Prologis Research: Europe's logistics market faces a supply gap of 150 billion euros due to increasing hurdles

Germany is one of the most difficult logistics markets in Europe for new developments

Düsseldorf, 25 September 2025 – The European logistics real estate market with a volume of 500 billion euros is confronted with a structural supply gap of more than 150 billion euros. This is according to a new white paper from Prologis Research entitled "Continued supply bottlenecks create value creation potential for Europe".

Regulatory hurdles, infrastructure bottlenecks, environmental requirements and political resistance are hampering new developments across Europe. At the same time, demand for modern logistics space continues to grow, driven by e-commerce, strategies to strengthen supply chain resilience and population growth in cities. With the obstacles increasing, it is becoming increasingly difficult to meet this demand.

The European Modern Logistics Concentration Index (MLC), which measures logistics space in relation to households, is 30, compared to 75 in the US. Since cities in Europe are more densely populated and networks are more efficient, a direct comparison is misleading. A value closer to 50 would be more realistic – which still indicates a significant shortage.

"Even if we were to achieve a more balanced level of logistics space in Europe, the shortage would still remain quite large. At the current pace of construction, it would take about eight years to close the gap and it would require an investment of more than 150 billion euros," says Eva van der Pluijm-Kok, vice president, Prologis Europe Research.

Germany: Europe's bottleneck in permits

Germany is one of the most difficult logistics markets in Europe for new developments. The scarcity of land near key demand centers is acute, and supply is further constrained by strict forest protection laws and complex municipal permitting procedures. These barriers have slowed down the provision of new logistics properties, especially near consumers.

Local resistance is adding to the pressure in Germany, as communities question the long-term economic value of logistics compared to alternative land uses. This combination of regulatory restrictions and societal resistance has exacerbated structural undersupply in Germany and limited new developments despite stable demand from users.

"The structural shortage in sought-after locations in Germany presents logistics real estate developers with the challenge of providing customers with modern and sustainable space close to consumers that they urgently need," says Philipp Feige, Vice President, Head of Capital Deployment and Co-Managing Director Germany at Prologis. "This not only puts a strain on security of supply, but also on the competitiveness of Germany as a business location."

Development in urban areas of Europe is facing the greatest challenges, which is pushing the construction of logistics facilities further out of cities – even though demand is strongest in urban markets. This is reflected in performance, with properties close to consumers achieving higher rental growth. Locations in the city and so-called last-touch locations have achieved rent growth of 150 to 240 basis points above the European average in the last three years. Quality also plays a role: modern properties achieve a rent premium of around 9 percent in markets where users have a choice.

While vacancy rates have risen, the stock of modern real estate remains scarce. The supply of high-quality, well-located properties is kept at a level close to friction levels by structural barriers, and occupiers continue to prefer sustainable, modern buildings in prime locations. This momentum is already supporting rental growth and is likely to lead to continued outperformance of modern real estate in the long term.

"The shortage of logistics real estate in Europe is structural, not cyclical," said Ben Bannatyne, President of Prologis Europe. "For customers, access to modern, sustainable space in the right locations is more important than ever. For investors, this reinforces the long-term value of well-located assets, where scarcity continues to drive performance. At Prologis, our scale, strong networks and execution capabilities enable us to deliver where others struggle – ensuring lasting, long-term returns for our stakeholders."

About Prologis

Prologis is the world's leading provider of logistics real estate with around 121 million square meters of gross floor area in 20 countries (as of June 30, 2025). The company develops, owns and operates sustainable logistics sites and complements its offering with energy, mobility and operations services for holistic supply chain solutions. With its size, innovative strength and industry expertise, Prologis plays a leading role and sets standards for the future. More than 6,500 customers from industry, retail, and e-commerce use Prologis to make their supply chains more efficient and environmentally conscious.

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