European Logistics and Industrial Market Outlook 2026 by Savills

Occupier demand expected to stay resilient across Europe

In The Experts’ View: European Industrial and Logistics Real Estate Market – 2026, Savills Research expects occupier demand for logistics space across Europe to remain resilient in 2026, with most markets projected to match 2025 levels or outperform them. The outlook is supported by trends that are less tied to the economic cycle, including rising e-commerce penetration, nearshoring, defence-related supply chain demand, and data centre-driven requirements.

Savills highlights retail and 3PL operators as the backbone of demand in many markets. Manufacturing occupiers remain active in established Central European locations, while activity is also increasing in parts of Southern Europe. Another pan-European operational shift is the growing need for cold-chain logistics, particularly in Western Europe, linked to grocery and pharmaceutical demand.

Grade A specifications and power capacity move to the centre

Savills points to a clear preference for Grade A, future-proofed space, where high clear heights, sufficient dock doors and yard depths, strong floor loading, and automation-ready fitouts are increasingly treated as baseline requirements for major occupiers. A key enabling factor is power availability, as electrification and automation trends push tenants toward assets with ample grid capacity and robust electrical infrastructure.

Savills also notes that in Southern European markets, where development has been more limited over the last decade, demand may concentrate disproportionately on modern units that are already scarce, amplifying competition for prime-grade stock.

ESG is important, but price and location still dominate

The report describes a pragmatic ESG dynamic. While a good ESG rating matters, it often does not translate into large rental premiums, as many occupiers remain reluctant to pay materially more or compromise on location solely to secure higher ESG-rated stock. For new speculative developments, ESG credentials are increasingly treated as a baseline expectation driven by developers and landlords rather than a strict tenant mandate.

Prime corridors outperform as location tightens rental markets

Savills reiterates that location is the defining determinant of success for speculative development. Space in strong transport corridors is absorbed quickly, while secondary locations can struggle. Looking into 2026, Savills expects prime submarkets and major metros to outperform, and flags that national supply figures can mask acute submarket shortages, potentially pushing occupiers from supply-scarce hubs into less desirable spillover areas.

Investment themes: core capital returns and yield dispersion widens

On the investment side, Savills reports that volumes were down around 10% in the first three quarters of 2025, influenced by uncertainty including tariff-related factors, followed by the typical Q4 uplift. For 2026, the firm identifies several consistent themes shaping the sector.

Core institutional investors are re-emerging, but with limited capital focused on best-in-class assets. At the same time, Savills expects the divergence between prime and secondary yields to widen, with prime pricing firming and yields potentially compressing, while secondary yields are more likely to remain flat or soften. Cross-border capital remains dominant and, according to Savills, accounts for about 62% of investment volumes across Europe, reinforcing the role of international buyers in 2026.

Country signals: hubs, constraints, and selective recovery

Savills’ country commentary reinforces a hub-led market. In Germany, the report notes stabilised prime yields of around 4.5% across major hubs and cautious optimism for 2026 if occupier fundamentals hold.

In France, Savills highlights the strength of 3PL-driven demand, planning constraints in the Paris region that limit pipeline supply, and prime yields around 4.75%, with potential downward pressure on yields in the second half of 2026 under a constructive scenario.

Across multiple markets, power grid capacity and connectivity emerge as practical constraints that can limit location choice and influence both development and leasing outcomes, making “power-ready” assets structurally more competitive.

As International Investment experts report, Savills’ 2026 outlook suggests Europe’s logistics sector is entering a quality-led cycle where power capacity, modern specification, and prime corridors increasingly separate winners from the rest, while the critical downside risk is a deeper split between prime and secondary stock that could force accelerated capex, repricing, or functional obsolescence for older assets.