Why logistics real estate valuations are broken — and what should replace them

Published: April 2026

Every week, institutional investors across Europe make acquisition decisions based on the same inputs: what are nearby buildings renting for, and is this one cheaper or more expensive?

It's a reasonable starting point. It's also increasingly wrong.

The market has matured. The methodology hasn't.

Europe's logistics real estate market recorded 28.1 million sqm of take-up in 2025 — 8% above the pre-pandemic average, with investment volumes up 11% year-on-year (JLL, European Industrial Market Dynamics Q4 2025). This is no longer an emerging asset class. It is one of the most capital-intensive, operationally complex corners of real estate in Europe.

And yet most valuations still rely on the same tool brokers used when the market was a fraction of this size: the comparable transaction.

The comparable answers one question: what did a similar building rent for recently? It does not answer the question that actually matters: what is this specific building worth to the tenants who would pay the most for it?

Two buildings. Same rent. Completely different value.

Take two logistics buildings — both 20,000 sqm, same submarket, both at €65/sqm/year. By comparable analysis, they are equivalent.

They are not.

Building A sits 4 minutes from a motorway junction, has 28 dock doors, a 12-metre clear height, and 2 MVA of power supply. Building B is 18 minutes from the same junction, 14 dock doors, 10-metre clear height, 0.5 MVA.

For a last-mile parcel operator, Building A is worth substantially more — proximity and throughput capacity reduce their operational costs by an amount that far exceeds any rent premium. For a cross-dock operator, dock-door ratio matters most. For a pharmaceutical cold chain tenant, power supply and expansion potential are critical; motorway access time is secondary.

Same headline rent. Fundamentally different economics for every tenant type.

Transport costs are the hidden driver

Transport accounts for approximately 58% of a logistics operator's total costs, with inventory carrying at 23% and warehousing at 11% — jointly 92% of all logistics costs (Armstrong & Associates, via Rodrigue, The Geography of Transport Systems).

A building that meaningfully reduces a tenant's transport costs is worth more than a comparable building that does not — regardless of what nearby properties are charging. The question is: by how much, and for which tenant type? Comparable analysis cannot answer this.

Logistics real estate is not one asset class — it's 95

A cross-dock facility and a pharmaceutical cold chain warehouse are both "logistics real estate." They have almost nothing else in common.

Cross-dock operators run on razor-thin margins. Every cent on rent matters. Their willingness-to-pay is driven almost entirely by throughput efficiency.

Cold chain tenants commit to 10–15 year leases because switching costs are enormous — the fit-out alone typically costs 2–3× the ambient build cost per square metre. Their willingness-to-pay reflects that lock-in.

Last-mile hubs in urban locations command rental premiums because proximity to consumers directly reduces the cost of the most expensive part of the supply chain: the final delivery.

Logivalue maps 95 distinct property types across 14 categories. Each has different cost structures, different tenant economics, and different drivers of occupier willingness-to-pay. Treating them as one asset class produces systematically wrong valuations.

What occupier-side analysis actually looks like

Between us, we have delivered more than 40 fulfilment centres across Europe for operators including Amazon, Zalando, DHL, and others. We have sat on the occupier side of these negotiations — modelling total supply chain costs, evaluating buildings against operational criteria, and deciding what a building is actually worth to our network.

That experience is the foundation of Logivalue's Investment Intelligence methodology.

We evaluate each building against 42 site variables — covering location, specification, operational capability, and market dynamics — and score it against 65 occupier profiles representing different tenant types and their operational priorities.

According to CBRE's European Logistics Occupier Survey 2025, labour availability has now overtaken transport connectivity as the most decisive factor in occupier location decisions. 53% of occupiers prioritise modern warehouse specifications. Power access is moving rapidly up priority lists. These are variables that directly affect what different tenant types will pay — and they are encoded in every assessment we run.

"Most logistics valuations compare the building to other buildings. We compare the building to what it does for the tenant's supply chain. That tells you what the tenant will actually pay — and whether they'll stay."

The question worth asking

If you are evaluating a logistics asset today, the question is not: what are comparable buildings renting for?

The question is: which tenant type extracts the most value from this specific building — and what would they actually pay?

The spread between worst-fit and best-fit tenant for a single building can exceed 30%. That is the difference between a good investment and a great one — and it is invisible to comparable analysis.

Logivalue's supply chain cost simulation makes it visible.