Romania Industrial Market Overview 2019

Supply

Romania’s industrial stock currently stands at around 3.75million sqm, with another 400,000sqm planned to be delivered by the end of 2019. Thus, 2018 has marked a new record on the industrial market, with approximately 455,000sqm delivered in a single year. Bucharest continues to be the largest market, with a 2.2million sqm stock at the end of 2018.

Demand

The leasing activity in 2018 amounted to around 520,000 sqm, with most of the deals being new leases. Bucharest was the most dynamic market, with a 58% share, followed by Cluj and Timisoara, with a combined share of 30%. The main demand comes from logistics companies which rented over 120,000sqm of industrial space.

Rent Levels

Prime industrial rents have remained roughly unchanged from last year, 4.25EUR/sqm/month in Bucharest and 3.7 EUR/sqm/month in the major regional cities. Additional costs include property tax and insurance, security and maintenance and range from 0.5EUR/sqm/month to 0.9 EUR/sqm/month.

Vacancy Rates

Despite the record level of new deliveries, the industrial vacancy rates remain low, around 5% nationwide, with Bucharest’s vacancy level at 3%.

Yields

Prime yields in Bucharest hover around last year’s levels of 8.5%, while in regional cities prime yields vary from 8.75% to 9.25% and secondary cities register yields of 9.25% – 10.25%.

Romanian motorways current situation (existing, under construction & planned)

A new high-speed highway to by pass Bucharest and link A1 highways from Pitesti and A2 from Constanta was announced by the Motorway Company. The Belt Motorway (A0) South of Belt Ring II as it is known would be 52 kilometers long and the Motorway Company estimates that the design and execution will cost about 580 million euro and it will take three and a half years from signing the contract. 60 km of new highway has been delivered in 2018 in Romania, 48% of the estimate from the government at the beginning of the year. For 2019, another 118km are expected to be delivered. Only half of the planned Km were delivered

Distribution

In 2019 the industrial market will have a similar dynamics with 2018. In Bucharest, due to the continuous development of e-commerce, the demand for logistics and distribution centers inside the  beltway, known generically a surban logistics, will increase. Further more, the changes in legislation regarding fire safety will raise the demand for modern industrial facilities with areas below 1,500 to 2,000sqm. Owners of small facilities built until now will have to make significant investments in the modernization of their spaces in order to comply with the new regulations.

Logistics

At a country level, the are as which benefit from high way and infrastructure access will continue to develop logistics and production facilities. Thus, the logistics segment will help the development ofcities in Transylvania, like Oradea, Cluj-Napoca and Targu Mures.

On the production subsegment, the demand will concentrate on areas where, along with the access to modern infrastructure, there is an availability of qualified workforce. Cities like Brasov for example attract large production companies as well as their local subcontractors. An important advantage that Brasov will have is the opening of the airport in 2020.

Main players

The main players on the market remain WDP, CTP, P3 and Zacaria Group. For 2019-2020, they announced deliveries of over 700,000sqm inBucharest, Sibiu, Cluj, Timisoara and Pitesti.

Facilities

The fact that more and more companies are moving to self-developed facilities will maintain the rents at the same levels as the previous years. E-commerce company Emag has completed the development of its 120,000 sqm warehouse and retailer Altex is developing its own logistics center, with two warehouses to talling 90,000sqm and another 46,000sqm of external logistics platforms.

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