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Truck loading bay
The German logistics property market reaffirmed its dominance in 2024, emerging as the top-performing asset class and capturing a record-breaking €7.7 billion in investment turnover, according to CBRE. This represented a 7% year-on-year increase, bolstered by strong international interest and a surge in large-scale transactions. BNP Paribas Real Estate emphasised that logistics properties accounted for 27% of total commercial real estate investment—an unprecedented share that underscores the sector’s attractiveness amid ongoing economic uncertainty.
Investment in logistics properties was driven by both individual deals (52%) and portfolio transactions (48%), with portfolio investments alone amounting to €3.3 billion, marking a 54% increase compared to the previous year. “The role of logistics in portfolio strategies has never been more prominent. Large-scale package sales have significantly boosted transaction volumes, highlighting the resilience of the sector,” said Christopher Raabe, Managing Director at BNP Paribas Real Estate.
The major logistics hubs accounted for €1.7 billion of the total turnover, with Hamburg (€456 million) and Düsseldorf (€318 million) leading the charge. Berlin, Frankfurt, Cologne, and Munich each reported transactions in the €180–220 million range. Foreign investors dominated the market, contributing 75% of the total volume. Notably, large transactions above €100 million surged, with 94% of these deals involving international buyers, including substantial investments from the United States (€2.1 billion) and the United Kingdom (€829 million). “Foreign investors are betting on Germany’s long-term potential, seeing current conditions as an ideal entry point,” said Raabe.
Shifts in rents and investment yields
Prime yields for logistics properties stabilised at 4.4% across most key markets in 2024, with minor yield compression reported in cities like Munich and Hamburg. “The repricing phase is nearing its end, with bidding processes now reflecting a consensus on asset values,” observed Kai Oulds, Head of Logistics Investment at CBRE.
Meanwhile, Berlin recorded an exceptional 31% annual rent growth, with prime rents reaching €10.50/m². Munich remained the priciest market at €10.70/m², reflecting sustained demand for high-quality logistics assets. Peripheral markets like Bremen, however, experienced declines as user demand remained cautious amid broader economic concerns. “The disparity in rental growth highlights the importance of location and asset quality in navigating this market,” added Oulds.
The limited supply of speculative developments emerged as a key challenge for the logistics market. Vacancy rates remained relatively low, but Savills warned that a lack of new developments could lead to bottlenecks as the economy rebounds. For instance, in Berlin’s big-box segment, oversupply has already tempered rental growth, while in cities like Bremen, peripheral locations saw falling demand for speculative leases. “Logistics properties are liquid and attractive, but a shortage of modern facilities could stymie growth if demand surges in 2025,” noted Panajotis Aspiotis, Managing Director at Savills. This concern is amplified in peripheral markets, where cautious tenant demand and economic uncertainties weigh on momentum.
Adding to this, Bertrand Ehm, Director of Investment at Savills, highlighted the liquidity of the segment, saying, “The industrial and logistics real estate segment is currently the only commercial asset class that is fully liquid even beyond a transaction volume of one hundred million euros. Large institutional investors have returned to the market, generating sufficient demand for large-scale transactions.”
Sarina Schekahn, Head of Industrial & Logistics Agency at JLL Germany, offered further perspective on rental dynamics: “Users’ reluctance to enter into new leases is having an ever-greater impact on the development of prime rents. Although construction costs have recently fallen and interest rates have eased, the impact on the rental market is limited. With the exception of key property strongholds, speculative developments remain constrained.”
Outlook for 2025
As stakeholders look ahead to 2025, brokers forecast a transaction volume of €8–9 billion, with moderate yield compression of 10–20 basis points expected as competition intensifies among investors. “Declining key interest rates and improving sentiment should drive renewed momentum in the logistics market,” said BNP Paribas' Raabe. Institutional investors, particularly those from North America and Asia, are likely to maintain their dominant position in the market.
However, challenges remain. Tenant caution, driven by economic uncertainty, may temper rental growth in secondary and peripheral markets. “While core locations will continue to see robust demand, the broader market recovery will depend heavily on Germany’s economic trajectory in 2025,” cautioned Savills' Aspiotis.
REFIRE: In our view, the German logistics market demonstrated resilience and strategic importance through 2024, cementing its leadership among German asset classes. As international investors intensify their focus on logistics and core hubs remain robust, the sector appears poised for further growth in 2025. With brokers forecasting a transaction volume of up to €9 billion and yield compression of up to 20 basis points, 2025 could mark another record year. However, navigating supply constraints and evolving tenant demand will be pivotal in determining whether this momentum can be sustained in the long term.