CONTENTS

• Flexible, cautious, cost-conscious: leasing in uncertain times
• Moving to supply chain resilience
• What occupiers want in 2025

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FLEXIBLE, CAUTIOUS, COST-CONSCIOUS: LEASING IN UNCERTAIN TIMES

The shifting geopolitical landscape – marked by changing tariff regimes, trade restrictions and regional conflict – is forcing industrial and logistics businesses to rethink their real estate strategies. Global tariff activity has reached levels not seen since the 1930s, underscoring the extent to which global trade norms are being upended.

While tariffs grab headlines, risks to trade routes, constraints on critical materials, the increasing risk of cyberattacks on port and logistics infrastructure and changing weather patterns also strain supply chains. Currency volatility also adds complexity.

In response, businesses are adopting a mix of immediate and longer-term strategies. In the near term, many are responding to tariff uncertainty by diversifying their supplier base and increasing reliance on third-party logistics providers (3PLs). At the same time, companies are re-evaluating their overarching corporate strategies to build greater resilience – investing in stronger risk management frameworks and pursuing broader supply chain diversification.

Geopolitical risk and its impact on real estate

According to our latest survey of the Savills global network, the most common response to recent geopolitical uncertainty is a delay in leasing decisions, cited by over 80% of respondents across 54 markets. This reflects a mood of caution, as businesses consider their options amid policy uncertainty and unpredictable demand.

For those signing leases now, flexibility is paramount. Across all regions, occupiers are pursuing lease structures that offer greater agility, including short-term commitments, break clauses and expansion rights.

INFOGRAM DISPLAY

Cost savings and efficiency

Cost saving is also a priority. Globally, tenants want to optimise available space and improve efficiency. Several respondents in EMEA also report a de-prioritisation of sustainability credentials, highlighting a trade-off between ESG ambitions and economic realities during a period of uncertainty. It's worth noting that EMEA started from a relatively high base of ESG-certified stock, with occupiers often going beyond the regulatory baseline. It is unlikely that this de-prioritisation of ESG criteria will become a long-term trend, considering investor and stakeholder expectations and rising regulatory standards.

Occupiers are also reevaluating capital expenditure decisions. In Asia Pacific, 40% of respondents report that planned capital investment projects are being delayed. This underscores the extent to which geopolitical uncertainty is not only affecting leasing behaviour but also curbing broader strategic initiatives.

MOVING TO SUPPLY CHAIN RESILIENCE

Shocks like the Covid-19 pandemic, recent supply chain bottlenecks, and a shifting US tariff regime highlight the need for greater resilience in global supply chains – and real estate strategy plays a critical role.

Focusing on recent tariff changes, while the situation remains fluid, the ongoing uncertainty has forced companies to reassess sourcing and distribution strategies. Many are adopting China Plus One or “friend-shoring” models to diversify risk, while others are weighing up the relocation of production to preferential trade zones. This reconfiguration may necessitate new warehousing and logistics hubs in strategically located locations, with knock-on effects for real estate demand.

In the US, tariff policy may lead to increased reshoring for some sectors. However, these processes are complex, time-consuming and dependent on the unique dynamics of each industry and company. For example, a recent Deloitte report suggests that reshoring is more viable in less labour-intensive sectors, where labour accounts for a smaller share of total manufacturing costs. Still, success hinges on the presence of a robust industrial ecosystem – requiring significant investment, modern infrastructure and a skilled workforce. Albeit automation is playing a growing role in addressing workforce constraints.

Our survey data shows that locational strategies were shifting in the 12 months to April 2025, reflective of heightened geopolitical risk. However, across all regions, a significant proportion (41%) of respondents indicate that it is still too early to tell how occupier strategies will change – highlighting the complex nature of strategic realignment to new trade risks.

Climate-related risk

The risks posed by climate change are intensifying operational vulnerability, with extreme weather such as floods, droughts, wildfires and storm surges disrupting transportation networks and damaging infrastructure.

