HighVest Capital's Outlook on the Logistics Market: Trends, Developments and Strategic Insights for 2024

The logistics market has witnessed significant growth in recent years. However, in 2023, this sector faced substantial challenges due to fluctuations in global capital markets, resulting in reduced investments and leasing activities. Despite these economic hurdles, logistics remained the largest sector in Dutch real estate investment.

Declining consumer spending is leading to a more subdued user market in the logistics sector, resulting in a slight increase in both visible and hidden vacancies. Logistics service providers are demonstrating less expansion ambition, with a noticeable shift towards shorter lease periods reflecting caution in long-term commitments. Although overall vacancy rates remain low, the rise in prime rents is gradually decelerating, indicating a potential stabilization or correction in the market.

Where investors see opportunity

Investors are identifying opportunities to add value to older, vacant properties through sustainability initiatives and more efficient space utilization. Developments such as high-bay distribution centers and multi-story distribution centers are gaining popularity.

There is still significant interest in core and core+ real estate categories. However, the price expectations between buyers and sellers are currently misaligned, leading to fewer transactions. Due to this misalignment, value-add and opportunistic investments are expected to dominate the market in 2024. Investors are preparing to enter core and core+ markets but are waiting for more favorable conditions, such as lower interest rates from the ECB and the Fed.

Beyond traditional hotspots

Some investors are expanding their strategies to include sub-assets like light industrial and last-mile logistics due to a shortage of traditional investment products. There is also a trend towards geographic diversification, with investors exploring opportunities in non-traditional logistics hotspots.

Areas such as Flevoland, Zwolle, and South Limburg are showing greater potential market growth compared to classic popular regions. These locations are becoming increasingly attractive for logistics real estate investments. Despite the opportunities, some investors remain cautious about venturing into new areas due to concerns about market performance and potential risks, caution influenced by broader economic uncertainties and the impact of global capital market fluctuations.