BR Analysis: Romania’s industrial and logistics market needs infrastructure and workers

Newsroom 07/07/2018 | 08:00

The industrial and logistics market was the second biggest growth driver of the Romanian real estate market after the office sector last year. As growing consumption powered the market, retailers and logistics players sought more storage space and developers gladly provided it – mostly in Bucharest and the west of the country.

By Razvan Zamfir

There is around 3 million sqm of space on the Romanian industrial and logistics market and if the economy continues to grow, the available surface will probably reach 3.5 million sqm by the end of the year.

One of the major market events was the entry of logistics developer and operator P3 into the portfolio of GIC, Singapore’s sovereign investment fund, following a global transaction worth EUR 2.4 billion.

P3 has one of the largest logistics parks in Romania, P3 Bucharest, purchased from CA Immo in early 2015, currently including 11 warehouses with a total area of 305,000 sqm.

Or, take CTP, one of the leaders of a market with few players, and its plans. The Dutch-founded company plans to become the biggest developer on the market, with the goal to own 1 million sqm of logistics properties in Romania.

This year, the company, which owns properties in Bucharest, Cluj, Timisoara and Pitesti, will deliver 300,000 sqm.

CTP has covered key positions in the west of the country, which is home to one of the highest levels of rental demand in the industrial and logistics market. Infrastructure improvements in this region, proximity to the western border and the abundance of new entrants to the area, from sectors such as IT, automotive, electronics, retail and FMCG, are among the draws for CTP’s expansion ambitions. “The capital city naturally records the largest demand for industrial and logistics space. We have three parks – CTPark Bucharest, CTPark Bucharest West and CTPark Bucharest Chitila, whose cumulative surface has already exceeded 500,000 sqm, and we expect it to reach 700,000 sqm at the end of this year, which makes us the biggest owner of logistic parks near Bucharest. The same situation exists at a national level, where we have industrial and logistics parks in the western region: Arad, Cluj-Napoca, Deva, Ineu, Salonta, Sibiu, Timisoara and Turda. Currently, at national level, we are focusing on finishing the developments started in the Timisoara and Cluj parks, as well as the further development of the Pitesti Park,” says Iulia Busca, commercial & business development manager at CTP Romania.


“Logistics projects are usually developed in areas that provide easy and fast access to major cities / neighboring regions; the main factor in choosing the location is the distance to motorways and national roads. However, it also depends on the specifics of the activities carried out by the firms in charge of the deposits. For example, in the case of light production units (activities that can be hosted in logistics warehouses), an important factor in the choice of the area is also the availability of labor force. So it is easy to understand why major cities are the urban centers chosen by developers of logistics space, especially for speculative projects,” says Laurentiu Duica, director of the industrial agency at Colliers International.

Players say there are two areas where the stock is high: Timisoara, in the west of the country, with 370,000 sqm, and Bucharest, the leader and the country’s strongest economic point, with more than 1.7 million sqm.

But things change. The western region, not only Timisoara, is developing fast, thanks to economic growth and because it is near to the border. Cluj-Napoca, for example, has reached around 210,000 sqm and Arad close to 100,000 sqm.

“In the future we do not exclude any area in Romania, as long as the basic conditions for the development of our clients’ business are fulfilled: infrastructure, labor force, economic development,” adds Busca.

Another investor interested in the western region is Globalworth. Although concentrated on the office market, the company founded by Ioannis Papalekas has owned the 103,000-sqm TAP industrial park in Timisoara, since 2014, and last year spent EUR 42.5 million on another logistics project of 68,000 sqm which can be expanded by another 40,000 sqm, located in Pitesti.

The company announced recently that it is moving its focus from the Bucharest market in order to buy industrial and logistics properties.


The market profile of Eastern Romania is, unlike the real estate, retail, office and residential sectors, evenly balanced between three major areas: the capital, the center of the country and the west of Transylvania.

Nevertheless, Moldova, although lacking fast road infrastructure (highways), seems to be interesting to players, although at present it has only 47,000 sqm of storage space, according to Costin Banica, head of industrial agency of JLL consultancy company, and no space delivered in Q1, a long way from the 1.7 million sqm of Bucharest or the 600,000 sqm in the west.

“Moldova is a region that has major development potential in the logistics segment, both in terms of surface area and population, or potential labor force. The development of quality infrastructure to facilitate connection with the northern and eastern countries of Romania would certainly increase interest in new and significant investments in the region,” says Busca of CTP.

Nonetheless, the region is appealing. Moldova is well positioned for malls and is open to other markets outside the country – the Republic of Moldova and Ukraine.

“Lately there has been increasing interest in less-cleaned areas such as the northeast of the country, with retailers being interested in developing distribution centers serving the north of the country, while also aiming to access the Moldovan market,” says Duica of Colliers International.

Players say that no matter how exciting it may become, Moldova will not be able to compete in the foreseeable future with the west of the country, but the eastern region has a trump card: its workforce.

“Not surprisingly, the center and west of the Carpathian Arc are generally the most attractive for companies that have trade links with Western Europe. Potential employees are located in other areas of the country, and Romania also has rather low internal labor mobility. For example, Iasi and Suceava counties together account for a seventh of the total number of people committed at national level, from our calculations. Structural reforms to increase productivity and two highways on the north-south / east-west axes could lead to explosive and lasting economic growth,” says Silviu Pop, head of research at Colliers International Romania.

Only then will other regions with poorer connections to the West, such as eastern or northeastern Romania or the southeast, benefiting from the underexploited potential of Constanta port, be able to receive serious investments to help their development.


Rents are roughly equal across the country, and they have been stable in recent years.

“Rents in Bucharest stand at EUR 3.75 – 4.2/ sqm, and in the other cities they are EUR 3.5-3.8/sqm. They vary and may also be lower, depending on company specifications, leased area, contract length etc,” says Rodica Tarcavu, senior broker, industrial agency, at Cushman & Wakefield Echinox real estate consultancy.

Emilian Podaru, head of industrial & logistics at Crosspoint Real Estate, confirms the level of rents, and claims that the highest rent is in Bucharest where the vacancy rate is the lowest, below 5 percent for Class A spaces. In the Cluj area rents can also exceed EUR 4 / sqm. Bringing up the rear is Moldova where average net rent can be around EUR 3.25 – 3.5 / sqm. Demand comes mainly from logistics companies, retailers, traditional or online, and FMCG. Trade provides most of the demand for logistics space, especially as there is a sizeable difference between the demands of retail or logistics and industrial players.

The top eight rental deals in the first quarter of this year reveal the structure of the market. According to JLL Bucharest City Report Q1 2018, four of them involved logistics spaces, and total 45,000 sqm. Two involve production facilities and account for 10,500 sqm, and the others were for a storage space and a data center, with areas of 2,500 sqm and 6,000 sqm, respectively.

“Most of the demand in 2017 came from logistics, transport and distribution companies, which leased more than 55 percent of the total space. Production companies need buildings with special technical specifications tailored to their needs,” concludes Busca of CTP.

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