted by 40% since 2012, not only due to tougher approvals but also developer reluctance to even submit new projects.
Eva van der Pluijm-Kok, vice president, Prologis Europe Research, said: “Even if Europe were to reach a more balanced level of logistics space, the shortfall would remain significant. At today’s pace of construction, closing the gap would take around eight years and require more than €150 bn of investment.” 
Ben Bannatyne, president, Prologis Europe, added: “Scarcity in European logistics real estate is structural, not cyclical. For customers, access to modern, sustainable space in the right locations is more critical than ever. For investors, it reinforces the long-term value of well-located facilities, where scarcity continues to drive performance. At Prologis, our scale, strong networks, and executional capabilities allow us to deliver where others struggle - ensuring durable, long-term returns for our stakeholders.”