LIP Invest publishes Q1 2025 market report on Germany’s logistics real estate sector

LIP Invest has released its latest quarterly report, LIP UP TO DATE – Logistikimmobilien Deutschland, offering an overview of Germany’s logistics real estate market for the first quarter of 2025. The report outlines trends in transactions, leasing activity, construction, yields, and market outlooks for the months ahead.

In the first quarter, transaction processes on the German logistics property investment market extended in duration, particularly among international investors whose decision-making timelines have lengthened. While foreign capital remains a significant part of transaction volumes, domestic institutional investors are also increasingly active.

Demand is shifting toward new sectors, including investments linked to national defence, following the government’s new spending initiatives. Although overall demand for logistics space remains solid, recent tariff announcements have introduced caution into leasing decisions. The long-term impact of these tariffs is expected to reshape supply chains and trade relationships.

“The volatility in interest rates we’ve seen, driven by policy uncertainties, may become a recurring feature,” said Sebastian Betz, Managing Partner at LIP Invest. “Clear political signals are needed to support economic recovery and stabilise the markets.”

Investment activity in the first quarter resulted in €1.2 billion in transaction volume. While the number of deals was high, volumes were tempered by the prevalence of single-asset transactions and a lack of large portfolio sales. Owner-occupiers were active, including Dachser’s acquisition of a 50,000 sqm distribution centre in Memmingen, previously operated as a leased facility.

Prime yields for new logistics properties remained stable during the quarter. Further interest rate cuts by the European Central Bank are expected later this year, potentially improving the investment climate for long-term holdings in logistics assets. LIP reported that €800 million worth of properties were offered to the firm during the quarter.

Leasing activity in the logistics sector reached approximately 1.2 million sqm in the first three months of the year, consistent with results from the previous two years. After a quieter period, several large leases were signed. The most notable was ID Logistics’ agreement to lease a 68,000 sqm facility from Scannell Properties in Diemelstadt for use as an e-commerce fulfilment centre.

Construction activity was more subdued, with around 750,000 sqm of new logistics space delivered in the first quarter, a decline compared to previous periods. However, several major projects broke ground, signalling an expected increase in completions later in the year. Among these is MLP’s development of a 72,000 sqm logistics site in Gelsenkirchen, with initial completions targeted for the fourth quarter.

The report also highlights the evolving role of logistics properties as part of Germany’s shift toward sustainable freight transport. With electric trucks gaining market share, logistics centres are expected to play a growing role in providing charging infrastructure. New developments already include electric vehicle charging facilities, and future properties may expand to accommodate high-capacity charging for electric lorries, supported by photovoltaic systems and upgrades to local power grids.

LIP’s report concludes that while the logistics property sector faces challenges from economic and policy uncertainty, structural trends such as supply chain adjustments and the transition to sustainable transport continue to shape demand and investment opportunities.