Investment activity in Europe’s logistics real estate sector rose by 9% year-on-year in H1 2024.
Leasing activity proved encouraging during Q2 2024, as take-up levels registered 12% above a slow Q1 totaling nearly 6 million square metres. While take-up levels rose in 8 out of 13 markets during Q2, weaker leasing activity in Q1 and slow demand persisting in select markets kept H1 2024 take-up of 11.4 million square meters 7% below the 2023’s comparable period.
Compared to the pre-pandemic average (2015 to 2019), H1 2024 take-up was 8% higher with several factors contributing to lower levels; inactivity from retailers and e-retailers, longer lease negotiations, and a lack of best-in-class warehouses.
Despite occupational challenges, Q2’s leasing activity was up 12% quarter-on-quarter and 14% above the 2015 – 2019 average. At the same time, construction activity slowed by 20% year-on-year.
For this reason, a higher European weighted average vacancy rate rose for the sixth consecutive quarter to 4.8%, viewed as temporary. The expected return of all occupier segments should normalise vacancy levels by 2025, says JLL.
Over €7.1 billion was invested in European industrial and logistics assets during Q2 2024, pushing the H1 total to €13.4 billion. Stable yields, falling inflation, and June’s rate cuts have created the right conditions for investors to move sidelined capital into action. Especially encouraging was the return of select larger deals, including portfolios, and very recently, core investors in smaller transactions (€50 – €70 million).
