The current real estate market is characterised by significant uncertainty, influenced by rising energy costs, inflation, increased financing costs, and geopolitical uncertainties. These factors lead to a more cautious stance among investors and companies. Nevertheless, segments such as mid-sized industrial and logistics properties prove to be remarkably stable and continue to offer diversification opportunities as well as potential for structural growth. This was explained by Theo Soeters, Head of Fund Management at Edmond de Rothschild REIM.
Resilience through tenant structure and operational processes
A key reason for the resilience of light industrial and urban logistics lies in their specific tenant structure. The frequent users of these spaces are small and medium-sized enterprises (SMEs), which are less directly affected by global supply chain disruptions than internationally oriented large corporations. Furthermore, the uncertain market environment leads many tenants to consolidate existing sites and extend leases. For property owners, this results in high tenant retention and improved cash flow predictability.
Moreover, many users of mid-sized logistics and storage facilities, for example in dry storage, distribution, or urban supply, are characterised by lower energy intensity. This protects them better from the volatility of energy prices compared to more energy-intensive industrial or production businesses. Urban locations experience additional stabilisation of operating costs due to the increasing electrification of delivery traffic.
Advantages for owners and market dynamics
From the owners' perspective, this market segment also offers significant advantages. A broader diversification of the tenant base across a larger number of smaller companies reduces cluster risk and minimises dependence on individual major occupiers. A more stable cost environment also facilitates constructive lease negotiations and supports the enforceability of inflation-linked indexation clauses.
Supply and demand dynamics also argue for a consistently strong position for this segment. Demand for urban storage and logistics spaces, particularly for last-mile solutions, is continuously increasing. At the same time, supply remains limited, as factors such as high construction and financing costs, lengthy approval procedures, a general shortage of land, and bottlenecks in energy and network infrastructure represent not only short-term challenges. These conditions sustainably support rental growth.
Within the overall real estate market, allocation to industrial and logistics properties continues to be highly relevant. The segment has developed into one of the most sought-after asset classes in Europe and benefits in the long term from structural trends. These include nearshoring strategies, the need for more resilient supply chains, the ongoing growth of e-commerce, increased urban distribution, and the establishment of strategic industrial capacities within Europe.
