From e-commerce to energy: Exploring the forces shaping the European logistics market

The era when Europe’s logistics sheds could be explained simply by e-commerce growth and interest rate shifts is over. Demand is now also being reshaped by shifting tariffs and customs rules, defence rearmament, and constraints on electrification and energy.

Market dynamics stabilising
Compared with the occupier market dynamics of recent years, tenants are now steadier, more selective and slower to commit, while trade policy now looms larger in shipping and supply-chain strategy.

European vacancy rates have risen to an average 6.1% in Q2 2025, from 4.9% a year earlier—an increase of 1.2 percentage points—yet remain low enough to support rental growth, albeit the pace is slowing across most markets. 

An uptick in availability, coupled with wider macro-economic conditions and a tempering in economic growth is leading to slower expansion decisions by occupiers. Economic pressures and a fall in speculative development, along with high fit out costs is driving more occupiers to consider second hand facilities, where they can benefit from a previous tenant’s fit-out.

Rising automation is channelling demand towards larger, power-capable buildings with good transport links and access to skilled labour. 

Supply chain dynamics have improved immensely over the past few years. However, global geopolitical instability remains, and ongoing shipping and supply chain issues have continued to hamper trade flows, reinforcing the need for dynamic rerouting capabilities, and promoting the holding of additional buffer/safety-stock and supporting just-in-case stocking strategies.

Investors are returning as pricing stabilises and transaction volumes are improving.

EU move to scrap the €150 de minimis customs duty threshold
From 2028, shipping small parcels into the EU will be less cost-effective as the €150 duty de-minimis is scrapped and a handling fee introduced.

As a result, trade will shift from parcels to pallets as we see greater bulk shipping via cargo terminals, and fewer small parcels. Cross-border sellers—especially those shipping from Asia—are likely to hold stock inside the bloc to trim duties, fees and delays. Gateway ports such as Rotterdam, Antwerp-Bruges and Hamburg should see rising container volumes, lifting demand for warehousing at these ports and along key distribution corridors across Europe. Chinese e-commerce players are set to drive demand for mid- to very-large facilities across Benelux, northern Germany (notably NRW and Hamburg), Poland and select airport/parcel corridors.

US trade policy shifts
The US has raised tariffs on targeted Chinese goods and suspended the $800 de minimis relief, which China and Hong Kong list in May, has now been extended to imports from all countries from 29 Aug 2025. These shifts largely erode the cost advantage of cross-border, small-parcel drop-shipping into the US, especially for China-origin goods due to higher tariffs, and pushes sellers toward bulk imports with US warehousing and fulfilment, or to re-focus international expansion on other markets.

Europe’s customs reforms are still a few years away (scheduled for March 1, 2028). That gives Chinese e-commerce groups a window of opportunity to press ahead with EU growth ahead of the rule changes. Enabling them to build brand presence, establish supply chains, warehouse facilities, and scale local fulfilment within the EU. 

Over the next 12–24 months, we expect redirected growth into Europe. The specific measures targeting China in particular, may be driving some inventory strategies toward Europe for multi-node global fulfilment. Multinationals are diversifying inventory buffers across European hubs to hedge tariff and freight volatility, favouring gateway markets.

As a sign of momentum, the Port of Antwerp-Bruges, Europe’s largest export port to the US, reported +17.2% growth in US traffic in H1 2025.

Competition for Europe’s same/next day ecommerce market
With changing trade rules and slower growth in their domestic market, Chinese e-commerce groups look set to play a larger role in shaping Europe’s logistics landscape.

JD.com is stepping up its European push. Its Joybuy platform has gone live in the UK, France and Germany, with the group targeting Amazon-style same- and next-day delivery. That goal demands inventory inside the EU and a denser middle-mile, driving appetite for large, power-capable sheds at major gateways. JD has already secured several big sites across the UK and the Continent. Expect demand for automation-ready facilities in Benelux, northern Germany, Poland and the UK. 

Defensive moves
European defence budgets are rising, and production is ramping up; from ammunition and missiles to tanks and aircraft. Since Russia’s full-scale invasion of Ukraine, defence companies and their suppliers have expanded across Germany, the Nordics, central and eastern Europe and the UK. NATO and EU programmes are helping to catalyse the build-out.

Analysis of European Space Agency data by the Financial Times shows a sharp rise in activity at arms production sites, with the total area where radar detected change jumping from about 790,000 square metres in 2020–21 to roughly 2.8 million square metres in 2024–25. The analysis was corroborated by photography of excavation works. It is worth noting that repurposing within existing buildings is likely undercounted.

This rearmament cycle has clear real estate implications. Defence contractors and their suppliers need secure, power-capable industrial and warehouse space with strong transport links and access to skilled labour—often on longer leases to match programme timelines. There is also steady growth in dual-use logistics for maintenance, repair and overhaul, component handling and secure storage.

These assets are capital-intensive and frequently delivered as highly specified, built-to-suit facilities. For investors, established defence corridors offer resilient demand and strong covenants, frequently underpinned by government contracts. Constraints tend to relate to planning and grid capacity. Where these issues can be overcome, these factors support income durability and can justify targeted investment where the fundamentals align.

Power play
Heavy-duty electrification is moving from concept to plan under the Alternative Fuels Infrastructure Regulation. The rule sets minimum coverage on the TEN-T network—charging every 60km on the Core and every 100km on the wider network—with at least half compliant by 2027 and full coverage by 2030.

While the build out of charging infrastructure should help encourage the adoption of electric fleet, most charging will occur at distribution facilities and depots. As a result, available onsite power and grid connection lead times are becoming key factors in location decisions. Across Europe, connection delays and uneven capacity are already reshaping where data centres are built, and similar constraints are emerging for power-hungry logistics and light manufacturing, including automation, cold chain and fleet charging.

Developers and occupiers increasingly need to secure electrical capacity early, factor grid upgrade timelines into programmes, and consider onsite generation and storage to de-risk operations. Power-ready sites with space for depot charging and straightforward grid reinforcement will command a premium.

Key takeaways for investors
Policy-led demand. Near-term take-up will cluster where policy is most supportive, most notably around EU customs reform and defence funding.

Inventory moving inside the EU. Changing customs rules are pulling stock closer to customers. Cross-border sellers are adding EU warehousing, lifting demand for large, well-located facilities.

Defence corridors strengthen. Rearmament is driving requirements for ammunition, missile and systems programmes, plus ancillary logistics (storage, components handling, MRO). These occupiers favour longer leases and higher specs, with covenants often underpinned by government budgets, supporting income stability.

Power is the differentiator. Sites with secured grid capacity, provision for depot charging and options for on-site generation/storage can offer a competitive edge.

Capital rotates to “certainty of use”. With pricing stabilising, investors are tilting to core-plus logistics backed by parcel, food, pharma and defence activity. In the most supply-constrained hubs, this backdrop can support gradual yield compression.