EUROPEAN - Location, and not the growing differential between prime and secondary assets, is driving pricing in European logistics, according to a report published by Jones Lang LaSalle.

The report forecast there will be rental increases in infrastructure-driven primary hubs, with strong demand and limited supply and "no or very limited" rental changes in secondary logistics hubs with greater land availability.

Despite evidence of an emerging separation of prime and secondary in other segments, report author Alexandra Tornow told IPE Real Estate the location - rather than the prime/secondary split - was the issue for international investors.

"In logistics, the driver is infrastructure. Where you have seaports, for instance, you have high demand and high rents. Where you have lack of supply and no expansion, you have high rents," she said.

"Elsewhere, even where you have prime - for instance, property located on motorways - rents are much lower."

Tornow cited a lack of quality asset availability as "a good opportunity". "Opportunistic investors and especially third-party logistics providers want quality supply," she said.

Q1 rental increases were strongest in prime logistics hubs driven by specific infrastructure locations, such as seaports and airports, and in Central and Eastern European markets. Rents increased highest in Budapest (8.3%), Moscow (7.1%) and Warsaw (4.5%) over the quarter, driven by macro-strength and the catch-up factor.

Although the report found rental growth slowing, with no European markets expected to see above-3% annual growth this year, Tornow said rents would remain stable in the medium term as she said "there's no expectation that they'll decline."