Romania Market – Industrial & Logostics Market – Overview coloring insights Q1-Q3 2017

INDUSTRIAL & LOGISTICS

Overview

The industrial sector continues its positive trend that began in 2016.Important players on the industrial market, both investors and developers, promise new projects and expansions of the existing spaces in what appears to be a new record for the real estate market. The first three quarters of 2017 were dominated by logistics companies and retailers.

Supply

As aresult of a growing demand nationwide, it is estimated that by the end of 2017 new deliveries on the industrial market will reach 480,000 sq m, most of which is already pre-leased or is BTS. Most of the developments are in Bucharest and its surrounding areas. The current modern stock around Bucharest stands at 1.2 million sq m, while on a national level it has reached 2.6 million sq m. The West and North-Western area continues to comprise the largest stock after Bucharest and its surroundings, with 750,000 sq m, followed by the South and South-Eastern area with a total stock of 470,000 sq m. Among the largest projects set for completion in 2017 are: CTPark Bucharest West (68,000 sq m), P3 Logistic Park Bucharest (60,000 sq m) and WDP Otopeni (38,000 sq m).

Demand

Demand for industrial and logistics centers has seen an increase in the first 9 months, with total take-up standing at 367,000 sq m. In Bucharest, total take-up this year has reached approximately 220,000 sq m, which was a 20% increase compared to the same period in 2016.

The main drivers of the demand are the logistics sector – 11%, storage -7% and retail sector – 6%. The remaining consists of e-commerce, manufacturing, distribution and automotive industries.

A total of 36 leasing transactions were recorded in the first three quarters of 2017, with ten exceeding 10,000 sq m. The top three largest transactions were all concluded in Bucharest: the renewal of DSV in CTPark Bucharest (55,000 sq m), the extension of DSV in CTPark Bucharest West (35,000 sq m) and the new lease of NOD in CTPark Bucharest West (31,000 sq m).

60% of total take-up was registered in Bucharest, and cities such as Timisoara and Pitesti also had notable transactions accounting for 10%, respectively 14% of total volume.

The main source of demand was the acquisition of new lease, taking up to 70% of the total number of transactions.

Vacancy

The industrial market has reached a peak occupancy rate. At the end of the first semester, it is estimated that the vacancy stands at 4% nationwide, which is a new record low for the industry, with figures falling as low as 2% in Bucharest.

Rent

Rents 100,000 Due to the low vacancy rate and high demand for class A industrial spaces, the average rent has seen a slight increase, situating itself at approx. €4 sq m/month.

Forecast

As a result of a favourable economic environment and a growing demand ofcompanies looking for business opportunities, the Romanian industrial and logistics market is expected to continue its positive trend, with new deliveries anticipated to exceed 480,000 sq m by the end of the year. Bucharest is not the only market that will see considerable growth in Q4 2017; as new developments are set to be delivered in Timisoara (45,000 sqm), Cluj Napoca (13,000 sq m) and Roman (32,000 sq m).

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