Rising Costs as a New Stress Test

Energy Price Shock Hits Industry and Logistics
The Iran war and the subsequent rise in oil prices are hitting the German economy hard. This is one reason why, in their latest Joint Economic Forecast, Germany’s leading economic research institutes have revised their 2026 GDP forecast downward by 0.7 percentage points compared with last autumn, to 0.6%. In addition, the uncertain outcome of the conflict is creating a lack of planning certainty for companies. According to the latest economic survey by the ifo Institute, uncertainty among industrial companies about future business developments is at its highest level in two years.

The rise in oil prices was followed by a rapid increase in diesel prices. The logistics sector has therefore been hit particularly hard. According to the Federal Statistical Office, trucks account for more than 70% of Germany’s freight transport performance, while inland waterways account for a further 6%. Since both modes of transport run almost entirely on diesel, three quarters of freight transport is directly or indirectly dependent on the diesel price.

This is compounded by a competitive disadvantage: because many EU governments have intervened in diesel price setting, German companies have so far been paying more than their European competitors. The weekly price data published by the European Commission show that diesel prices in Germany were around 10% above the average for all EU member states in both March and April 2026. Since the introduction of the national CO2 tax in 2021, the German diesel price had averaged only about 4% above the European level.

The extent to which the rise in diesel prices affects freight forwarders depends on how they hedge against this risk. Most of them use contractual price adjustment clauses that pass on higher diesel costs to the customer, known as diesel floaters. As a result, customers could reduce their transport volumes in response to the higher costs. So far, however, this effect has not been observed: the Federal Statistical Office’s adjusted truck toll mileage index shows a decline of only 0.3% in March compared with the previous month. The longer the period of high diesel prices persists, the more likely it is that transport performance will decline.

Pressure to Adapt Increases for Logistics Users
In light of the developments outlined above, logistics users are acting more cautiously: they are postponing expansion decisions and replanning investments. In the short term, this may lead to weaker demand in the leasing market. In isolated cases, small and medium-sized logistics tenants are not, or not sufficiently, hedged against price jumps of this kind and are therefore facing existential questions. For owners, this increases the risk of rental defaults in such cases.

With a volatile oil price, another factor is being added to an already uncertain trading environment. For strategic reasons, logistics and industrial companies could therefore further increase their inventories, generating higher demand in the leasing market. According to national accounts data, inventories held by German companies already rose in 2025 more sharply than in any other year since 1990, although in some cases this was involuntary due to weak consumer demand.

Another consequence could be the increasing use of battery-electric trucks, as they improve the predictability of transport costs. This changes the requirements placed on logistics real estate, such as energy availability. Aspects such as proximity to the charging network, medium-voltage grid connection and photovoltaics are therefore becoming more important in leasing decisions. Our European Real Estate Logistics Census 2025 confirms this: one in four users already cited energy availability, and one in five cited photovoltaics, as particularly important location factors.

Cost Increases Are Changing Acquisition Profiles
The impact of the energy price shock on the investment market for industrial real estate cannot yet be assessed on the basis of transaction volumes. Over the past twelve months, €5.6 billion was transacted, around 25% below the 10-year average. Logistics properties accounted for 70% of transaction volume, while industrial properties made up 18% and business parks 12%. Deutsche Hypo’s Real Estate Climate Index for April has so far shown no signs of declining transaction activity in the near future. While the overall real estate climate has fallen by 5 points since the beginning of the year, the logistics climate gained half a point and, in absolute terms, also remains at a higher level than overall sentiment.

On the buyer side, private equity funds dominated with a net balance of €750 million. Investment managers bought around twice as much, but on the other hand also sold approximately €1.3 billion worth of assets. As in previous years, developers frequently appeared as sellers, due to high completion volumes. The prime yield stood at 4.5% at the end of the first quarter, rising by 10 basis points compared with the previous quarter.

Some investors are showing restraint and are currently reviewing their investment approaches in light of the changed cost environment. For example, long-term financing costs have risen slightly compared with 2025, increasing expectations for initial yields. In addition, some market participants expect construction costs to rise as a result of the energy price shock and are therefore reconsidering refurbishment and conversion scenarios. Rising construction costs would also lead to a decline in speculative development activity. Particularly in regions with above-average vacancy rates, this could slow the growth in supply.