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The volume of modern industrial and logistic space to top 5 ml sqm by year-end
Romania's modern industrial and logistic space will top 5 million sqm by the end of this year, shows the most recent exCEEding Borders report by Colliers International.
As of H1 2020 this type of property hit 4.72 million sqm, up 5 percent compared to the same period in 2019, and accounts for over 9 percent of the stock of the largest 17 Central and Eastern European markets.
It is estimated that in the first six months of 2020 developers delivered countrywide roughly 120,000 sqm of new industrial and logistic space, which was close to the figure for H2 2019 (100,000 sqm) but on the other hand marked a decline compared to the 300,000 sqm delivered in the year-ago period. However, the second half of the year is expected to be much more active, with almost 300,000 sqm in planned new deliveries, of which over 60 percent located on the outskirts of Bucharest.
According to the expert report, Romania's total leasing transaction volume was of 250,000 sqm at the end of June, with 35 percent of the leased space (87,500 sqm) located in Bucharest. New contracts accounted for 81 percent of the deals. In Bucharest, new agreements and renegotiations accounted for 55 percent and 37 percent of the new deals, respectively.
"Romania's volume of modern industrial and logistic space has increased threefold since 2015, but there is still a significant gap between Romania and other CEE markets. The Czech Republic has 9 million sqm of modern industrial and logistic space, while in Poland modern warehousing space amounts to around 19.6 million sqm, which means that Romania's per capita stock of industrial and logistic space is 4 times lower than that of the Czech Republic and 2 times lower than Poland's. (...) Tenant structure by sectors in the Romanian market was dominated by FMCG (50 percent), while in Bucharest it was led by 3PL (35 percent) and light production/manufacturing (33 percent). That said, large deals tend to move the market, as in the previous year, with the automotive sector acting as the main driver of demand. Profi's new logistic facilities in Timisoara and Craiova represented the most important deals, with a combined 115,500 sqm of leased space," the data centralized in the report shows.
Against this background, rents for class A industrial and logistic space in important locations remained generally stable this year at 3.8 - 3.9 euro/sqm for facilities around Bucharest and at 3.7 - 3.9 euro/sqm for facilities in other hubs in the country.
"For comparison, in the area of Warsaw, Sofia or Budapest rents amount to 5 euros per sqm. The average lease lengths in Romania are 3 - 5 years for logistics/warehouse premises and 3 - 7 years for production/manufacturing facilities," the experts explain.
According to the Colliers International report, some of the key challenges to CEE's industrial and logistics property sector revolve around a number of factors that include: the availability of land and property in locations that meet both the developers and end-user expectations, the availability and reliability of utilities (and increasingly data networks) and transport infrastructure, the availability and skills of the labor pool, EU membership and access to investment incentives, amongst others.
Colliers International Group Inc. is a leading real estate professional services and investment management company with operations in 68 countries and over 15,000 experts.