2023 Prologis Logistics Rent Index: Solid Global Rent Growth and New Leading Locations

Introduced in 2015, the Prologis Logistics Rent Index examines trends in net effective market rental growth[i] in key logistics real estate markets in NorthAmerica, Europe, Asia and Latin America. Our proprietary methodology focuses on taking rents, net of concessions, for logistics facilities. 

This index combines the company’s local insights on market pricing dynamics with data from our global portfolio. Rental rates at the regional and global levels are weighted averages based on estimates of market revenue.

Global logistics real estate rent growth totalled 6% in 2023, underscoring the resilience of logistics real estate fundamentals. Nearly all markets globally recorded positive real rent growth, amid positive demand, low vacancy, and the need to evolve supply chains in response to changing consumer expectations, operational challenges and persistent disruption. 

Global Takeaways

• Latin America led the world as Mexico rents surged 19%, driven by ultra-low vacancy, rapidly rising replacement costs, and the emergence of nearshoring, a new secular driver.
• The majority of markets posted positive real rent growth. Only a small handful of markets, either those that cooled from record levels of rent growth in 2021/2022 or had excess supply, pulled down global and regional averages in 2023. 
• Replacement costs increased in most regions during 2023, driven by higher costs for labour and materials, as well as higher interest rates. Replacement costs put upward pressure on rents and drove new construction starts down by more than two-thirds from peak levels globally. 

Data Pertinent to Europe for 2023

• 2023 rent growth within Europe was 7%.
• Logistics vacancy in Europe at the end of 2023 was 4%, showing a y/y change of +150 bps[ii].
• Munich (Germany) and South Netherlands (the Netherlands) featured in our top Global Rent Growth Markets[iii].
• Within Europe, the top ten growth markets are[iv]:
  • Munich
  • South Netherlands
  • Lyon
  • Frankfurt-Rhein Neckar
  • Rhine-Ruhr
  • Berlin
  • Amsterdam
  • Rotterdam
  • Barcelona
  • Bratislava
• Performance diverged by location, with markets failing into four groups:
  • Supply-constrained markets with healthy growth that benefit from structural trends (e.g., Germany and the Netherlands).
  • Markets with traditionally modest growth that continued to grow at a defensive pace (e.g., France).
  • High-cost markets where rents stabilised at high levels (e.g., London and Prague).
  • Select markets where elevated deliveries drove an increase in concessions (e.g., Poland).

Eva van der Pluijm-Kok Vice President, Research & Strategy, Europe adds:

“Looking ahead, Europe is likely to see a lower peak in the vacancy rate during the upcoming mini-cycle because new construction starts fell earlier than in the U.S. and other global markets. Improvement in the demand backdrop could cause rent growth to reaccelerate quickly as scarcity returns to many markets on both the Continent and in the UK.”

You will find the full research here.

Should you like to interview Eva van der Pluijm-Kok, discuss any aspect of this announcement or require more information, please do not hesitate to contact us.
 

[i] [i]Source: U.S.: CBRE, C&W, JLL, Colliers, CBRE-EA, Prologis Research. Europe: CBRE, C&W, JLL, Colliers, Fraunhofer, Gerald Eve Prologis Research. 

[ii] Source: U.S.: CBRE, C&W, JLL, Colliers, CBRE-EA, Prologis Research. EU: CBRE, C&W, JLL, Colliers, Fraunhofer, Gerald Eve Prologis Research

[iii] Source: Prologis Research

[iv] Source: IMF, Prologis Research, CBRE, Gerald Eve, Fraunhofer & JLL.