Stockholm Commercial Real Estate Market Report

Sweden's Commercial Real Estate Rebound: Industrial Warehouses Lead the Recovery

The Swedish commercial real estate market is experiencing a decisive turnaround in 2025, driven by a favorable shift in monetary policy and moderating inflation. For investors and businesses seeking exposure to small industrial warehouses and logistics properties, the current environment presents a compelling opportunity window that was unavailable just eighteen months ago.

The Monetary Tailwind: How Lower Rates Are Reshaping the Market

The most significant catalyst for market recovery has been the Riksbank's aggressive policy pivot. Beginning in April 2024, Sweden's central bank cut its policy rate by 175 basis points cumulatively, bringing it to 1.75% by December 2025. This dramatic easing has cascaded directly into the mortgage market, where variable-rate costs have plummeted from 4.7% in April 2024 to just 2.71% by November 2025. For commercial property investors, the impact has been equally pronounced: prime yields have stabilized at 4.90%, while transaction volumes have surged 98% year-over-year in Q3 2025.

Inflation, the original justification for the Riksbank's 2022–2023 tightening cycle, has collapsed below the bank's 2% target, reaching just 0.3% in November 2025. This sharp disinflation—coupled with the Riksbank's explicit commitment to maintain rates at 1.75% for "some time to come"—has fundamentally altered investor expectations and removed a layer of uncertainty that had suppressed capital deployment.

The Logistics Boom: Shifting Vacancy Dynamics Create New Opportunities

The industrial and logistics sector has emerged as the most dynamic segment of Sweden's real estate market in 2025. Investment activity in the I&L sector totaled SEK 104 billion in the first nine months of the year, a 27% increase year-over-year. The sector now accounts for 31% of all commercial real estate transactions, underscoring renewed investor confidence.​

However, beneath this positive headline lies a market rebalancing that fundamentally reshapes the competitive landscape. For decades, Swedish industrial properties were characterized by chronic undersupply—vacancy rates hovered at 1–2%. This scarcity created a landlord's market where rent levels remained stable and returns were predictable. That dynamic has shifted decisively.​

Speculative development in 2023–2024 has pushed national vacancy rates to 9.1%, with regional variations ranging from 6.5% in Gothenburg to 11.5% in Stockholm. While this may appear negative, the rebalancing has actually improved conditions for quality-focused investors. The surge in vacancy reflects not a collapse in demand, but rather the maturing of the market: tenants now have genuine optionality, and operators are consolidating to modern, well-specified facilities that offer operational efficiency gains.​

This "flight-to-quality" phenomenon is particularly relevant for small to mid-sized industrial warehouses. As CBRE's Q3 2025 research notes, demand for modern facilities remains robust despite elevated vacancy, especially in segments where properties offer superior specifications and energy efficiency. Prime-segment properties continue to command premium positioning.

Price Development and Buying Interest: A Tale of Two Markets

The real estate investment market has cleanly bifurcated into prime and secondary segments. Prime yields have compressed to 4.85%–4.90%, reflecting strong investor appetite for institutional-quality assets. Rents at the prime end have stabilized—rents in Stockholm have held at SEK 1,050/sqm p.a., with Gothenburg stable at SEK 1,000/sqm. This apparent stagnation masks healthy underlying momentum: leasing sentiment turned decisively positive in Q3 2025, with signed leases reaching 239,000 sqm, a 62% surge compared to Q3 2024.​

For small industrial warehouses specifically, the buying interest has accelerated meaningfully. The 98% surge in I&L investment volume in Q3 2025 versus the prior year reflects a portfolio-building dynamic among professional investors, particularly cross-border capital entering the market. International investors deployed SEK 9.8 billion in industrial deals during the first nine months of 2025, representing 36% of total I&L transaction value.​

Crucially, this investor interest is no longer concentrated in the "golden triangle" of Stockholm, Gothenburg, and Malmö. Regional hubs—including Ludvika, Örebro, Malmö, and Södertälje—are attracting major anchor tenants and developers. Logistri secured a 100,000 sqm lease for Hitachi in Ludvika (completion 2027), while Epiroc committed to a 29,000 sqm facility in Örebro. This geographic diversification has reduced competitive intensity in secondary regional markets, where smaller industrial operators can still command reasonable acquisition multiples and rental growth.

Vacancy Rate Dynamics: The Inflection Point

The vacancy rate story is critical to understand. While rising to 9.1% nationally, the trajectory suggests stabilization rather than further deterioration. Speculative development—which comprised 35% of new supply in 2024—is expected to decline to just 20% in 2025, reducing future vacancy pressure. Under CBRE's baseline scenario, vacancy is forecast to stabilize in 2026, provided speculative development returns to historical norms and demand rebounds.​

For small industrial warehouse operators, this matters enormously. Properties located in submarkets with strong fundamentals—proximity to population centers, good transport links, and modern specifications—have experienced negligible vacancy pressure despite the sector-wide increase. The owners of non-prime stock have faced greater headwinds, but this creates asymmetric opportunity: acquiring secondary assets at attractive entry valuations and positioning them for long-term hold, capturing the structural shift toward modern facilities.

The Investment Case: Timing and Positioning

The convergence of lower interest rates, stabilizing inflation, strong capital inflows, and flight-to-quality dynamics creates a rare window for industrial real estate investors. A typical small industrial warehouse purchase in 2022—when rates peaked at 5%—would have faced prohibitive financing costs and uncertain tenant demand. The same asset acquired today commands a 2.71% mortgage rate and benefits from tenant capital actively seeking modern facilities in secondary markets.​

The key to generating alpha is selectivity: properties with modern specifications, strong tenant covenants, and exposure to logistics hubs benefit most from the current market rebalancing. Conversely, aging facilities in saturated submarkets face structural headwinds.

As the Riksbank maintains its accommodative stance and economic activity begins to recover, the window for acquiring well-positioned industrial warehouses at still-reasonable valuations will narrow. The 2025 inflection in buying interest and the stabilization of vacancy rates suggest that the next 12–18 months represent an optimal entry point before prime valuations re-rate sharply upward.

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