Eight cities concentrate 90 pct of Romania's industrial and logistics space stock

Romania's stock of industrial and logistics space has topped the threshold of 4 million sqm; eight big cities in the country south, center and west concentrate 90 percent of this space, shows the report Romania Industrial & Logistics Market by real estate consulting firm Cushman & Wakefield Echinox.

According to the document, the only cities in the country east to have caught the attention of private developers of industrial and logistics parks are Iasi, Roman and Braila, but they account for less than 3 percent of the stock, as most developers and potential investors avoid them mainly because of infrastructure issues. "By comparison, Sibiu's stock is larger than everything the region of Moldova holds," the report states.

"Bucharest is the largest market, with almost 1.9 million sqm and a weight of about 46 percent of the total, followed by Timisoara, which has exceeded the 500,000-sqm line, and Ploiesti with about 370,000 sqm. In the past five years the market has doubled, as developers have delivered between 400,000 and 500,000 sqm every year," says Cristi Moga, head of research Cushman & Wakefield Echinox.

According to Cushman & Wakefield Echinox representatives, 2020 promises to be a record year, with around 700,000 sqm announced for handover, of which about 400,000 sqm in Bucharest, which has two important logistics hubs in the works, namely North-West (Dragomiresti, Chitila, Mogosoaia) and North (Stefanesti).

Andrei Brinzea, Cushman & Wakefield Echinox partner - Land & Industrial agency, said that the market dynamics in the industrial sector has generated speculative land purchases in 2019, as the developers attempted to anticipate the future needs of potential tenants.

"We can see new cities like Bacau, Craiova, Buzau, Deva appearing on the relevant map of this activity sector, but also an increased interest for the eastern part of Bucharest, which has also captured the attention of potential tenants. We estimate that in 2020 we will see developers expand their portfolios in smaller cities, but with a higher potential," said Andrei Brinzea.

According to him, transactions remained at a high level, as corporate rentals in 2019 stood at about 477,000 sqm, of which contract renewals represent just 20 percent. The most active sectors were automotives (accounting for 30 percent of the total demand), retail (physical and online - 20 percent), distribution in various sectors (12 percent) and logistics and transport (10 percent).

"Investors are dependent on infrastructure. Currently we can see a concentration of production capacities in the country west, due to the fact that outbound traveling is much easier here, and to the smoother motorway connections to main cities.

The absence of the Pitesti - Sibiu motorway increases travel times very much and the southern area is cut off the west of the country. This is also visible in production volumes, as production in western Romania exceeds by far the output of the south. Railway transport could be a solution, but it will take some time before we will have a modern railway infrastructure, said Andrei Brinzea.

According to him, the human resource is the main challenge for the western area. "From my point of view, this is the main risk we are facing. The unemployment is very low. For this reason, the developers have to choose their areas also according to the human resource potential. As Timisoara's unemployment rate is 0.3 percent, we know cases where certain warehouse owners work with open-prison detainees. If you look at Timisoara's restaurant or hotel sector, you will be astonished to see how many Serbian employees they have. Finding personnel nowadays poses a real challenge. I think that at some point, when we will have a real perspective of a motorway in Moldova and in the south, these regions could become much more interesting," added the Cushman & Wakefield Echinox representative.

According to the survey, the largest owners of industrial and logistics spaces are real estate developers CTP and WDP, which have a cumulative portfolio of about 2 million sqm, thus controlling half of the market. Other developers such as VGP, Global Vision, Industrial Element, P3 or Helios Phoenix too display a high appetite for expansion.

Cushman & Wakefield Echinox has a team of over 60 professionals and collaborators offering a full range of services to investors, developers, owners and tenants. Cushman & Wakefield is one of the global leaders in the field of commercial real estate services, with 51,000 employees in over 70 countries, helping tenants, owners and investors optimize the value of their assets. The main services provided by the company are: consultancy in asset and investment management, capital markets, leasing, property management, tenant representation, project and evaluation services. AGERPRES