By Iain Finnegan, SIOR FSCSI FRICS, President of the European Regional Chapter of SIOR
The European Chapter of the Society of Industrial and Office Realtors (SIOR) had another successful MIPIM, bringing together members at our dedicated stand in the exhibition hall. Given the focus of this year’s Global Urban Festival on sustainability and resilience, in the context of an ever-changing geopolitical climate, we also chose to use this platform to launch our SIOR Europe Market Pulse Spring 2025 report, compiled following a series of roundtable discussions with SIOR property practitioners.
As a global network of top-tier industrial and office real estate professionals, we foster collaboration and knowledge exchange that drives business opportunities among members and successful outcomes for clients globally. Taking the pulse of the market is key to ensure we stay at the forefront of these real estate trends, advising investors and developers and putting together deals that optimise value.
Below we summarise our insights into the trends and opportunities in the European commercial real estate market:
- The office sector is seeing a widening gap between prime and secondary office markets, with the remote work revolution and a more recent impetus to returning to the office leading to a growing demand for high-quality, energy-efficient buildings to attract and retain talent. The by-product of this is an increase in obsolescence of older office assets, which need to be significantly enhanced or risk being stranded.
- In industrial real estate, demand remains strong, driven by supply chain reconfiguration and e-commerce growth. Logistics hubs, last-mile distribution centres, and smart warehouses are all becoming critical investment areas.
- Refurbishment versus new builds continues to generate debate. Regulatory constraints are increasing and developers need to balance the cost, timescale and sustainability benefits of refurbishment versus new development. In some cases, repurposing office spaces into residential, hotels, medical or educational uses are becoming a viable alternative.
- Investment Market Shift: Institutional investors are diversifying their portfolios beyond traditional office assets, focusing on logistics, life sciences, and mixed-use developments. With significant refinancing pressures expected in 2025, distressed assets and repositioning strategies will be key trends.
- Sustainability and Regulation Challenges: The EU’s Corporate Sustainability Reporting Directive is set to impact real estate valuations and investment decisions. While sustainability remains a priority, there is growing concern that excessive regulation could hinder economic growth.
The challenges ahead are significant, but so are the opportunities. By driving discussion, innovation and collaboration, SIOR remains the trusted partner for navigating the evolving CRE landscape.