Strategic Aggregation and Diversification: Unlocking Industrial Real Estate Value in Sweden

The Swedish industrial real estate market is emerging as a compelling arena for value creation in 2025, driven by a confluence of favorable macroeconomic conditions and innovative investment strategies. As global supply chains reconfigure and e-commerce demand surges, Sweden's logistics and light industrial sectors have become focal points for capital seeking stable returns. According to a report by CBRE, the broader real estate investment market in Sweden is projected to grow by 10% in 2025, fueled by the Riksbank's rate-cutting cycle and a robust domestic capital base. Within this context, two strategies-strategic asset aggregation and long-term tenant diversification-are proving pivotal in enhancing returns and mitigating risk.

Strategic Asset Aggregation: Building Scale for Competitive Advantage

Strategic aggregation of industrial assets allows investors to consolidate fragmented markets, optimize operational efficiencies, and command premium pricing. A prime example is EQT Real Estate's recent success in Sweden, where the firm aggregated 33 light industrial assets into a high-quality portfolio, which was subsequently sold to Brookfield and ICA Fastigheter. This approach not only streamlined management but also created a diversified portfolio capable of attracting institutional buyers. By targeting assets in high-demand logistics corridors like Stockholm and Gothenburg-where prime yields have dipped to 4.90%-investors can leverage scale to negotiate better terms and accelerate value realization.

The benefits of aggregation are amplified in a market where vacancy rates remain stable at 9.0% nationally. By consolidating assets, investors can address underperforming properties through targeted renovations or re-leasing, as seen in EQT's portfolio, where short-term leases were restructured to stabilize cash flow. This strategy aligns with broader industry trends, such as EQT's Value-Add approach, which emphasizes single-asset aggregation and repositioning to optimize long-term performance.

Tenant Diversification: Stabilizing Returns in a Dynamic Market

While asset aggregation builds scale, tenant diversification ensures resilience. In Sweden's industrial sector, where 75% of Q2 2025 logistics completions were already let, maintaining a balanced tenant mix is critical. EQT's portfolio, for instance, prioritized small and medium-sized enterprises alongside established businesses, reducing exposure to sector-specific downturns. This approach mirrors the broader market trend of securing long-term leases with a mix of e-commerce, manufacturing, and distribution tenants, which helps stabilize occupancy rates and rental income.

The importance of diversification is underscored by regional variations in rent growth. While prime rents in Stockholm and Gothenburg have remained largely stable, Gothenburg saw a 2.6% quarter-over-quarter increase in rents to SEK 1,000/sq m. By spreading risk across multiple tenants and sectors, investors can capitalize on localized growth without overexposure to any single market segment.

The Role of a Favorable Funding Environment

Sweden's industrial real estate boom is further supported by a favorable funding environment. As the Riksbank continues its rate-cutting trajectory, borrowing costs are declining, enabling developers and investors to finance new projects and renovations at lower yields. This dynamic is particularly advantageous for value-add strategies, where capital is required to upgrade infrastructure or reposition assets for higher-demand uses.

The impact is evident in the logistics sector, where H1 2025 completions reached 224,000 sq m. With access to affordable capital, investors can accelerate development timelines and capture market share before competition intensifies. Additionally, domestic capital remains active, with industrial real estate accounting for 19% of total investment in 2024, signaling sustained interest in the sector.

Conclusion: A Recipe for Sustainable Growth

Sweden's industrial real estate market offers a unique combination of macroeconomic tailwinds and strategic opportunities. By aggregating assets to build scale and diversifying tenant bases to mitigate risk, investors can unlock value in a sector poised for growth. The favorable funding environment further enhances these strategies, enabling capital-efficient execution. As the Nordic region continues to attract global capital amid geopolitical uncertainty, Sweden's industrial real estate stands out as a model for disciplined, data-driven value creation.