Prologis Logistics Real Estate Supply: The Forces Governing Supply

Media Alert – June 15, 2021

Dear journalist,

“This Special Report shows that barriers to new supply in Europe are significant and rising in the face of strong demand. These challenging market circumstances will pose opportunities for developers that prioritize added value including, labour future-proof solutions and ESG.” – Dirk Sosef, Vice President, Research & Strategy

Barriers to logistics real estate supply are significant and rising. Over the next decade, completions are expected to fall short of demand in most locations within Europe. The latest Prologis Research identifies significant geographic, economic and political barriers to new supply.Notably land scarcity will be a key challenge, especially in the largest consumption centres like London and Paris and while replacement costs continue to trend upward- urbanization is driving competition among real estate providers. As of first quarter 2021 replacement costs in Europe have risen an estimated 8-10% year over year. Land has risen around 10-15%, and in core Western European markets core land has risen between 50-100% in the last 12-18 months.

Permitting and entitlement processes have already become harder and are more expensive and time-consuming than ever. In Europe alone, Prologis Research has calculated that development lead times for projects in need of rezoning are roughly double that of projects already located in industrial zoned land.

Proprietary data also points toward building requirements and costs continuing to rise, in sharp contrast to the supply of well-located industrial land. Concerns around labour remain and emphasize the need for facility improvements that focus on worker wellbeing, such as the WELL standard.

While rising value in well located and well designed buildings will justify more ‘creative’ real estate solutions, the structural shifts in the logistics real estate development industry will likely continue to limit the amount of new supply delivered to meet the future supply chain needs of customers.

With this in mind, scale development and the benefits which arise from it, innovation and the ability to advance sustainability goals will continue to be differentiators for logistics properties.

Attached you will find a summary overview. For the full research, please click here.

Read short overview

Prologis Real Estate

Recent updates

Bright8 takes off with SpaceNed

At Bright8, we are ready to take off with SpaceNed! We are proud to announce that we are now supporting SpaceNed in their mission to strengthen the positioning of the Dutch space market within the...

read more
Bright8 collaborates with Nuna

A new collaboration is born! At Bright8, we are thrilled to announce that we are now working with Nuna. This Dutch premium lifestyle brand offers stylish, smart and safe baby strollers, products and...

read more

Subscribe to our newsletter

Want to stay informed of important developments in the field of Online Marketing and Social Media?
Then sign up for our newsletter!