Take-up in Q3 2024 totalled 6.0 million sq m, a fall of 20% compared to the previous quarter and 22% lower than Q3 2023. While Q3 is typically the weakest quarter of the year, the fall in take-up was greater than typically expected. In combination with a strong performance in Q2 2024, take-up has totalled 19.8 million sq m so far this year, a decline of just 8% compared to the same period in 2023 and by 3% higher than the pre-pandemic average. With Q4 accounting for 27% of annual take-up since 2019, we are projecting take-up of 7–8 million sq m in the final quarter of the year. This would leave take-up for 2024 just short of 28 million sq m.

As take-up rises from a dip in Q1 2024, there is significant variation across the various markets. The only markets that saw quarterly increases were Dublin (+129.8%), Spain (51.3%) and Italy (3.5%). In contrast, Portugal (-56.9%) saw the largest quarterly decline in take-up, followed by Belgium (-42.9%) and Budapest (-41.7%).

In annual terms, the biggest decreases were in Belgium (-65.5%), Dublin (-54.1%) and France (-54.0%). Portugal, Spain and Budapest saw increases of 66.8%, 43.9% and 28.9%, respectively. The Czech Republic was the only other market to experience annual growth in take-up, with the majority of markets underperforming relative to a year earlier and only Spain beating their five-year averages.

Anecdotally, we are seeing an increase in demand from manufacturing occupiers in CEE, particularly amongst APAC occupiers. This tracks with previous predictions that CEE would gain the most benefit from onshoring due to competitive labour costs and government incentives. In Western Europe, we have seen several 3PLs expanding their footprint and healthy activity amongst automotive, food production and retail occupiers.

For the first time since 2022, the average vacancy rate across Europe started declining in Q3 2024, falling by 13 bps to 5.86%. This follows several quarters of deceleration in the vacancy rate growth, and while the market appears to be turning the corner, it’s important to note that the recovery is unlikely to be uniform or steady. In annual terms, vacancy rates are 73 bps higher than they were twelve months ago.

The reversal in the vacancy rate obscures the nuance of individual markets. During the quarter, 60% of the markets that form our average vacancy rate saw their average vacancy rate decline, while 30% saw the vacancy rate continue to rise. The swiftest declines in vacancy were in Madrid (-130 bps), Barcelona (-90 bps) and the Netherlands (-50 bps). Of the three markets that continued to see rising vacancy rates, Budapest saw the greatest increase (+110 bps), followed by the Czech Republic (+49 bps) and the UK (+22 bps).

Slower take-up and previous increases in the vacancy rate appear to have finally caught up with the market. For the first time since 2017, quarterly growth in Savills European Prime Rent Index has flattened. Annual growth remains positive, with the prime rental index showing an increase of 3.8% compared to a year earlier. Average rents across Europe grew by 2.2% compared to the end of 2023. Considering current levels of available stock, rental growth continues to outperform compared to historical trends; however, it is falling towards the long-term trend.

There were no significant changes in prime rents on a quarterly basis. Over the last four quarters, Lisbon (+17.6%), Brussels (+14.3%) and London (+11.0%) have all seen significant annual growth in rents.

_{Read the articles within Spotlight: European Logistics Outlook – Q3 2024 below.}