German logistics property market 2025: Stability, growth, and emerging trends

The German logistics property market in 2025 continues to attract strong investor interest, with transaction activity picking up again. Both domestic and international investors are actively seeking logistics assets, contributing to stable yields and rising rents. Analysts predict a positive market outlook for the year, with demand growing in various submarkets. Key industry concerns include nearshoring, the implementation of ESG criteria, the economic feasibility of photovoltaic systems, and evolving user requirements.

The transaction volume for logistics real estate in 2024 reached approximately 7.5 billion euros, and forecasts suggest a similar level in 2025. The first quarter showed promising activity, particularly with increased transactions from the United States, the United Kingdom, and Canada. The typical transaction size ranged between 20 and 60 million euros. Colliers reported that gross yields have stabilized at an average of 4.75 per cent.

Christian Kah, Head of Industrial & Logistics Investment at Colliers, stated, "We have a very positive view of the logistics market in Germany, both the rental and the investment market, because the market in many regions in south-west Germany will grow more strongly in the coming months, particularly from a user perspective."

Rents for logistics buildings continue to rise, especially in high-demand markets like Munich, where supply remains constrained. In contrast, Berlin has seen a decline in demand, leading to subletting activity, while Leipzig is experiencing a surplus of space due to recent project developments. The Frankfurt/Rhine/Main region recorded significant growth in 2024, with 490,000 square metres of space turnover. By the end of 2025, rental growth of up to 3.5 per cent is expected in the top eight regions, particularly for modern rental spaces. Areas such as Stuttgart, Munich, the Lower Rhine, and the Ruhr are projected to experience rental price increases of 2.5 to 3.5 per cent.

"By the end of 2025, we will see rental growth of up to 3.5 per cent in the top 8 regions, particularly in modern rental areas," said Kah. "In the Stuttgart and Munich areas, as well as in the Lower Rhine and Ruhr areas, we expect a positive rental price development of 2.5 to 3.5 per cent."

Tenant incentives are expected to play a role in lease negotiations. "Since we are coming out of a recession, many logistics companies have to be price-sensitive when signing leases," said Kah. "Therefore, there will be incentives. We expect three to six rent-free months."

German investors are focusing on core logistics properties, with pension funds, insurance companies, and pension schemes actively acquiring assets. International investors, particularly those seeking higher returns, are targeting core-plus properties. "Logistics properties have found their place in national and international real estate portfolios," said Maximilian Tappert, Head of Transaction Management Logistics at HIH Invest Real Estate. "As the most sought-after asset, they currently rank just behind residential properties."

"On the German market, it is pension funds, insurance companies and pension schemes that want to buy and are focusing on core investments," Tappert added. "On the other hand, there are international investors who are currently increasingly demanding logistics in the German market and focusing on core plus – with a correspondingly higher risk, but also with higher returns."

Location, quality, and alternative use potential remain critical investment criteria. "Above all, the location of the property has come to the fore again," Tappert noted. "For this reason, we only focus on very good locations that allow for re-letting. Outside of the top locations, the rental business is no longer quite as easy."

Prices for logistics properties are expected to rise moderately over the next two years but will not return to 2020 levels due to the absence of ultra-low interest rates. "This price level only worked in combination with extremely low interest rates," explained Tappert.

ESG compliance remains a key consideration for both investors and tenants. The adoption of photovoltaic systems is increasing, as they offer substantial cost savings by reducing electricity grid fees. "In the future, buildings without sustainability will disappear from the market environment," said Matthias Dötsch, Managing Director of COMPLEMUS Real Estate. "But the question is, what measures make a property sustainable? Energy generation through photovoltaics plays a major role here."

"If you are big enough, you can save 50 per cent of your total electricity and thus 50 per cent of your grid fees," Dötsch explained. "Since the fees for using the grid are becoming more and more expensive, the partial elimination of these fees is a significant cost factor."

Heat pumps are also becoming standard due to regulatory requirements, mandating that at least 65 per cent of heating energy must come from renewable sources. "We have to provide at least 65 per cent of the energy for heating from renewable sources," Dötsch stated. "And from 2024, this will also include appropriate monitoring, which we are preparing for structurally, but which will later have to be continued by the user."

Geopolitical uncertainty has heightened interest in nearshoring, with companies favoring locations closer to their main markets. Rising construction costs and ESG regulations are limiting new developments, leading to greater emphasis on revitalization and automation. "Interest in high-quality logistics centres is increasing. At the same time, there is a growing desire to invest in locations close to home. This is likely due to the overall uncertain geopolitical situation," said Dr. Manuel Schrapers, Managing Director of Metroplan.

"New construction projects are on the decline due to rising construction costs and ESG requirements, which is tightening the market," said Schrapers. "When it comes to choosing a location, the decisive factors for users are, above all, wage costs, political stability, customer proximity, accessibility and infrastructure, as well as the availability of labour."

Many of its European neighbours can offer this: "Poland, as a direct neighbour, stands out with growing freight traffic and a high level of quality; the Czech Republic and Slovakia offer low costs and a good infrastructure; Spain and Portugal have a better cost level than the Czech Republic in some cases, but also growing ports for European trade," Schrapers explained.

International investors remain optimistic about the German logistics sector, driven by strong e-commerce growth. "We are seeing robust growth and a sustained increase in rents across Europe," said Marten Helms, Senior Fund Manager Europe at Catella Investment Management. "This has already attracted foreign investors in 2024 – primarily from the US and the UK, but also from Canada and Singapore."

Overall, international capital accounted for 55 per cent of Germany’s logistics investments in 2024, with significant participation from investors in the US, UK, Canada, and Singapore. "We are complaining at a high level; international investors see our prospects much more positively and are investing heavily in Europe," Helms concluded.

Photos: Maximilian Tappert, Head of Transaction Management Logistics, HIH Invest Real Estate,. Christian Kah, Head of Industrial & Logistics, Colliers, Matthias Dötsch, Managing Director, COMPLEMUS Real Estate, Christian Kah, Head of Industrial & Logistics, Colliers, Dr Manuel Schrapers, Managing Director, Metroplan and Marten Helms, Senior Fund Manager Europe, Catella Investment Management