Credit: Adobe StockA region on the move: Understanding CEE’s logistics real estate market dynamics
Strategic insights on the challenges, investment shifts, and emerging opportunities in Central and Eastern European logistics
August 28, 2025Real Estate
Written by Jorge Aguinaga
In the midst of Central and Eastern Europe’s (CEE’s) accelerating transformation, the GRI Institute convened senior industry leaders, investors, and developers at the Deloitte offices in Warsaw for a highly focused roundtable discussion on the trajectory of logistics and light industrial real estate in the region.
The panellists analysed a market that is showing signs of maturity, with vacancy levels and rent stabilising, and development giving way to investment to paint a portrait of a region poised for opportunity but contending with complex headwinds - both political and practical.
While the pace of new development reached annual highs of 50% growth in past years, new supply now hovers at just 7% to 7.5% of the total stock. This shift marks a more diversified landscape, with established core markets showing limited vacancy, while secondary locations fluctuate with each new project.
Poland continues to stand out as a focal point, with attendees agreeing that it currently offers the lowest logistics rents across the CEE region. However, while this is attractive from a tenant perspective, landlords are facing declining margins, with one participant observing that, in some cases, rents had returned to the same levels of ten years ago.
The reasons for this disparity are multifaceted: despite concerns about land scarcity, the Polish market still provides relatively easy access to development sites. Combined with a decade of tripled supply and Poland’s strategic geographic position, this has created an oversupplied environment that has driven rents down.
That said, another view surfaced during the event - with operational costs in Poland increasingly burdensome, some firms are beginning to consider relocating to markets such as Romania, where construction costs are lower and tax regimes are more favourable.
Although Poland remains the region’s prime logistics hub, the focus is shifting from new developments to investing in existing assets due to rising costs and increasing vacancies. (GRI Institute)
As one executive stated, "we are probably shifting more from development into investment at the moment".
When comparing market conditions, a patchwork of diverse opportunities emerged. Hungary, with lower construction costs and higher rents, has maintained development activity, and Romania was cited as a potential rising star, benefiting from improving infrastructure, competitive tax policies, and untapped development potential.
In contrast, the Czech Republic was described as “hermetic,” with building permits extremely difficult to obtain. Slovakia was noted as an enigma - known, but not favoured for large-scale logistics activity.
Poland’s high electricity prices - among the highest in the region - are already impeding industrial productivity, with some factories shutting down entirely due to unviable energy costs.
The current energy model, heavily influenced by political priorities favouring households over industry, was flagged as unsustainable. As one participant noted, “It’s easy to win votes by offering low-cost energy to households, but there’s been little attention paid to industrial users”.
Poland’s transition toward renewables is underway, but the pace is insufficient. According to data shared at the event, Poland requires some USD 450 billion in investment to reach net-zero targets. This includes not just renewables but energy storage and grid improvements.
If coordinated effectively, this transformation could boost GDP by 4%. However, significant risks remain, especially around energy grid connection limitations that are already delaying logistics developments in high-demand areas.
While some participants observed that investor scrutiny on ESG has lessened in early-stage negotiations, particularly among American buyers, others reported that large corporate tenants are now explicitly demanding ESG-aligned properties and are unwilling to occupy low-compliance assets.
ESG’s application was described by some as superficial in the Polish context, suggesting that many new buildings already comply with ESG criteria by default, rendering the topic more of a formal requirement than a meaningful differentiator.
However, panellists highlighted that ESG compliance is increasingly one of regulatory enforcement, especially for lenders. From a banking perspective, ESG classification systems are becoming central to credit risk assessment.
The European Central Bank (ECB) is mandating stricter compliance measures, and buildings classified as F or G will soon find it "very, very difficult to get financing," confirmed one participant.
Non-compliant, non-green assets are increasingly seen as opportunistic plays, more likely to attract private debt or alternative capital at significantly higher rates. This shift has the potential to create a two-tier market, with traditional bank financing disappearing altogether for these properties.
While some questioned whether ESG should be deprioritised amid concerns of recession, others made the case that long-term economic growth and ESG goals are intertwined.
In this view, ESG - particularly the environmental component - is not an ideological burden but an economic necessity, as Poland’s aging energy infrastructure and high utility prices will ultimately constrain industrial growth.
In response, private debt funds are expected to fill the gap, but at a price. The market is entering a bifurcation: compliant, ESG-rated assets will remain attractive to institutional capital, while non-compliant stock will be traded at discounts and financed on more opportunistic terms.
This raises the issue of a "chicken and egg" dynamic: can economies afford to prioritise ESG before solving structural economic challenges, or is sustainable infrastructure the prerequisite for long-term resilience?
The consensus posits that both are true. ESG, particularly the environmental dimension, is not just a regulatory mandate but the foundation for future competitiveness. For investors navigating the CEE landscape, adapting to this new reality will be essential.
For more insights into CEE’s logistics market, as well as key observations on investment strategies, sector performance, and funding dynamics from the discussions CEE GRI 2025, be sure to check out our recent CEE Real Estate Outlook 2025/26.
Access the full report below:
In the midst of Central and Eastern Europe’s (CEE’s) accelerating transformation, the GRI Institute convened senior industry leaders, investors, and developers at the Deloitte offices in Warsaw for a highly focused roundtable discussion on the trajectory of logistics and light industrial real estate in the region.
The panellists analysed a market that is showing signs of maturity, with vacancy levels and rent stabilising, and development giving way to investment to paint a portrait of a region poised for opportunity but contending with complex headwinds - both political and practical.
