Logistics

The logistics market has experienced significant growth in recent years. However, in 2023, this sector was severely affected by movements in global capital markets, leading to less investment and leasing activity. Despite economic challenges, it remained the biggest sector in terms of investment volume. That said, there was a sharp drop in investment volume to €2.4 billion. We are expecting a slight increase to €2.75 billion for 2024, but this depends on the ECB’s and the Fed’s interest rate policies.

Trends and developments

• In the wake of a reduction in consumer spending, we are seeing a calming of the occupier market in the logistics sector, resulting in slightly increasing vacancy rates and more hidden vacancies. Logistics service providers are less inclined to expand and are opting for shorter lease periods. Despite the fact that the overall vacancy level remains low, the rise in rental levels for prime rents is gradually levelling off.
• Opportunities are arising for developers with a hold strategy to add value to older, vacant premises by making them more sustainable and using space more efficiently. Think of high-bay distribution centres, i.e. distribution centres consisting of several floors. This will make these buildings more attractive for investors and users once the market picks up again.
• There is still interest in real estate in the core and core+ categories, but consensus regarding a price level still has to be reached. Many investors are still reluctant to get involved thanks to this depreciation. For this reason, value-add and opportunistic investments are likely to dominate the market in 2024. Investors are already gradually preparing for purchases in the core and core+ categories to ensure that they are a step ahead of the competition and avoid buying in an overheated market. Actually proceeding to purchase real estate will only become more attractive again if ECB and Fed interest rates fall.
• It was evident last year that some investors were expanding their investment strategy to include other sub-assets, such as light industrial and last-mile logistics, due to a lack of investment products. Now we also see some investors widening their strategy based on geographical location. Still, not all investors are prepared to take the leap due to concerns about the potential risks.

Logistics analysis

Investors are becoming more inclined to move away from traditional logistics hotspots, but not all investors dare to take this step for fear that the market in those locations will not pick up as much. Our analysis shows that the potential growth on the market in some less-traditional hotspots, such as Flevoland and Zwolle, is greater than in the traditional popular regions. In South Limburg, we are witnessing a similar growth of hotspots such as Tilburg and Venlo. Logistics real estate in such non-classical hotspot locations is therefore likely to be an interesting investment opportunity.

Note: Potential market growth is determined based on the expected local increase in gross added value to GDP up to 2050 in various relevant sectors, aggregated to become a score on a scale of 0 to 5. Five is the highest attainable score.