Take-up in Q2 2024 totalled 7.1 million sq m, an increase of 20% compared to the previous quarter and 12% higher than Q2 2023. A weak start to the year has seen take-up total to 13.1 million sq m, a decline of 18% in H1 2024 compared to the second half of 2023 and by 4% compared to H1 2023. With H1 accounting for 43% of annual take-up since 2010, take-up is on track to reach roughly 30.3 million sq m by the end of the year.

As take-up rises from a dip in Q1 2024, there is significant variation across the various markets. The greatest quarterly increases were in Budapest (+107.3%), Romania (101.8%) and Poland (91.5%). In contrast, Madrid (-16.3%) saw the worst quarterly decline in take-up, followed by the Netherlands (-4.2%) and Italy (-4.0%).

In annual terms, the biggest decreases were in Dublin (-77.9%), Italy (-38.8%) and Romania (-32.6%). Portugal, the UK and Poland saw increases of 139.3%, 120.7% and 55.8%, respectively, with the majority of European markets experiencing annual growth in take-up even as they largely remain below their five-year averages.

With overall take-up in H1 underperforming due to the weak start to the year, it’s unsurprising that most markets recorded annual declines. The greatest declines were in Dublin (-82.5%), Romania (-43.2%) and Italy (-26.5%). Notably, the UK was the strongest-performing market in the first half of the year, with take-up rising by 43.8% year-on-year. The UK tends to lead the trend when it comes to European Logistics, as such, it is promising that this market seems to have turned a corner, with take-up rising by 56% in Q2 2024.

We’ve notably seen an uptick in enquiries from manufacturing, automotive and food production occupiers across Europe. This may form part of much-discussed onshoring trends, although evidence remains limited. Notably, these enquiries are focused on Grade A space, in order to facilitate greater levels of automation of their facilities, which should drive greater levels of take-up amongst Grade A stock.

The average vacancy rate continued to rise in Q2 2024, increasing by 26 bps to 5.99%. This is an increase of just under 144 bps over the last four quarters. The quarterly movement in the average vacancy rate represents a slight deceleration acceleration compared to Q1 2024 when the vacancy rate increased by just 26 bps.  The largest increases in regional vacancy rates were in Madrid (+126 bps), The Czech Republic (+68 bps) and the Netherlands (+60 bps).

As we have previously noted, there remains significant variation between locations. The markets with the highest vacancy rates are Madrid (12.2%), Central Poland (+10.7%) and Warsaw City (+9.2%). The lowest vacancy rates are in Dublin (1.7%), Prague (2.4%) and the wider Czech Republic (3.1%).

Despite slower take-up and continued increases in the vacancy rate, rents have continued to trend upward in the first half of the year. Average rents across Europe grew by 2.2% compared to the end of 2023 and 5.8% compared to a year earlier. Considering current levels of available stock, rental growth continues to outperform compared to historical trends, however, it is falling towards the long-term trend.

The largest quarterly increases were in London (+8.9%) and Rotterdam (+4.8%). Notably, rental growth has remained positive across all markets. On an annual basis, Venlo has seen the greatest increase in prime rents, increasing by 21.4%. Lisbon (+17.6%), Rotterdam (+15.8%) and Schiphol (+15.8%) have all seen significant annual growth in rents.

_{Read the articles within Spotlight: European Logistics Outlook – Q2 2024 below.}