GARBE PYRAMID-MAP: Logistics Yields Have Almost bottomed out, Rental Growth Continues at Lower Dynamic

The investment market remained in its shock-frozen state during the first half of 2023 after the inflation rate and subsequent interest rate adjustments had significantly altered the parameters for the real estate industry within a very short period of time.

However, the logistics real estate market is evidently finding a stable basis and emerging from its decompression cycle. A look at many markets shows that the strongest price corrections already took place in late 2022, with the dynamic slowing during the first two quarters. This means that the long-anticipated price stability that investors need could be achieved by the third or fourth quarter. Assuming the interest rate development is stable, investors could come out of limbo and the investment market regain momentum on a modest level. 

During the same time period, the logistics take-up declined as well. This is to some extent attributable to the economic situation. But it also suggests that (new-build) rental units are in short supply. In most logistics regions, demand for space still exceeds the available supply in plots of land and rental units by far.

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