Manufacturers are increasingly occupying industrial halls in Europe. The CEE region is growing fastest – partly thanks to the defence industry
Caution among developers, tenants and real estate investors has characterised the commercial property market across Europe from January to August 2026. With one exception – space for manufacturing and warehousing. Despite the overall macroeconomic situation and geopolitical uncertainty across the continent, this segment continues to grow steadily; within the Central and Eastern European (CEE) region, the Czech Republic is showing considerable resilience. According to international real estate consultancy 108 REAL ESTATE, new construction and leasing activity are also reaching high levels in Slovakia, Poland and Romania. Year on year, this represents an increase of up to 20 to 30% in the volume of leased space, depending on the market. Manufacturing and logistics are the drivers of demand – both in Western Europe and in CEE markets. In Central and Eastern Europe, however, we are seeing a higher share of manufacturing in the overall performance of individual markets than in the past.
“Manufacturing from around the world is moving to Europe as part of the so-called nearshoring trend, closer to its customers. Stable supply and rental conditions are supporting this shift. From January to the end of August, manufacturing accounted for a significant share of total realised demand for industrial space in the Czech Republic, Slovakia and Hungary,” says Jakub Holec, CEO of 108 REAL ESTATE, which operates in key CEE countries. Tenants associated with logistics services, including 3PL companies (logistics firms providing warehousing and distribution for other companies), accounted for around 50% of leasing activity.
The industrial real estate sector is also gaining strength in Western Europe. A study by BNP Paribas Real Estate, 108 REAL ESTATE’s alliance partner, shows growing demand from companies in Germany, Italy and Spain. Nevertheless, developments in the CEE region are more dynamic – this is also due to improving infrastructure throughout the area, including the Balkans. According to developers, the trend towards consolidation among logistics operators is also helping: for example, according to statements by the Prologis group, tenants are increasingly vacating several smaller facilities within a single country and consolidating them into one large, modern centre in order to make their processes more efficient.
Nearshoring concerns both distribution and manufacturing operations. According to a global survey by Prologis Research, as many as 60% of senior executives expect supply chains to be organised on a much more regional basis by 2030, with a clear emphasis on greater resilience and risk diversification. “Our data shows that, in response to these needs, customers are currently seeking warehouse and manufacturing space located as close as possible to their end customers. Demand is concentrated primarily in key Central European hubs that offer this stability. Locations around Prague, Bratislava, Budapest and major Polish cities such as Wrocław and Warsaw are leading the way,” adds Martin Baláž, Senior Vice President and Head of Asset Management Central Europe at Prologis.
The picture is more varied among manufacturing companies. At least in the CEE region, they do not form a homogeneous group of tenants; moreover, many manufacturing companies still prefer build-to-own facilities tailored to their needs over leasing. Nevertheless, the data shows that in Hungary, Slovakia and the Czech Republic, the automotive industry and related manufacturing continue to play a crucial role. Leasing activity associated with the defence industry and specialised technologies is also growing. In the Czech Republic, this includes, for example, the activities of the Tatra group.
As Matěj Indra, Head of Industrial Agency at 108 REAL ESTATE, adds, in the case of manufacturing it is also necessary to monitor leasing by logistics operators such as 3PL providers.: “Although technically logistics, within manufacturing halls they often perform an outsourcing function for manufacturing companies, such as storing components or assembling them. The logistics sector accounts for approximately 50% of total net demand across Europe.”
Although location remains the key factor in tenants’ decision-making on the industrial space market, developers and real estate experts are noting the growing importance of labour availability, wage costs and overall operating expenses. The latter factor favours modern, energy-efficient Class A buildings. “It is true that the technical quality of buildings and their energy performance are playing an increasingly important role. That is why we continuously invest in and modernise our parks. High-level environmental certifications, such as BREEAM, are becoming standard, as are the implementation of smart systems for real-time energy consumption monitoring, lighting upgrades and technological improvements for smoother operations. Through the Prologis Essentials platform, we are also successfully rolling out rooftop photovoltaic installations across our European parks, thanks to our ‘solar-ready’ buildings, and using heat pumps, which substantially reduce operating costs and support decarbonisation by eliminating fossil fuels,” explains Martin Baláž from Prologis.
108 REAL ESTATE does not expect any significant fluctuations in the industrial space market by the end of this year – with the exception of volatility in fuel prices. This could affect the decision-making processes of logistics companies. Speculative construction in Central and Eastern Europe will continue to be constrained by interest rates and inflationary pressures, which are also reinforcing developers’ caution. Nevertheless, the industrial segment in the CEE region can be described as resilient, stable and safe, including for institutional investors. In the Balkans and Poland, it also offers new opportunities for developers best known primarily from the Czech Republic.