The World Economic Forum’s Global Risks Report 2024 ranked extreme weather as the second-most severe global risk, yet the same report found that only 28% of companies have diversified their supplier base to manage climate risks.

Recent Savills research has identified locations where climate-related risk to real estate is most acute. Key global trade hubs in Asia Pacific, for example, are most at risk from more extreme hurricanes, storm surges and floods. In Central America, severe droughts in Panama impact major trading routes. In parts of Europe, flooding is a key risk. In 2021, major floods in Germany and Belgium caused massive disruption to warehouses and freight corridors.

Another phenomenon contributing to weather-related risk is climate “flips”, where weather patterns shift from wet to dry extremes, or vice versa. For example, over the past four decades, Egypt has shifted from wetter to more extreme dry conditions, as noted in a 2025 Water Aid report. This, combined with extreme heat, dries out sand, enabling winds to create more intense sandstorms. This climate flip can lead to increased sandstorm frequency and may have contributed to the 2021 Suez Canal blockage.

But it’s not all about risk – climate resilience in logistics infrastructure is crucial. Ports worldwide are investing in future-proofing against extreme weather. The Port of Rotterdam has reinforced its infrastructure with higher quay walls, flood barriers and drainage systems to withstand rising sea levels and storm surges. Singapore’s Maritime Green Plan has elevated port facilities to prevent flooding, while Jebel Ali in Dubai has upgraded to minimise the impact of sandstorms.

As climate volatility intensifies, companies must embed resilience in real estate decisions to better protect supply chains.

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WHAT OCCUPIERS WANT IN 2025

Occupiers in this sector are revisiting site selection priorities as technology, operational pressures, and geopolitical and economic uncertainty redefine logistics requirements and supply chains. Traditional drivers like transport access and labour remain essential but are weighed alongside power requirements and smart systems.

Proximity to key transport hubs

Location near ports, airports, motorways or rail interchanges continues to be critical for efficient logistics. But with global disruptions, this is no longer just about proximity – it’s about optionality. Sites that offer multi-modal connections and strategic access to alternative routes are becoming especially attractive.

Labour availability and cost

Labour remains a priority globally. Rising wages, labour shortages and demographic shifts pressure occupiers to locate in areas with strong workforce availability and competitive costs. At the same time, logistics companies are looking to automation as a way to reduce reliance on manual labour.

Power availability and reliability

Power has surged in importance due to the growing demand for automation and data-heavy warehouse management systems, which require significant and stable power supplies. In some regions, particularly across Europe and parts of Asia Pacific, environmental standards are also changing power requirements. Landlords and tenants are increasingly installing solar panels, battery storage, and other green energy solutions – often in partnership. In urban logistics, where speed and throughput are key (fulfilling many small orders quickly), constant equipment use drives up energy demand and makes reliability essential.

Digital connectivity and smart building features

Digital infrastructure is now essential to operations. Facilities must support high-speed connectivity to enable real-time inventory tracking, IoT-based automation, and AI-driven decision-making. As 5G expands and supply chains become more digitised, this criterion is set to become a baseline expectation for modern logistical space.

The growing role of automation

Automation is becoming a key consideration for occupiers. Technologies like robotics and automated storage systems are driving efficiency and reducing reliance on manual labour. Many tenants now seek automation-ready space from the outset, driving demand for bespoke, future-proofed developments.

Environmental credentials

In much of Europe and parts of Asia Pacific, sustainability is key in site selection. Occupiers want properties with green certifications and energy-efficient systems. Access to onsite renewable energy, such as solar panels, is increasingly seen as a valuable way to reduce emissions, lower energy costs and future-proof operations. Regulatory pressure, investor demands, and ESG goals drive this trend, though in some markets, cost concerns are pushing sustainability down the priority list in the short term.

As we look ahead, the most competitive warehouses will be those that can adapt to occupiers’ evolving needs, supporting operational resilience, energy security, digital readiness and environmental commitments.

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