Madrid has a logistics paradox that explains where European logistics is heading. In the first quarter of 2026, Spain leased more than 751,000 square metres of logistics space, up 5% on a year earlier, with Madrid alone accounting for 345,000. Availability in the Madrid market stood at 10.3%, the highest of Spain’s major hubs. Yet in September, the companies that use that space, Prologis, DHL Supply Chain, Procter & Gamble and STEF among them, presented a report to shape the region’s first Logistics Strategy warning that Madrid is short of land. Large plots are scarce in the Henares Corridor, around Barajas and along the southern axes, and the land that is available “often fails to meet current logistics requirements”. The report puts energy alongside land at the top of the problem: insufficient electrical capacity in parts of the region, and grid connections that are slow and expensive enough to undermine investment planning.

A market with one in ten square metres empty and a shortage of space at the same time does not have a quantity problem. It has a specification problem. The vacant space is mostly the wrong product. What operators cannot find is large, well-connected, permitted land with the power to run a modern facility. That gap between the stock that exists and the stock that works is not a Madrid story. It is the defining feature of European logistics in 2026.

The continental numbers show the same split. According to CBRE, European take-up stabilised at between 5 and 6 million square metres per quarter in 2025, well below the 2021 peak, and vacancy kept rising through the year despite weak new supply. On average, the market has space. Yet prime rents are still forecast to grow, with Iberia, Dublin and parts of Central Europe expected to outperform. Savills recorded Madrid prime rents up 12.5% and Lisbon up 10% in 2025. Rents are rising at the top while vacancy rises below it. That only happens when the scarce asset is no longer generic space but the right space in the right place.

Power has become the variable that decides which space is the right space. In the Netherlands, one of Europe’s three core logistics markets, Savills found that 66% of logistics properties sit in areas where the grid is congested. Dutch take-up fell 47% in the first three quarters of 2025, and Prologis built a microgrid-powered facility in Almere because the grid could not supply a conventional expansion. Automation is pushing in the same direction: Prologis estimates that fully automated warehouses can use three to five times more power than the 2024 baseline. And logistics developers now compete for the same land and grid capacity as data centres, which can pay far more per megawatt. CBRE lists power constraints and competition with data centres among the five forces reshaping European logistics.

Three consequences follow for anyone deploying capital.

First, the valuation of a logistics plot now starts with its grid connection, not its location. A well-located plot without secured power is an option on a utility queue. A slightly less central plot with capacity contracted is a buildable asset. As one Spanish consultancy put it this summer, project viability “no longer depends solely on finding well-located land, but on the capacity to develop it on schedule, with sufficient electrical capacity”.

Second, the map is spreading to wherever power and permits exist. In Spain, availability is 3.1% in Catalonia, 0.8% in Valencia and below 3% in most secondary markets, while Zaragoza, where the PLAZA platform concentrates around 70% of deals, posted record take-up in 2024 and around 150,000 square metres in 2025. Capital is not leaving Madrid because Madrid is full. It is following the plots that can be switched on.

Third, the obsolescence risk sits in the existing stock. If new demand needs power, height and automation-ready specifications, older buildings without them will make up a growing share of vacancy. That is the hidden side of Madrid’s 10.3%: part of it is space the market no longer wants, and it will not be absorbed just because demand recovers.

Here is what the market underweights. For a decade, European logistics was a land story: buy plots near motorways and big cities, build boxes, and let e-commerce fill them. The next decade is an infrastructure story. Completions are falling to nine-year lows, which should tighten supply in the second half of 2026. But new supply will be limited less by planning or land prices than by how fast grid operators can connect new load. That makes the winners different from the last cycle: developers with power already contracted, landlords who can provide energy on site through solar, storage or microgrids, and regions that treat grid connection as logistics policy. Madrid writing its first Logistics Strategy around land and energy is an early sign that governments are starting to understand this.

The implications cut both ways. For investors, prime powered assets in constrained markets justify their premium, and the case for secondary, unpowered stock is weaker than its yield suggests. For developers, a land bank without grid capacity is worth less than its book value implies. For Spain, the opportunity is real: strong demand, rising prime rents and secondary markets with almost no vacancy. But it will go to the regions that can connect a warehouse in months rather than years.

Europe has not run out of logistics land. It is running out of land it can switch on. The next decade of European logistics will be decided less by where the motorways go than by where the grid can reach.