Key trends in Europe’s logistics property market indicate a resilient occupational demand despite cautious decision-making due to trade and geopolitical uncertainties, with lease activity above pre-pandemic levels – albeit subdued, according to JLL’s latest Industrial Market Dynamics Report.

E-commerce growth, Europe’s industrial transformation, new manufacturing, AI, and increased EU defence spending are boosting demand while Asian online marketplaces are shifting lease activity toward Europe due to high tariffs on China.

Supply disparities are rising regionally, with tight modern space in key locations, minimal demand in secondary markets, and construction dominated by build-to-suit (BTS) projects expected to slowly reduce vacancies by the end of 2025.

Rental growth is being driven by new build assets meeting high ESG standards with a 5.1% year-on-year increase in Q2 2025. However, secondary and tertiary markets with higher vacancies remain vulnerable, with landlords offering more incentives.