Industrial property investment in Europe fell by 21%

Industrial property investment in Europe fell by 21% year-on-year in Q1. The blame lies with the uncertain and less predictable global economic situation, or the effects of geopolitical instability in the Middle East, affecting the performance of the logistics market in particular. The total volume of EUR 7.5 billion for which warehouses and production halls on the European continent changed hands in the first quarter of this year is below the long-term quarterly average. However, data from real estate consultancy 108 REAL ESTATE, shared with BNP Paribas Real Estate as part of an alliance, shows that compared to traditional investment dominants such as France, the Netherlands, Germany and the UK, investor activity grew in Central European countries.

While in Poland industrial property sales reached record levels at the end of last year and interest has not waned this year, in the Czech Republic investors are facing a lack of suitable assets on the market. This could change at the end of the year if several developments, also on a speculative basis, are successfully completed.

"Over the past year, industrial property yields in the Czech Republic have fallen to the lowest level since the outbreak of the crisis in Ukraine. This translates into attractive selling prices for owners. Some of them have therefore decided to sell and are in a relative hurry. This is linked to the fear of the possible impact of further geopolitical instability, this time in the Middle East. For the ongoing transactions, we are monitoring offers at the prime yard level, which confirms the positive trend," explains Jakub Holec, CEO of 108 REAL ESTATE.

The Czech market is currently at the level of the prime yield of 5%, while in Poland it has fallen from 6.25% to 6% due to an excess of investment capital. From January to the beginning of April, EUR 37.3 million worth of halls and premises were sold in the Czech Republic.

According to 108 REAL ESTATE, investor interest in industrial properties in the Czech Republic is driven by their long-term high occupancy and relatively high, but above all stable rents. In the significant category of the highest achieved rents (net prime rent), there has been an increase from EUR 4.90 / month / m² to the current EUR 7.50 / month / m² since 2020. It has been at a similar level, with only percentage adjustments, for the last two years.

Compared to the rest of Europe, the Czech Republic thus has a chance to maintain its positive investment momentum, although foreign investors in particular are keeping a close eye on the European Central Bank's interest rate actions and its impact on 10-year government bond yields. However, for many, and especially domestic investment funds and groups, it is crucial that new industrial properties will be gradually released on the market. In the Czech Republic, 992 349 m² of industrial space is currently under construction. A further 525,000 m² are in the shell and core phase.

"Pre-leasing is thriving. Even new leases are in higher volumes than in the same period of the previous year," adds Matěj Indra, Head of Industrial Agency at 108 REAL ESTATE.

While the transaction volume of EUR 657 million on the Czech investment market in Q1 2026 represents a solid entry into the year, it is also a significant year-on-year decline. 108 REAL ESTATE expects industrial real estate to play a more significant role in the Czech Republic's full-year investment balance than during the first quarter.

On a pan-European level, the decline in investor interest is reflected in a 7% drop, which affects all segments of the commercial property market. There is a noticeable decrease in investor activity from regions directly affected by the situation in the Middle East or having to deal with its consequences. In the case of US investors, the share of deals closed fell by 13%, Asian investors by 54% and groups from the Arabian Peninsula by 78%. In contrast, cross-border activity by European investors has increased.

Despite the quarterly fluctuations due to the global geopolitical situation, industrial and logistics properties in Europe still maintain a strong market share compared to other assets. This has moved from 15% in 2017 to 24% of total commercial real estate investment. However, data from 108 REAL ESTATE and BNP Paribas Real Estate shows that, compared to investors, European industrial real estate continues to be trusted by tenants. Compared to the first quarter of 2025, new space has been leased by 10% more: last year, new tenants in key European markets¹ including the Czech Republic, leased 5,058,000 sqm, while from January to the end of March this year it was almost 5,600,000 sqm. By comparison, almost 24 million m² were newly let in the last quarter of last year. In the Czech Republic this was 1,257,000 m², in Poland 3,219,000 m² and in Germany, for example, quarterly absorption was 5,300,000 m².

"We are also seeing strong interest in the second quarter. The new tenants include a number of companies expanding into Central Europe, in some cases pure relocations. These have a dual rationale - both factual and a precautionary measure of logistics-related costs. And at the same time, getting closer to end customers and buyers, which is true for the automotive industry, but also for sectors related to the energy or arms industry," adds Matěj Indra.

¹ Czech Republic, France, Germany, Italy, the Netherlands, Poland, Slovakia, Spain and the UK.