Published: June 2026
Two buildings on the same estate, built to the same spec, can let at rents that differ by a third. The market calls the higher one a premium and moves on. But premium rent is not a mystery and it is not luck. It is a measurable outcome of how much value a specific tenant extracts from a specific building - and whether they have anywhere else to get it.
For an investor, the question is not whether premium rent exists. It is whether a given building can achieve it, with which tenant, and how durably. Get that right before you buy and you underwrite the upside instead of hoping for it. Get it wrong and you pay a premium price for a building that will only ever clear at market rent.
What premium rent actually is
Premium rent is the portion of a tenant's operational saving that a landlord can convert into rent. A logistics building is an input into an operation, not an end in itself. When a building lets a tenant run faster, cheaper, or with less risk than the alternatives available to them, it creates a saving. Part of that saving is negotiable - and the share the landlord captures is the premium over market.
This is why premium rent is always tenant-specific. The same building that saves a parcel carrier hundreds of thousands of euros a year in route efficiency may save a bulk 3PL almost nothing. The premium is real for the first tenant and absent for the second. A rent comparable, which records whoever happened to lease nearby, cannot see this distinction - it averages it away. Premium potential has to be built from the operation up.
"Premium rent is not what the building is worth. It is what the building saves the right tenant - minus what they manage to keep. The landlord's share of that saving is the premium, and it only exists where the fit is rare."
- Raimund Paetzmann, Occupier-Side Strategist, Logivalue
The four drivers of premium rent
Premium potential is the product of four conditions. Where several are strongly present, a building can sustain rent well above its comparables. Where none are, no amount of headline quality will lift it above market. Logivalue's site scoring framework reads each of these from the 42 site variables, scored against 65 occupier profiles.
Premium rent requires that the tenant cannot easily find the same fit elsewhere. A building that uniquely serves an operation - the only site of its kind within a critical drive time, or the only one combining a specific clear height with a specific labour catchment - has pricing power. A building that competes with twenty near-identical boxes does not, however good it is. Scarcity is the precondition for premium: without it, the saving the building creates simply flows to the tenant, because they can replicate it down the road for less. The first question in any premium assessment is therefore not "how good is this building?" but "how replaceable is it for this tenant?"
The size of the premium is bounded by the size of the saving. Because transport is roughly 58% of total logistics cost (Rodrigue, The Geography of Transport Systems), the largest premiums tend to come from location advantages that shorten routes or raise stops per route. A site that cuts a parcel operator's average drive time saves money on every route, every day - a saving that dwarfs the rent line and leaves ample room for a premium. Yard depth that removes trailer reshuffling, dock ratios that speed turnaround, and power capacity that enables automation all create quantifiable savings. The premium a building can command is a function of how large those savings are for the target operation - and they have to be modelled, not assumed.
The buildings that command the highest sustained premiums are increasingly those that enable automation. Clear height above 12 metres, exceptional floor flatness, high floor loading, and abundant power supply let a tenant deploy high-bay shuttle systems, AutoStore grids, and robotics that transform throughput per square metre. A tenant who can automate inside a building extracts far more value from it - and will pay to secure a site that supports the investment, because automation-grade buildings remain scarce relative to demand. A specification that is merely adequate for manual operation is a market-rent building. A specification that unlocks automation is a premium one.
A premium is only worth underwriting if it lasts. Switching cost is what makes it durable. Once a tenant has invested in automation, built a route network around the location, and trained a workforce from the local catchment, the saving the building creates is protected by the cost of leaving. That lock-in is what lets a landlord hold a premium at renewal rather than surrendering it. A premium with no switching cost behind it is a premium that erodes at the first lease event. This is the bridge between premium rent and tenant retention - the two are the same analysis viewed from different ends.
What the premium is worth in euros
The arithmetic is straightforward once the drivers are scored. On a 20,000 sqm building, the difference between a market rent of €75/sqm/year and a premium rent of €95/sqm/year is €400,000 a year. Capitalised at a typical European logistics yield, that is on the order of €8 million in asset value - created not by the building costing more to build, but by it being matched to a tenant who extracts more from it and cannot easily replace it.
"Underwriting premium rent off a comparable is guessing. Underwriting it off the tenant's cost model is measuring. The difference is whether the upside is in your spreadsheet because you found it, or because you hoped for it."
- Carl-Friedrich zu Knyphausen, Managing Director, Logivalue
How to test for premium potential before acquisition
The assessment runs in three steps, and all of them belong before the financial model is locked, not after.
First, identify the tenant the premium exists for. Run the building against the full set of occupier profiles to find which operations extract the most value from it. The use-case identification step produces that shortlist - the premium is never general, so it has to be tied to a specific operation.
Second, quantify the saving. Model what the building actually saves that tenant against their realistic alternatives. The supply chain cost simulation turns location, spec, and operational fit into a euro figure for the tenant's cost base - which sets the ceiling on what a premium can be.
Third, test durability. Score scarcity of fit and switching cost using the site scoring framework. A large saving with low scarcity is a premium that leaks to the tenant. A large saving protected by scarcity and lock-in is a premium you can hold - and therefore one you can underwrite into the price.
Find the premium rent hiding in your pipeline
We model which tenant a building's premium exists for, how large it is in euros, and how durable it is - so you underwrite the upside instead of hoping for it. Book a 20-minute briefing to see the output format.
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- J.-P. Rodrigue - The Geography of Transport Systems, transport cost structure in logistics (58% transport share). transportgeography.org
- Savills - European Logistics Spotlight 2025: prime logistics rents range from roughly €65 to €130/sqm/year across comparable European markets, reflecting how much spec and tenant-fit drive achievable rent above market average.
- CBRE - European Logistics Occupier Survey 2025: automation-grade specification and labour-rich locations command the strongest occupier demand and the widest rent premiums.