Logistics leasing slows down, but long-term demand remains strong

Leasing activity has slowed in the industrial real estate market across the Americas, APAC, and EMEA, while long-term demand drivers remain strong.

C&W logistics

Despite higher interest rates and selective liquidity, long-term investor confidence is solid, especially in core logistics markets and infill locations. This is according to the "Waypoint: Global Industrial Dynamics 2025" report from Cushman & Wakefield.
The explosive growth of e-commerce, increasing 289% globally in the last decade, is expected to be the primary driver of space demand in the EMEA region for the next three years.
While e-commerce growth has recently slowed, over half of the global logistics and industrial markets are still projected to see rental increases through 2027, supported by strong occupier demand and increased supply in key areas.
Rising expenses for construction materials, energy, and labour are impacting decisions about location and operations, favouring markets offering more cost-effective alternatives in terms of labour and energy.
Europe is experiencing a diverse recovery influenced by shifting occupier strategies, inflation, regulation, and sustainability demands. Vacancy rates remain low in core hubs, with structural demand exceeding new supply in certain submarkets. Investor conviction in the sector remains high.
EMEA rents are, on average, 38% higher than in 2019, with notable growth in the UK, the Czech Republic, the Netherlands, and Norway. EMEA markets are divided into three groups based on labour costs: high-cost locations (e.g., Germany, UK), average-cost locations (Western and Northern Europe, Middle East), and low-cost locations (CEE, Southern Europe, Africa).
Currently, only 25% of EMEA markets favour landlords due to supply constraints, but a shift towards more neutral and landlord-favourable conditions is anticipated in the next three years. Vacancy rates are expected to remain stable in 38% of markets, increase in 33% due to slower occupier activity, and decrease in 29% due to low supply and rising occupier activity.
Automotive manufacturing and cold storage are identified as key demand drivers in EMEA. Significantly, 60% of EMEA markets anticipate rising rental levels, largely driven by new supply.