For a long time, logistics investment in Southeast Europe followed a relatively predictable formula: focus on the capital city, stay close to the largest consumer base and choose a location along an established transport corridor.

That logic has not disappeared. Prime logistics zones around major cities still offer what most investors value: deeper occupier markets, better liquidity and a more straightforward exit. But they are no longer the only locations worth discussing.

As manufacturers, retailers and logistics operators become more focused on efficiency, a number of secondary cities across SEE are starting to make a stronger case. Not only because land is cheaper, but because some of these locations offer a better operational balance, including available sites, access to labour, proximity to production, good road connections and enough space to expand. The important word here is some.

A secondary city does not become an attractive logistics market just because it sits near a motorway or has a large industrial zone marked on a planning map. A location may look convincing in a presentation and still fail when tested against the issues that actually determine whether a project will work.

The real question is whether the location can support an asset that is usable, financeable and relevant beyond its first tenant.

Start with the occupier, not the land

One of the most common mistakes is to begin with an available site and then build an investment story around it. The process should work the other way around.

Who would realistically occupy the building? Is demand coming from manufacturers, retailers, third-party logistics providers or local distributors? Are these companies already operating in the area? Are they actively looking for space, or is the demand based mainly on expectations of future growth?

It is also necessary to understand what occupiers would actually take. A general assumption that the area “needs modern logistics space” is not enough. Investors need a view on acceptable building size, technical specification, rent, lease length and expansion requirements.

In less-established markets, these details matter even more. Demand may exist, but not necessarily for the type or scale of product initially planned. A convincing regional growth story can support an investment case, but it cannot replace one.

A good location on a map may not work on the ground

Logistics projects are particularly sensitive to infrastructure. Motorway proximity is useful, but it tells only part of the story. The quality of the junction, the final access road, congestion, border waiting times and restrictions on heavy vehicles may have a greater impact on day-to-day operations than the distance shown on a map.

The same applies to utilities. Electricity, water and drainage may technically be available, but not always at the capacity required for a modern logistics or light-industrial facility. Even where upgrades are possible, their cost and timing can materially affect the project.

Public transport and employee access also deserve more attention than they often receive. A warehouse that trucks can reach easily but employees cannot is not necessarily well connected.

This is why market and technical analysis should not be treated as separate exercises. Strong occupier interest does not mean much if the site cannot be delivered on the required terms and within a realistic timeframe.

Labour can change the location equation

For occupiers, labour availability is increasingly becoming part of the real estate decision.

Capital-city locations may offer a large workforce, but they also come with higher employment costs, greater competition and longer commuting times.

Some secondary cities can offer a more stable labour base, particularly where logistics is connected to an existing manufacturing cluster. However, lower labour costs should not be assumed automatically.

A location may already be competing with several large industrial employers. The available workforce may not have the required skills, or employees may depend on transport provided by the occupier. Demographic trends and outward migration can also make today’s labour advantage less reliable over the full term of a lease.

Labour is therefore not just an occupier’s operational concern. It directly affects tenant retention, re-leasing potential and the long-term competitiveness of the asset.

The first tenant is only part of the investment case

A build-to-suit opportunity with a credible occupier may make a secondary location look attractive. But investors and lenders still need to ask what happens after the first lease.

Would another occupier be able to use the building without significant modifications? Is there enough market depth to support re-leasing? Does the location have relevance beyond one company or one industry? This is where the difference between an operationally viable project and an institutional investment becomes clear.

Secondary locations may offer lower land costs, less competition and more attractive yields. In return, they often require more careful thinking about liquidity, tenant concentration and exit. A higher yield is not automatically better value if it mainly reflects risks that have not been fully examined.

Secondary cities are not a single investment category

The logistics opportunity in SEE is not only about moving away from capital cities. It is about identifying individual locations where occupier demand, infrastructure, labour, planning, utilities and long-term liquidity reinforce one another.

Some secondary cities will develop into credible logistics and industrial hubs. Others may support a specific occupier or a limited local market without becoming broader investment destinations. Both can produce viable projects, but they require different underwriting assumptions and different exit strategies.

The strongest opportunities are usually not the ones with the most ambitious “emerging location” narrative. They are the ones where the operational case can be demonstrated, the delivery risks are understood, and the asset still makes sense under a less optimistic scenario.

At Adriatic Advisors, we work with investors, developers and lenders assessing logistics and industrial opportunities across SEE and CEE. Our work combines market research, location and site assessment, feasibility, technical due diligence and practical delivery insight.

If you are reviewing opportunities in the region, we would be happy to discuss it with you.