Market Review 2025 and Outlook 2026 for Institutional Investors
Introduction: Why Sale-and-Leaseback Has Become a Core Institutional Strategy Again
By the end of 2025, sale-and-leaseback (SLB) transactions have clearly re-established themselves as a mainstream institutional investment strategy, particularly within the industrial and logistics real estate sector. What was once perceived as a niche solution or a tool used primarily in distressed situations has evolved into a strategic capital allocation instrument for both corporates and investors.
The renewed relevance of sale-and-leaseback is the result of several structural shifts that have defined the real estate and capital markets since 2022. Persistently higher interest rates, a more conservative banking environment, increased scrutiny of balance sheets on the corporate side and a strong demand for predictable, long-term income among institutional investors have created a market environment in which SLB transactions are not only viable, but often highly attractive.
As of December 2025, it is evident that sale-and-leaseback is no longer a cyclical phenomenon. Instead, it has become a permanent building block within institutional allocation strategies, especially in markets such as Germany and Poland, which offer different but complementary risk-return profiles.
Review of 2025: How the Sale-and-Leaseback Market Evolved
Macroeconomic Background and Capital Market Conditions
The year 2025 marked a phase of normalisation following the repricing period of 2022–2024. Interest rates stabilised at a structurally higher level, providing more visibility for long-term underwriting, even though financing conditions remained restrictive by historical standards. Banks continued to lend selectively, focusing on lower loan-to-value ratios, stronger covenants and demonstrably resilient cashflows.
For many corporates – particularly in the industrial and manufacturing sectors – traditional mortgage financing became either less accessible or significantly more expensive. In this environment, sale-and-leaseback transactions emerged as a capital-efficient alternative to bank debt, enabling companies to unlock liquidity without compromising operational continuity.
At the same time, institutional investors faced the challenge of reallocating capital in a market where development risk, value-add strategies and short-lease assets appeared increasingly volatile. Sale-and-leaseback offered a compelling solution by combining long-term income visibility with real estate security.
Investor Demand in 2025: A Broader and More Institutional Buyer Base
During 2025, investor demand for sale-and-leaseback assets broadened significantly. While earlier cycles were dominated by specialised net-lease REITs and opportunistic capital, the current market saw a growing presence of insurance companies, pension funds, sovereign-related investors and core/core-plus funds.
These investors approached SLB transactions less as traditional real estate acquisitions and more as structured income investments. The primary focus shifted toward lease duration, indexation mechanics, tenant creditworthiness and downside protection rather than headline yields.
As a result, pricing became increasingly differentiated. Assets backed by strong covenants, long weighted average unexpired lease terms (WAULT) and clear net-lease structures attracted intense competition, while transactions with weaker tenant profiles or limited alternative-use potential faced more scrutiny.
Supply Side in 2025: Why Corporates Sold and Stayed
On the occupier side, 2025 was characterised by a growing strategic awareness of sale-and-leaseback as a balance-sheet and capital-structure optimisation tool. Corporates across industrial production, logistics, automotive supply chains and manufacturing increasingly accepted that owning operational real estate is not always the most efficient use of capital.
Instead, sale-and-leaseback allowed companies to redeploy capital into core business activities such as automation, energy efficiency, expansion of production capacity, geographic growth or acquisitions. Importantly, the long-term leaseback ensured that operational stability and site control were preserved.
This trend was evident in both Germany and Poland, albeit with different motivations. In Germany, SLB was often driven by balance-sheet optimisation and conservative capital planning, while in Poland it was frequently linked to growth, international expansion and scaling of production platforms.
Germany in 2025: Sale-and-Leaseback in a Mature Core Market
In 2025, Germany reaffirmed its position as a stable and institutionally driven industrial and logistics market. Compared to other asset classes – particularly office – industrial and logistics assets demonstrated more resilient fundamentals, supporting sustained investor interest.
Sale-and-leaseback transactions in Germany benefited from a high degree of legal certainty, well-established lease standards and predictable enforcement of contractual rights. At the same time, investors applied a conservative underwriting approach, placing strong emphasis on lease clarity, maintenance obligations, indexation clauses and tenant transparency.
Deals that lacked clear net-lease characteristics or relied on optimistic re-letting assumptions were increasingly discounted. As a result, 2025 can be seen as the year in which sale-and-leaseback became fully accepted as a core-eligible investment product in Germany, provided that structure and credit quality met institutional standards.
Poland in 2025: Scale, Momentum and International Benchmarks
Poland played a particularly prominent role in the European sale-and-leaseback market during 2025. Over the past decade, the country has evolved into one of Europe’s most important industrial and manufacturing hubs, supported by nearshoring trends, export-oriented production and competitive cost structures.
In 2025, sale-and-leaseback transactions gained high visibility due to several large-scale, internationally recognised deals. These transactions demonstrated that the Polish market is capable of absorbing significant institutional capital and providing the lease structures and covenant quality required by global investors.
For institutional buyers, Poland offered an attractive combination of higher initial yields, long-term leases and exposure to structurally growing industrial clusters. However, the market also required more detailed due diligence, particularly with respect to technical standards, ESG compliance and alternative-use scenarios.
Why Sale-and-Leaseback Is Structurally Attractive for Institutional Investors
The structural appeal of sale-and-leaseback lies in its ability to meet multiple institutional requirements simultaneously. SLB assets typically provide long-dated, inflation-linked cashflows with clearly defined risk allocation between landlord and tenant. The investor’s return is primarily driven by contractual income rather than speculative value appreciation.
In essence, institutional investors are underwriting the operational strength of a corporate tenant, with the real estate serving as tangible security. This makes sale-and-leaseback particularly attractive as part of income-oriented portfolios, often positioned alongside infrastructure investments or long-duration credit strategies.
Outlook for 2026: How the Sale-and-Leaseback Market Is Likely to Develop
Expected Market Dynamics
Looking ahead to 2026, the structural drivers supporting sale-and-leaseback transactions are expected to remain firmly in place. Interest rates are unlikely to return to pre-2022 levels, and banks are expected to maintain disciplined lending standards. As a result, corporates will continue to seek alternative capital solutions, while institutional investors will remain focused on secure income streams.
In Germany, further professionalisation and standardisation of SLB structures can be expected, with increasing competition for high-quality core transactions. In Poland, the market is likely to continue scaling, with additional large-format SLB deals reinforcing its position on the radar of global institutional capital.
Returns, Risk and Structuring in 2026
For 2026, we expect:
- stable to slightly compressing yields for prime SLB assets
- greater differentiation based on tenant covenant quality
- increased focus on ESG compliance and energy performance
- heightened importance of exit and alternative-use strategies
Sale-and-leaseback will continue to evolve from a pure real estate strategy into a hybrid investment approach combining elements of real estate, credit and infrastructure.
Conclusion: Sale-and-Leaseback as a Permanent Institutional Allocation Tool
As of December 2025, it is clear that sale-and-leaseback has become a permanent feature of the institutional real estate landscape. For investors seeking predictable income, inflation protection and controlled downside risk, SLB transactions in industrial and logistics assets represent a highly compelling strategy.
Germany and Poland offer distinct but complementary opportunities. Investors who understand the nuances of both markets and apply disciplined underwriting can use sale-and-leaseback as a scalable, long-term investment solution.
We support institutional investors in sourcing, analysing, structuring, advising on and executing sale-and-leaseback transactions, with a particular focus on industrial and logistics real estate in Germany and Poland.
