Baltic Industrial and Logistics Outlook, 2025 Q1 -

Baltic Industrial and Logistics Outlook, 2025 Q1

The first quarter of 2025 marked a transition phase for the Baltic logistics and industrial sector, as markets adjusted after several years of rapid expansion. While new supply remains visible across all three capitals, development activity is becoming more selective, and occupiers are increasingly focused on efficiency, flexibility, and ESG-compliant premises. Rental levels remained broadly stable, even as vacancy edged upward.

In Vilnius, the logistics and industrial market showed signs of stabilisation following a record year of completions. Transport and storage activity continued to grow, but at a more moderate pace, reflecting a shift toward a sustainable market equilibrium. Vacancy increased mainly in older and less efficient warehouse stock, while demand for modern logistics and stock-office formats remained resilient. Although permitting activity rebounded, developers are proceeding cautiously, with fewer speculative starts and a greater focus on risk-managed projects.

In Riga, the industrial and logistics segment remained one of the most dynamic in the region. New deliveries continued in early 2025, slightly lifting vacancy levels, but demand for modern facilities stayed strong. Growing interest from logistics operators, manufacturing, and the military-industrial sector supported absorption. Limited availability of development land and rising interest in redeveloping older industrial sites are shaping the city’s long-term growth strategy, while stock-office formats continue to gain popularity among small and medium-sized companies.

In Tallinn, logistics and industrial vacancy continued to rise as significant volumes of new and existing space became available. Despite improving industrial production and export indicators, tenant decision-making remains cautious amid broader economic uncertainty. Rental levels remained stable across logistics and stock-office segments, supported by declining construction costs and sustained interest in modern, well-located assets. The near-term outlook points to heightened competition among landlords as additional space enters the market.

Across the Baltics, the logistics and industrial sector is increasingly characterised by polarisation between modern, ESG-ready facilities and older secondary stock. Tenants are prioritising operational efficiency and sustainability, while developers adapt to a more selective and disciplined market environment. As supply growth moderates, the sector is expected to move toward a more balanced phase over the coming quarters.