The European logistics market remains fundamentally resilient, supported by strong occupier demand, disciplined development activity and continuing supply-chain transformation. Leasing activity accelerated throughout the first half of 2026, while development pipelines continued to contract across most European markets, helping to maintain balanced market conditions.

At the same time, the market is operating in a very different capital markets environment than anticipated at the beginning of the year. Higher energy prices and persistent inflationary pressures have prompted a renewed tightening cycle by the ECB, resulting in higher financing costs and a significant repricing of European government bond yields.

A notable feature of the current cycle is that logistics yields have remained largely stable despite rising risk-free rates. As a result, the spread between logistics yields and government bonds has compressed materially, creating a more challenging environment for investment underwriting and increasing the importance of rental growth assumptions when assessing future returns.

Against this backdrop, investors are increasingly focusing on locations offering resilient occupier demand, supply constraints and long-term rental growth potential. Markets benefiting from strong infrastructure, modern logistics stock and limited future supply continue to attract the strongest investor interest despite a more selective capital markets environment.

As capital markets remain selective, rental growth and occupier fundamentals are becoming increasingly important drivers of logistics real estate returns.