When Inflation Hits Home: The Impact of Rising Prices on Logistics Rents

In recent years, logistics rent rates have been surging in a number of regions. This is explained, on the one hand, by keen demand and a limited supply of land, but was also accelerated by macroeconomic factors, on the other hand. Particularly the inflation trend has influenced logistics rents both directly and indirectly since 2022. Rising construction costs due to pricier materials, higher interest levels and tightening ESG requirements are driving up the overall costs for the development of new logistics facilities. This article will take a closer look at the relationship between logistics rents and inflation in 12 European countries and highlight the challenges and opportunities that present themselves as a result. To do so, it will draw on the historic and forecast figures for 30 selected logistics regions represented in the GARBE PYRAMID.  

Key Takeaways: 

• The historic and projected development of prime rents demonstrates that the inflation rate seriously impacts real rent growth. That said, the delta between nominal rents and inflation-adjusted rents varies from one city to the next. 

• Twelve of the examined 30 logistics regions registered an inflation-adjusted rental decline between Q4 2015 and Q4 2025. 

• In 14 of the 30 logistics regions, inflation-adjusted growth will remain negative until Q4 2030, which suggests that inflation will continue to account for a share of any nominal increases in future. 

• The location of Germany as a whole reports positive real rent growth in five of its 7 leading logistics regions through Q4 2030, with high nominal growth rates that make up for the accelerated inflation. 

• The overall outlook remains auspicious. The forecast model, with inflation now added, shows growth rates for some logistics regions that are positive even when adjusted for inflation. However, choosing sites will become more selective. Logistics regions with potentially negative real growth rates will necessitate active asset management to keep rent rates above the inflation level in the long term.[1]

• This raises the question as to which regions will lend themselves to extra earnings beyond inflation-indexed rent reviews.  

A Retrospective Analysis: The Influence of Inflation on Real Rent Growth 

A retrospective of prime rents in European logistics regions clearly shows how strongly inflation impacts, and sometimes reduces, real rent growth. Figure 1 represents the development of prime rents in selected European logistics regions between Q4 2105 and Q4 2025. 

The dark-blue bars represent nominal rent increases whereas the green bars show the inflation-adjusted change. Nominal rent growth is particularly fast in logistics regions like Berlin, Munich, and Manchester, which take the lead in absolute terms with growth rates exceeding 140% over the past ten years. However, nominal and inflation-adjusted rental values vary significantly from one city to the next. In twelve of the 30 logistics regions, including Warsaw, Prague, Amsterdam / Schiphol, Ljubljana, Bratislava and Leipzig, the inflation-adjusted premium rents follow a negative trend, historically speaking. This means that real prime rents are actually falling. Other logistics regions such as Rotterdam, Barcelona and Dusseldorf, while registering nominal increases, are left with barely any real growth when adjusted for inflation. Once again, logistics regions like Berlin, Munich and Manchester stand out because they report rent growth in both nominal and real money terms. The delta between the growth in nominal and real rents, respectively, averaged 53 percentage points across all 30 logistics regions. Germany’s top 7 logistics regions, while matching this figure at 53 percentage points, achieved such brisk nominal growth that they averaged a growth of around 24% even in real money terms over the past ten years. This compares to an average real growth of only around 6% that Europe’s top 30 logistics regions achieved. 

These findings underscore the significance of a macroeconomic assessment when selecting an investment site and the importance of taking an inflation-adjusted perspective to form a realistic picture of actual market growth.  

Hampered Growth: How Inflation Shapes Tomorrow’s Rents 

As the retrospective undertaken in the section above shows, accurately capturing the current market status is a key prerequisite for a differentiated analysis of opportunities and risks. Robust target-oriented strategies cannot be defined without the use of evidence-based forward-looking modelling. In cooperation with Oxford Economics, we developed a forecast model for the GARBE Pyramid that provides investors and market operators with a well-informed basis for assessing the future growth of prime rents and net initial yields for logistics real estate in 88 leading European logistics markets.  

In Figure 2, this forecast model was supplemented to include the inflation forecast by Oxford Economics. The inflation-adjusted growth remained negative in 14 of the 30 logistics regions. This contrasts with the brisk nominal growth everywhere. Logistics regions like Munich and Berlin clearly stand out with nominal rent increase by up to around 35%. But real-money growth presents a different picture. When adjusted for inflation, the rent growth is almost slashed in half, with Munich topping the ranking with around 20% in real rent growth through Q4 2030. Next in line are Berlin, Paris and Barcelona with significant nominal rent increases, whereas their real rent growth is considerably slower. In the medium segment, you find logistics regions like Manchester, Copenhagen and Lyon which report both nominal and inflation-adjusted rent increases but whose growth rates move at a more moderate pace than those of the top markets. Logistics regions like Duisburg, London and Hamburg, while showing a slower dynamic, still report slightly positive nominal growth rates despite the high level of inflation. This suggests that demand for logistics facilities in these markets is growing at a slower pace and that inflation largely neutralises any real rental growth. The inflation-adjusted prime rents clearly exemplify once more that even stable rent growth will actually imply moderate or indeed negative real growth in countries with a high rate of inflation.

The delta between the nominal and real rent growth forecasts (Q4 2025 – Q4 2030) averaged 13 percentage points across all 30 logistics regions, which is considerably less than the difference obtained from the retrospective. This compares to a slightly bigger delta of 14 percentage points in Germany’s top 7 logistics regions.

Focus on Germany: rent growth despite inflation 

A closer look at Germany illustrates the impact of inflation over time. Figure 3 shows the average prime rents in the top 7 logistics regions during the period Q4 2015 through Q4 2025 on the left. Absolute nominal values are represented in blue, real values in green. The divergence of the two graphs began to gather noticeable momentum by mid-2022, coinciding with a drastic loss of purchasing power (inflation). The difference to the base year (Q4 2015) amounted to EUR 3.10/sqm by Q4 2025. This implies a real growth by around 22% over the examined period of time, which contrasts with a nominal real growth of around 75% for the same period.