A commentary by Kuno Neumeier, CEO of Logivest
The German logistics property market saw a sharp decline in new-build space in 2025. Only around 3.4 million square metres were completed for new-build projects last year – around one million square metres less than in 2024.
This decline reflects the current tense and uncertain economic situation, which we would all prefer to be different.
However, whilst this may seem less than encouraging at first glance, on closer inspection it also has its positive aspects. For instance, the lower level of new-build activity is contributing significantly to the stabilisation of the market. This is evident from the trend in rental rates.
The decline in new-build activity means that existing space is being utilised rather than creating additional new capacity on the market. This is good news for property owners, as the shortage of new space stabilises rents in the existing stock and maintains its value. This effect is particularly evident in conurbations and established logistics locations. Here, available rental space is becoming increasingly scarce, causing market prices to stabilise at a steady level. For investors and owners, this price stability is an important signal. A market in which supply and demand are better balanced reduces short-term price fluctuations and strengthens long-term investment prospects.
The well-stocked project pipeline
At the same time, the current process appears to be a natural market correction. In recent years, even developers without substantial equity have occasionally been able to carry out speculative projects. In a more demanding market, capital discipline is regaining importance. Project developers with a solid capital base are emerging stronger. The latter – with their long-term outlook and expertise – continue to engage in land banking.
It is also interesting to look at the project pipeline. It currently stands at around 14.8 million square metres and is therefore at a very high level. As soon as the macroeconomic environment stabilises and occupiers begin to expand more strongly again, many projects could be realised relatively quickly. This is because developers are largely sticking to their projects, which have been prepared to the point of being ready for construction – a good sign.
At the same time, structural changes are taking place. New asset classes, in particular light industrial properties and business parks, are gaining in importance. Multi-user business parks – which combine production, urban logistics, smaller storage spaces and showrooms – are also seeing rising demand. They combine proximity to urban areas with flexible usage options, thereby opening up a new, high-growth sub-category within the logistics property sector. Accordingly, there is certainly a growth trend, possibly with a shift towards new asset classes that is not reflected in the statistics for pure logistics assets.
Speculative development continues in prime regions
Speculative development is continuing in Germany’s five most attractive logistics regions, as the likelihood of letting is high there. In other regions, however, the focus is shifting more towards demand-driven developments.
The current decline in new-build activity is therefore less a sign of structural weakness than a phase of consolidation. The market is becoming more selective and placing greater emphasis on quality, strong locations and sustainable concepts. Brownfield developments, ESG-compliant spaces and long-term investment strategies are coming more into focus.
Overall, it is clear that current trends are strengthening the foundations of the logistics property market: more stable rents, falling vacancy rates for existing properties and a greater focus on high-quality projects are laying the groundwork for sustainable growth once economic conditions pick up again.