Key Trends and Data
Participants reported that vacancy rates at the end of 2024 ranged from 2% in Sofia, Bulgaria, to around 3% in the Czech Republic, with Hungary and Romania reporting levels of 7.5% to 7.6%. This indicated a clear regional slowdown in net absorption and new construction, signaling a turning point from the high-growth era of the early 2020s.While the pace of new development reached annual highs of 50% growth in past years, new supply now hovers at just 7% to 7.5% of the total stock. This shift marks a more diversified landscape, with established core markets showing limited vacancy, while secondary locations fluctuate with each new project.
Rental Market and Competition
Consensus among industry leaders reveals the explosive rental growth of recent years has stabilised. While some panellists noted that select locations could still see increases, there was a broad agreement that rent levels have now plateaued.Poland continues to stand out as a focal point, with attendees agreeing that it currently offers the lowest logistics rents across the CEE region. However, while this is attractive from a tenant perspective, landlords are facing declining margins, with one participant observing that, in some cases, rents had returned to the same levels of ten years ago.
The reasons for this disparity are multifaceted: despite concerns about land scarcity, the Polish market still provides relatively easy access to development sites. Combined with a decade of tripled supply and Poland’s strategic geographic position, this has created an oversupplied environment that has driven rents down.
That said, another view surfaced during the event - with operational costs in Poland increasingly burdensome, some firms are beginning to consider relocating to markets such as Romania, where construction costs are lower and tax regimes are more favourable.
Although Poland remains the region’s prime logistics hub, the focus is shifting from new developments to investing in existing assets due to rising costs and increasing vacancies. (GRI Institute)Investment and Development Outlook
Developer sentiment has undergone a significant shift, as underwriting new projects at acceptable yields has become a formidable challenge. The consensus posits that new development activity will be “much, much weaker” moving forward, with the investment focus tilting towards existing assets.As one executive stated, "we are probably shifting more from development into investment at the moment".
When comparing market conditions, a patchwork of diverse opportunities emerged. Hungary, with lower construction costs and higher rents, has maintained development activity, and Romania was cited as a potential rising star, benefiting from improving infrastructure, competitive tax policies, and untapped development potential.
In contrast, the Czech Republic was described as “hermetic,” with building permits extremely difficult to obtain. Slovakia was noted as an enigma - known, but not favoured for large-scale logistics activity.
The Role of Energy and Infrastructure
The broader outlook for CEE logistics cannot be understood without examining energy costs and infrastructure, which emerged as one of the most pressing concerns throughout the panel.Poland’s high electricity prices - among the highest in the region - are already impeding industrial productivity, with some factories shutting down entirely due to unviable energy costs.
The current energy model, heavily influenced by political priorities favouring households over industry, was flagged as unsustainable. As one participant noted, “It’s easy to win votes by offering low-cost energy to households, but there’s been little attention paid to industrial users”.
Poland’s transition toward renewables is underway, but the pace is insufficient. According to data shared at the event, Poland requires some USD 450 billion in investment to reach net-zero targets. This includes not just renewables but energy storage and grid improvements.
If coordinated effectively, this transformation could boost GDP by 4%. However, significant risks remain, especially around energy grid connection limitations that are already delaying logistics developments in high-demand areas.
Consensus posits that in Poland, ESG is not considered an ideological burden but an economic necessity. (GRI Institute)
Environmental, Social, and Governance (ESG)
ESG remains a divisive topic in the CEE logistics and industrial real estate market, with the degree to which it drives investor behaviour remaining inconsistent.While some participants observed that investor scrutiny on ESG has lessened in early-stage negotiations, particularly among American buyers, others reported that large corporate tenants are now explicitly demanding ESG-aligned properties and are unwilling to occupy low-compliance assets.
ESG’s application was described by some as superficial in the Polish context, suggesting that many new buildings already comply with ESG criteria by default, rendering the topic more of a formal requirement than a meaningful differentiator.
However, panellists highlighted that ESG compliance is increasingly one of regulatory enforcement, especially for lenders. From a banking perspective, ESG classification systems are becoming central to credit risk assessment.
The European Central Bank (ECB) is mandating stricter compliance measures, and buildings classified as F or G will soon find it "very, very difficult to get financing," confirmed one participant.
Non-compliant, non-green assets are increasingly seen as opportunistic plays, more likely to attract private debt or alternative capital at significantly higher rates. This shift has the potential to create a two-tier market, with traditional bank financing disappearing altogether for these properties.
While some questioned whether ESG should be deprioritised amid concerns of recession, others made the case that long-term economic growth and ESG goals are intertwined.
In this view, ESG - particularly the environmental component - is not an ideological burden but an economic necessity, as Poland’s aging energy infrastructure and high utility prices will ultimately constrain industrial growth.
Future Outlook
The financial landscape for logistics and industrial assets is undergoing significant transformation. Banks are now facing increased capital requirements, particularly on development loans, which will likely make such financing more expensive and scarce.In response, private debt funds are expected to fill the gap, but at a price. The market is entering a bifurcation: compliant, ESG-rated assets will remain attractive to institutional capital, while non-compliant stock will be traded at discounts and financed on more opportunistic terms.
This raises the issue of a "chicken and egg" dynamic: can economies afford to prioritise ESG before solving structural economic challenges, or is sustainable infrastructure the prerequisite for long-term resilience?
The consensus posits that both are true. ESG, particularly the environmental dimension, is not just a regulatory mandate but the foundation for future competitiveness. For investors navigating the CEE landscape, adapting to this new reality will be essential.
For more insights into CEE’s logistics market, as well as key observations on investment strategies, sector performance, and funding dynamics from the discussions CEE GRI 2025, be sure to check out our recent CEE Real Estate Outlook 2025/26.
Access the full report below: