Europe’s logistics market suffers from a huge supply shortage

Several significant trends have been observed in the field of European logistics recently. The rise of e-commerce, supply chain flexibility strategies and urban population growth are driving demand for modern logistics areas, but regulatory barriers, environmental requirements and political pressures are hindering new developments across Europe.

The figures from the European Modern Logistics Concentration (MLC) index prove this: Europe ranks 30th, compared to 75th in the United States, when measured as the ratio of logistics space to the number of households. Since European cities are more densely populated and networks are more efficient, direct comparisons are misleading; a more realistic benchmark would be 50 – which would still show a significant gap.

“Even if Europe were to achieve a more balanced level of logistics space, the gap would still remain significant. At the current construction rate, it would take around eight years and more than €150 billion in investment to close the gap,” said Eva van der Pluijm-Kok, Vice President, Prologis Europe Research.

Developments are facing the greatest challenges in urban locations, with logistics developments increasingly being located further away from cities – despite the fact that demand is strongest in urban markets. Tenants consistently prefer sustainable, innovative buildings located along major routes. This is reflected in performance: facilities close to consumers are achieving higher rent growth, while modern buildings are enjoying a rent premium of around 9% in markets where tenants have choice.

Hungary: Oversupply in secondary markets

Vacancy in the domestic logistics market has surged following rapid expansion. Oversupply is holding back performance and increasing risks, as weaker demand means longer lease terms for new developments. As the market corrects, the obstacles are less regulatory and more market-based, so it can be said that oversupply has become a defining factor in the Hungarian logistics outlook. Strategically located, high-quality facilities are less affected, although the situation is not easy for them in the current market environment.

“Prologis is in a favorable position in Hungary, as it has invested in strategically important locations in the Budapest region. This position has brought us excellent results in the first half of 2025, as we have leased 97% of our available space, which is approximately 10 percentage points above the market average,” says Zsuzsanna Hunyadi, Director of Leasing and Customer Satisfaction at Prologis Hungary.

“The key to our business success lies in the strategically excellent location of our logistics parks and the quality of our services. Our parks are located close to the center of Budapest and directly connected to the main transport infrastructure, offering excellent access providing access to the city center, major highways and the airport. Our customers also regularly confirm that location is a particularly important aspect for them when concluding or renewing a lease agreement. The high utilization of our parks is important feedback: it indicates that we are on the right track.”

The quality of the buildings is also a determining factor, which contributes to Prologis’ results in Hungary.

“We continuously invest to ensure the highest standards for our customers and investors. Every year we devote significant CAPEX resources to the development of our buildings, parks and assets”

– says Lóránd Gárdonyi, Director of Property Management and Customer Experience at Prologis Hungary.

“Asset Management Our strategy focuses on long-term value preservation and operational efficiency. We regularly review the performance of our property portfolio to ensure optimal operation in terms of energy efficiency, maintenance costs and customer satisfaction. These not only contribute to our sustainability goals, but also to our customers’ operational.