Amid Tariff Chaos, Europe's Industrial And Logistics Sector Could Be A Space Winner

As the global manufacturing industry wrestles with the implications of President Donald Trump's stop-start tariff proposals, many Asian suppliers are weighing up opportunities to shift more of their logistics to Europe as one possible way of circumventing the worst of the punitive duty impositions China has been threatened with.

And despite a 90-day pause between China and the U.S., Chinese retailers and manufacturers will be on high alert over the possibility of a volatile four years ahead.

With industrial and logistics demand cooling a little in Europe, the question is whether the continent can position itself as a safe haven in a complicated world.

“If there is an increasing focus from Asia, then it is coming at a good time, as takeup has been cooling a little. It’s more of a balanced market,” LaSalle Investment Management Europe Head of Research and Strategy Daniel Mahoney said.

U.S.-headquartered third-party logistics giant Prologis pointed out in a recent report that importers began to act more than a year ago in anticipation of the possible removal or reduction of de minimis provisions, or duty exemptions for direct deliveries to the U.S. under $800 in value. Fast-fashion and e-commerce platforms such as Shein, JD.com, Temu and TikTok Shop have accelerated this shift, Prologis said.

Although de minimis imports represent only 2% of total U.S. goods imports and 4% from Asia, companies relying on built-to-order production models via air freight will need to adapt, Prologis predicted. That will necessitate a shift toward lower-cost maritime shipping, longer delivery timelines and domestic inventory-holding strategies, with supply chains that more closely resemble existing U.S. e-commerce players. 

Currently, continental Europe’s e-commerce penetration, at around 10%, remains well below the UK’s 33%, meaning there is significant potential for expansion and a corresponding demand for logistics real estate.

Asian e-tailers such as Shein, AliExpress and Temu have rapidly gained ground and now account for 34% of Spain’s e-commerce orders, for example, and have grown their German market share from 2% in 2022 to 7% in 2024.

Local European platforms are responding with similar manufacturer-to-consumer models, Prologis said. With e-commerce expanding more than 5% annually, 15M SF to 20M SF of logistics space per year will be needed in the next five years, it predicted.

But shifting manufacturing and logistics strategies takes time, and although several major Chinese companies have been making plans for 12 months or more, these remain early days.

“I suspect this will happen, but we don’t have any tangible, specific proof of it yet in our own activities,” Logistics Capital Partners Managing Partner James Markby said. “It could also be viewed as just another accelerant, albeit a dramatic, major one, to the nearshoring trend already ongoing since issues from the pandemic, Brexit, inflation, plus global supply chain issues and fuel and shipping costs generally.”

He added that capital flows from Asia to Europe might get a boost for the same reasons, with tariffs making the U.S. look relatively low-growth. So for real estate investors already present in Asia, the next priority stop is probably Europe in the short to medium term.

“The two trends are also obvious bedfellows,” Markby said. “Chinese capital, and Asia more generally, will follow companies and operators they know and understand into new territories for real estate activities, and they typically like to deal with each other.”

That strategy is already evident among some of the most active Chinese e-commerce players in Europe. In 2025, JD Logistics, the logistics arm of Chinese retail giant JD.com, is expected to deliver in two to three days for consumers in 19 countries, with more than 50 self-operated overseas warehouses and a doubling of total overseas warehouse floor space.

JD Logistics operates nearly 100 bonded, direct-mail and overseas warehouses, and in March it launched its third warehouse in Poland, the second in Warsaw, with a circa 108K SF facility. 

These are the buildings where the world’s commerce happens, and the uptake in space in Europe has been going for a few years, LaSalle's Mahoney said.

He said the market has matured and that many space takers have already acted to secure their space, partly because of macroeconomic uncertainty, pointing to a slow uptick in vacancies in the UK as a “pure indicator” of supply and demand dynamics.

“We’ve probably seen growth rates peak. That said, we are also probably close to the peak in terms of vacancies,” he added. “I would say we remain optimistic but realistic about the market going forwards.”

Before the tariffs were announced, The Daily Telegraph reported that Shein had abandoned plans to open a UK warehouse amid doubts over its potential £50B London Stock Exchange listing. The fast-fashion giant had been exploring sites in the Midlands, including Derby and Coventry, with a Shein spokesperson telling the paper there was “no immediate need” for a UK warehouse.

In December, fellow Chinese discount retailer Temu launched a local warehousing service across several European countries, enabling products from both Chinese and European sellers to be delivered directly to European customers. Temu's local warehouse services are available in Germany, France, Spain, the Netherlands and Italy, with Austria recently added, and Temu has projected that 80% of its European orders will eventually be processed through such local facilities.

“These activities are more about the long-term trend towards e-commerce logistics,” Evonite partner Jose Pellicer said. “Where Chinese companies have been shifting manufacturing has tended to be to lower-cost countries such as Vietnam. In Europe, the costs are too high.”

As a result, there may be some logistical shifts in technology, such as solar panels, where perhaps the manufacture is 60-40 China-Europe, and this can be skewed more toward Europe and then badged as a European product, Pellicer said. But it will be limited to those specific categories.

He said the most likely beneficiaries are nations such as Germany and possibly Hungary, which already has BYD Auto and Nio electric vehicle factories and a battery facility and has the advantage of being inside the EU while being politically positive toward China. 

“There are a number of French and German investors still overweight in offices, so we may still see some shift in allocations,” Pellicer said. “We have probably reached peak globalisation, so while there is still momentum behind the industrial and logistics sector, it will slow.”