In the run-up to 2026, Europe’s logistics property sector is recovering in a disciplined manner. The demand for warehouses has stabilised following the pandemic. Meanwhile, prime logistics assets feel more like core infrastructure than cyclical real estate. Leasing activity is more focused now. Planning and power capacity have restricted development. Investment capital and pricing are returning. Investors are more focused on quality, location and the durability of income rather than the number of transactions.
The future of logistics in Europe is shifting from rapid expansion to a focus on optimisation, automation readiness, and energy resilience. After years of disruption, occupiers are actively recalibrating supply chains, whilst landlords and investors are recalibrating risk in a higher interest rate environment. In that regard, 2026 is more of a structural consolidation than a cyclical recovery, with strategic positioning replacing aggressive growth as the key theme.
Demand for leasing stabilises, but prime assets dominate performance
CBRE research has found that European logistics take-up is gaining momentum but is still below peak pandemic levels. Net absorption is expected to recover slowly, with full normalisation likely to occur only in 2027. Nonetheless, the moderation is not indicative of weakness, but rather a more intentional effort by corporates to better differentiate from competitors. Companies have concentrated on efficiency rather than expansion. Networks are merging, and warehouse capacity is increasing.
Based on Savills, occupiers have consistently preferred high-spec buildings, with clear heights of 10 to 12 metres, good floor loading, strong yard depth and ESG-compliant design. As distribution centres become more automated and electrified, energy needs outstrip the power supply access they can rely upon.
According to Prologis, the European vacancy rate has the potential to fall below 5 percent if supply pipelines are managed properly and economic growth picks up. It is unlikely that this will happen in all countries in the region. However, the case reinforces that modern logistics capacity is scarce and strategically valuable in core locations.
Prime rents stay high in supply-constrained markets
Knight Frank states that the prime logistics market in London continues to command around €360 per sqm per year and, as we can see from prime rental levels, the market is becoming more and more bifurcated: Dublin is in second place on around €150 per sqm per year, with key continental hubs Berlin, Amsterdam and Barcelona clustered together between €90 and €110 per sqm per year.
Major logistics corridors show solidity with prime rents at historically high absolute levels. Secondary cities of Southern and Central Europe cluster around €70–€90, although incentives are increasingly evident in oversupplied corridors, particularly for older stock. According to CBRE, prime rental growth will slow to approximately 1.8 percent in 2026. It indicates a shift from quick re-pricing adjustments to slower yet steadier income growth.
Investment volumes re-build under stricter yield discipline
Logistics remains one of the most resilient sectors in Europe, according to the capital markets evidence. As per CBRE, European industrial and logistics investment hit more than €40.6 billion in 2025, with the UK accounting for around €11.3 billion of that.
Even though this volume is below the extraordinary peaks of 2021 and 2022, it suggests institutional appetite is meaningfully re-activating and liquidity is returning.
Long term interest rates have remained higher than the ultra-low cycle of the early 2020s. According to Knight Frank, this fundamentally changes the pricing environment and yields have stabilised at higher levels, with further compression appearing limited. As per Knight Frank, the pan-European net initial yield for prime logistics in late 2025 was around 4.7 per cent. Country benchmarks include Germany around 4.5 per cent, France close to 4.75 per cent, and the Netherlands approximately 4.7 per cent.
Diminishing energy capacity and permitting constraints are shaping supply
Demand can no longer be driven only by new delivery. The development equation now includes grid capacity, environmental regulation, and planning complexity as key variables. This means they are setting the conditions for the delivery of new logistics stock. According to CBRE, completions will decrease in 2026 as speculative pipelines remain controlled, and developers will prioritise pre-letting projects situated in well-connected corridors with reliable access to infrastructure.
The availability of power is becoming an increasingly important constraint, with connection timelines extending materially in several European markets and effectively rationing large scale distribution development. According to Savills, this infrastructural challenge enhances rental strength in established logistics clusters while also increasing the significance of refurbishment in urban locations constrained by land availability.
As a result, the performance gap between prime and secondary stock is likely to continue widening as investors reposition older properties in strong micro locations with improved ESG credentials and automation readiness. The focus is transitioning from speculative growth to improving operations and optimising the long term asset base.
By 2026, there will be three structural forces driving change in the logistics market. The first is supply chain alteration. The second is ESG and decarbonisation. The third is automation and digitalisation.
Strategic themes defining 2026
Three structural drivers—supply chain changes, ESG and decarbonisation, and automation and digitalisation—shape the European logistics outlook in 2026. Continuing supply chain regionalisation and nearshoring anchor demand in Central and Eastern Europe as production networks become more diverse and less reliant on Asia for manufacturing. Sustainability and decarbonisation practices have seeped into supply chains and occupier procurement processes, considerably affecting lease structures and capex. Warehouse design increasingly incorporates automation and digitalisation, putting upward pressure on capital intensity and further enhancing occupier commitment to modern warehouses.
Overall, these three structural drivers position 2026 as a year that, while appearing more serene than 2025, nevertheless remains undersupplied in key strategic corridors. The rise and fall of vacancy by a few percentage points and rental growth moderating is not going to change the structural story for logistics real estate. In fact, the European logistics market in 2026 is not overheated and is rather consolidating than accelerating. Prices are getting more disciplined.
