In Market: Italy with Francesco Nappo

Italian Market Trends

With a 2.9% increase compared to 2023, logistics real estate investment volume in Italy reached €1.75 billion in 2024 according to leading industry data. This growth has continued into the first quarter of 2025, driven by the light industrial sector and “pure logistics”. We are witnessing businesses from across all sectors looking to transform their supply chains and reshape their networks to be more resilient. Reshoring, near-shoring, more safety stock, and consolidation hubs closer to consumer markets are just some of the ways they are achieving this.

There is also a growing demand for highly specialized built-to-suit (BTS) or built-to-own (BTO) developments, capable of adapting to the ongoing evolution of a modern and sustainable sector.

1) What is the situation in the Italian market?
Industry data points to a welcome stabilization of the Italian logistics market. Investment volumes in the logistics sector for the first quarter of this year amounted to 640 million euros, double that of the same period in 2024 and up 22% compared to the fourth quarter of 2024.

Vacancy rates, stable and slightly below the European average, are around 4.8% at a national level, with some submarkets approaching zero. Much of this empty space will be obsolete warehouses, developed before 2000, which do not meet the needs of modern logistics operators.

2) Which sectors are driving demand for logistics space in Italy?
We are witnessing a return of demand for build-to-suit real estate in many sectors, especially across retail, food, pharmaceutical, fast fashion, and automotive. The growth is driven by the need for more efficient supply chains and the adoption of innovative technologies such as digitalization, real-time tracking, and warehouse automation.

3) Regarding rents and leases, what is the current trend?
Although demand is slowing slightly, rents are stabilizing at higher prices than in previous years, with national “prime” rents stable at €70/sqm/year, as evidenced in the main cities like Milan and Rome. More generally, rental values are higher where the area is highly industrialized and predominantly urbanized. Logistics operators are also prioritizing sustainable, quality assets that will increase their operational efficiency and differentiate their offerings.

In recent years, many speculative properties have been built and at this time, the market has yet to absorb all this space. The impact of this new space on rental values is likely to be felt most acutely amongst older warehouse stock as Italy is still seeing a significant undersupply of modern space. It is estimated that over 80% of logistics assets were developed before 2000, making them inefficient, inflexible and unsuitable for the needs of today’s supply chain operations.

4) What are the biggest challenges for the future?
The first challenge is anticipating supply chain changes in advance and the subsequent impact they might have on demand for specific locations. This volatility in demand is combined with evolving technical requirements. Today, tenants are increasingly looking for customized solutions with specific characteristics, from the number of bays to the height of the warehouse. These occupiers need certainty that these custom solutions can be designed and built quickly whilst remaining financially viable.

Then there is the problem of land scarcity; well-connected undeveloped lots are rare and expensive; most of the remaining opportunities are brownfields, former industrial sites that require complex remediation and environmental processes, which can have significant impacts on budgets and timelines.

Lastly, bureaucracy is another stumbling block to deal with; building permits, zoning constraints, evolving ESG regulations, as well as new European customs requirements can create delays and uncertainties.

5) Sustainability and technology: which solutions do you consider the most important for Italian logistics developments?
Technology is playing an increasingly important role in the Italian logistics sector and in all phases of a building’s life, from design to construction to the management methods used by the final tenant.

The use of Building Information Modelling offers a whole range of benefits that do not stop at the building design phase alone but extend to the entire building life cycle (construction and operational management). Thanks to this technology, there is more precise space planning (shelving placement, internal routes, loading bays, etc.) and all those involved work on a shared digital model, reducing errors and overlaps. It is now possible to manage site time schedules and related cash flows, simulate the flow of vehicles and goods by optimizing internal layouts and external routes.

AI will increasingly have an impact in the field of logistics, for example the possibility of implementing algorithms to identify more efficient routes by reducing transportation costs, analyzing demand and optimizing warehouse stocks and related orders, or even automatically managing picking and goods handling through robots. With AI, it is possible to analyze BIM models in real time and propose more efficient solutions at the property design stage.

In terms of sustainability and reducing carbon emissions, we are committed to ensuring that each of our developments are designed to achieve the best BREEAM or LEED certifications possible.

We are also very aware of the impact of land consumption, preferring, where the opportunity arises and despite its complexity, to redevelop disused industrial areas, as per Birolli logistics development in Rome or Logistics AirPark Calderara di Reno in Bologna.

6) Are there new development hotspots in Italy other than the traditional highways?
The locational focus for logistic operations still remains along the main transport arteries connecting north and south particularly along the A1 motorway and the major seaports.

However the volume of goods moving through Italian ports continues to grow, leading to signs of congestion in some key ports such as Genoa and La Spezia. This saturation has led to the development of some secondary locations. The port of Livorno is a good example of this, it’s importance as a logistics hub has also grown thanks to the expansion of sectors such as pharma, fashion and automotive in the Tuscany region.