European Industrial and Logistics set for continued investment growth in 2025

The 2025 edition of CBRE’s European Investor Intentions Survey canvassed the views of 781 Europe-based real estate investors. The survey asked a range of questions regarding their appetite and preferred strategies for sectors and markets in 2025. This article explores the views of the 209 respondents that identified Industrial and Logistics (I&L) as their main choice of asset class for acquisitions in 2025.

Introduction

As explored in our 2025 Capital Markets outlook, CBRE forecasts a further increase in transaction volumes this year. The reasons for continued improvement include buyer and seller expectations converging, as more product is put up for sale, as well as financing conditions supporting higher deal activity.

2024 was already a year of recovery for European I&L investment. Total investment volumes in Europe rose by 21% year-over-year to reach €40.5bn, and the average deal size bounced back to €24m after the dip in 2023.

Figure 1: European I&L investment volumes and average I&L deal size

Considering the investment market is still in a state of recovery, what is the current investor sentiment and outlook for 2025?

I&L remains one of the two most sought after sectors

Figure 2: Sector preference – 2025 and 2024 European Investor Intentions Surveys

The proportion of respondents targeting I&L as their main asset class saw a slight fall year-over-year, from 34% in 2024 to 27% in 2025.

This is due to an increase in appetite for the living, retail, and hotels sectors. The living sector has become Europe’s largest asset class by investment volume, owing to strong fundamentals, stemming from a supply-demand imbalance. Retail and hotels, meanwhile, continue to see improved fundamentals, as a result of moderating inflation and a stronger consumer, coupled with a resurgence in global travel.

However, while I&L has seen a decrease in its share, it remains the second most sought-after sector by a significant margin.

Greater acquisition intentions for I&L

Figure 3: Compared to 2024, do you expect your investment activity in 2025 to be higher, lower, or the same?

The 2025 edition of the survey shows a strong year-over-year increase in buying intentions, across all respondents. However, respondents primarily targeting I&L show stronger acquisition intentions, both compared with the overall cohort, and with their own responses from last year.

While 64% of all respondents plan to buy more this year, for I&L investors, the figure stands at 68%. Only 1% of I&L investors have no intention to buy this year, compared with 3% for the overall cohort.

Value-add and core-plus strategies to dominate

Figure 4: What type of strategy do you believe will be the most attractive for your organisation in 2025?

In terms of strategies, I&L investors are now more aligned with the overall cohort than last year, with a significant increase in investors pursuing core (up from 10% to 14%) and core-plus strategies (up from 20% to 29%). This suggests a gradual return of core capital into the I&L sector, although value-add strategies (33%) are currently preferred.

Sentiment on occupier demand gradually improving

While the investment market for I&L assets saw a recovery last year, occupier markets were not so strong. Take-up decreased 11.6% year-over-year, although this brought it back in line with the pre-pandemic average.

Figure 5: European Logistics take-up

After a challenging 2024, investors sentiment towards occupier markets is cautiously optimistic for 2025.

Figure 6: How do you expect occupier demand for I&L assets to evolve this year, when compared with last year?

The percentage of I&L investors expecting occupier demand to increase this year rose to 44%, up from 33% in 2024. Over a third (36%) believe demand will remain the same, while 19% believe demand will fall, though this figure is sharply down compared with the previous edition of the survey (29%).

We believe that leasing activity will pick up this year, particularly towards the latter half of the year, as macroeconomic conditions improve.

Investors continue to focus on major markets

Figure 7: Among industrial and I&L assets, which asset type do you focus on?

As with the 2024 edition of the survey, investors show a clear preference to prioritise location over building age. 73% of investors will target facilities in major markets, while approximately 60% will focus specifically on modern buildings. Still, older facilities could offer refurbishing opportunities to value-add investors, which could be very well received by occupiers – particularly in undersupplied major markets.

The results are aligned with findings from occupiers, a majority of whom prefer modern/optimised warehouse space compared to more traditional space. Occupiers place a growing importance on sustainability certifications from BREEAM, LEED, or WELL, which are increasingly seen as a market standard for new buildings and crucial to their location decision processes.

Conclusion

The recovery in European I&L investment is expected to continue this year, with I&L remaining a highly sought-after sector with strong fundamentals. Investors are gradually returning to core strategies, focusing on modern facilities in major markets. Downside risks remain, including a still subdued occupier market, although sentiment is showing some signs of improving.