German logistics real estate stable with stagnant construction

Germany's logistics real estate market saw strong supply and numerous individual deals in Q2 2025, with property owners increasingly willing to sell, according to LIP Invest.

LIP Invest logistics

While sales in the space market remained stable, US fiscal policy and uncertainties surrounding the EU-US trade agreement are causing some planning hesitation. However, slightly improved economic forecasts for 2025 and 2026 offer a positive outlook.
Investment in German logistics properties reached approximately €1.4 bn in Q2, bringing the total for the first half of the year to €2.6 bn, slightly below last year's figures due to a lack of large portfolio deals. Individual deal activity, however, remains high. Prime yields for new buildings edged up slightly to 4.90-5.10%, impacted by rising financing costs due to high bank premiums and a slightly increased 10-year swap rate.
LIP's Q2 market analysis shows a growing product offering, with €1.3 bn in properties offered, providing a solid foundation for future transactions.
Leasing activity in the German logistics market remained steady, with 1.4 million m2 taken up in Q2, bringing the H1 total to 2.6 million m2. Notably, Chinese companies, previously acting as subtenants, are increasingly leasing warehouse space directly, exemplified by Chinese logistics provider Shaoke (SK Express Germany) leasing 40,000 m2 in Greven.
New construction remained moderate at 800,000 m2 in Q2, totaling 1.55 million m2 for H1. The pharmaceutical industry is emerging as a key demand driver, prompting logistics providers like DHL to open specialized facilities, such as their 30,000 m2 temperature-controlled logistics property in Florstadt.
The courier, express, and parcel (CEP) service market is a rapidly expanding sector within the German logistics industry. Despite a minor dip after the initial COVID-19 surge, shipment volumes have been consistently rising and are projected to surpass five billion by 2029, according to the German Parcel and Express Logistics Association (BPEX).
Direct imports in e-commerce are increasingly transitioning to local fulfillment, creating further growth potential for the CEP market. This shift in supply chains indicates a growing demand for fulfillment centers and parcel distribution hubs within the logistics real estate sector. The local-for-local fulfillment model is particularly prevalent in North Rhine-Westphalia and Bremen, regions with direct access to seaports.
Sebastian Betz, managing partner of LIP Invest, commented: "The financing banks have recently proven to be a brake: High margins and premiums made some financing unattractive and thus acted as a brake on purchases. Although the ECB has further reduced short-term interest rates as expected, so far it is mainly the project developers who have benefited from this. I hope that this will lead to more speculative projects being started again. Long-term interest rates, on the other hand, remain at a significantly higher and volatile level. This makes financing more expensive for long-term investors like LIP. Interest rates between 3.60% and 3.80% for a 10-year loan are very easy to work with."