Resilience or Delayed Adjustment?

Europe continues to show surprising economic stability despite geopolitical tensions, energy disruption and rising costs. Industrial output has stabilised, logistics markets remain active, and investor interest persists in selected real estate segments. However, this stability masks a deeper transition. Rather than pure resilience, the market is undergoing an uneven and delayed adjustment. 

“Growth drivers are shifting and weakening in parts, with clear divergence across sectors and geographies. The central question is not whether Europe remains resilient, but how long this can continue and what structural changes are emerging beneath the surface.” – underlines Grzegorz Sielewicz-Head of Economic & Market Insights-CEE, Colliers.

An Unfinished Industrial Cycle

The industrial sector has performed better than expected, supported by temporary factors such as inventory build-ups, selective energy advantages and public sector spending. However, broader macroeconomic signals point to fragility, with weakening confidence indicators and subdued growth expectations. Persistent inflation combined with slower growth suggests a prolonged adjustment phase rather than a traditional recovery, indicating that the current cycle has yet to fully play out.

Demand and Investment Under Pressure

The real impact of current economic challenges is increasingly visible in demand. Consistently high energy costs are eroding purchasing power, weakening consumption and indirectly affecting logistics and industrial activity. Investment conditions remain constrained by uncertainty, higher financing costs and energy volatility. At the same time, persistent inflation is reinforcing a “higher-for-longer” rate environment, increasing pressure on real estate markets and shifting focus toward asset quality and operational performance.

CEE: From Growth Story to Strategic Anchor

Central and Eastern Europe continues to stand out due to its strong structural fundamentals, including its role in European supply chains, cost competitiveness and growing domestic demand. Logistics markets remain particularly resilient, supported by both regional consumption and international trade.

However, the region is transitioning to a more mature phase. Growth is increasingly constrained by infrastructure capacity and rising costs rather than lack of demand. Prime assets continue to outperform, while secondary locations face mounting pressure.

Investment activity reflects this evolution. While volumes have moderated, capital remains active and increasingly local, with domestic investors playing a larger role. Poland continues to lead the region, while markets such as Hungary show renewed momentum. This growing differentiation highlights increasing market sophistication and maturity.

Industrial Hotspots: Europe's New Geography of Growth

Europe’s industrial attractiveness is becoming increasingly concentrated in a limited number of strategic growth corridors. Central and Eastern Europe is strengthening its position as a key manufacturing hub, particularly for automotive, electronics and battery-related industries, while Iberia is emerging as an increasingly attractive destination for energy-intensive production supported by competitive renewable energy resources. Poland, Spain and Romania are among the markets leading this transformation and shaping the next phase of European industrial development.

For years, the case for the periphery rested on cost arbitrage alone, while Europe’s traditional industrial core kept the advantages that actually decided many mandates: decades of experience, deep skills, mature infrastructure and scale. That equation has gradually inverted. Costs across CEE and Iberia have risen - but productivity, technical expertise, supplier ecosystems and infrastructure have risen faster - paving the way to attract increasingly advanced manufacturing projects. These strategic growth corridors are no longer only the low-cost alternative to the core; they have built the very industrial fundamentals that once justified staying west. The periphery didn’t displace the core only on price – it did so by matching it on everything else.” says Jan Kamoji-Czapiński, Director, Incentives Advisory Europe, Strategic Advisory, Colliers.

Southern Europe: Emerging Growth Momentum

Southern Europe, particularly Spain and Portugal, is gaining importance as a growth driver. Improving fundamentals, strong logistics demand and rising international interest are supporting market activity.

Spain benefits from its strategic geographic position and robust domestic demand, while Portugal offers stability and improving integration into global supply chains. These markets combine growth potential with relatively attractive pricing, making them increasingly appealing for investors seeking diversification and medium-term returns.

A More Selective Market Environment

The European industrial and logistics sector is entering a more selective phase. While short-term resilience is likely to continue, the medium-term outlook points to increasing fragmentation across regions, sectors and asset classes. Success will depend on strategic positioning, including location, infrastructure readiness, asset quality and operational efficiency. Broad-based growth is giving way to more targeted, high-conviction investment strategies.

Labour Constraints and Operational Shifts

Labour markets are becoming a critical constraint across both CEE and Iberia. In CEE, low unemployment is driving wage pressure and intensifying competition for talent, particularly in logistics and transport roles. In Iberia, higher labour availability is offset by skills mismatches and regional imbalances. Across all regions, structural shortages of drivers and increasing regulatory complexity are adding further pressure. In response, companies are accelerating investment in automation, digitalisation and workforce development to sustain productivity and manage costs.

Resilience Redefined

Europe is not simply absorbing current shocks, nor entirely postponing them. Instead, the adjustment is unfolding gradually, with different sectors responding at different speeds.

Industrial activity remains relatively stable, but consumption and investment are weakening, and real estate markets are beginning to reflect these pressures. At the same time, strong structural demand, particularly in CEE and Southern Europe, continues to create opportunity.

Resilience is evolving rather than disappearing. The next phase will be defined by selectivity, execution and the ability to identify where sustainable growth can still be captured in an increasingly complex European landscape.

Download the report from the link below:
https://www.colliers.com/en-hu/research/exceeding-borders-industrial-2026