Lucian Opris, Colliers: We need more Class A spaces in Romania

In the panel discussions at our recent re:FOCUS on Retail, Couriers & Logistics 2024, Lucian Opris, Director of Tenant Services at Colliers, provided profound insights into the dynamics of land acquisitions and developments in Romania’s real estate sector. He emphasized the cautious approach of developers amidst financing challenges, yet noted the importance of securing opportunities for future projects. Delving into statistical analysis, Lucian shed light on Romania’s consumption patterns, revealing a significant demand for storage despite lagging Class A stock availability compared to other European countries.

“What you said, we believe we will see land acquisitions or land reservations cumulatively, and not necessarily development itself, probably with all this greening of the map and acquiring new highway nodes, entrances, exits, and so on. Those lands will suddenly become, if they haven’t already become, especially where things are advanced, a subject of future projects. We don’t see developers rushing in ultra-speculatively headfirst, and financing itself is a problem these days, but certainly a way to secure your opportunity to build there.

At Colliers, we like statistics, and we looked into consumption. We consume goods and services about 80% of the European average; we indeed buy them cheaper than most Europeans. But in terms of volume and the need for storage, they are roughly the same. This is in the context where the Class A stock in other countries is up to seven times larger than what we have, specifically the 7 million square meters reached today in Romania. Let’s make a small comparison with the Netherlands. In the Netherlands, there are 2 square meters per inhabitant of Class A storage. We’re not comparing ourselves to the Netherlands yet, but I believe that the 0.3 m² per person we have in Romania is very little at the moment, and we can compare more objectively and closer to home by noting that the Czechs have three times the stock per capita, and we’re not that far from the Czech Republic. So, this statistic doesn’t do us justice; we need Class A spaces in Romania.

Throughout last year, we leased around a little over 100,000 square meters of logistics spaces, and indeed, in one of the deals we closed, there was a significant emphasis on price. But among the large and very large tenants, some were around 50,000, some were around 20,000 square meters, and so on. The cost wasn’t the project’s driver; rather, the fact that if the delivery is not on time, if it’s not done to specifications, or for other technical reasons, they will lose much more money from missing out on that market opportunity than from the savings they would have made in reality. And that’s why I truly believe that it doesn’t help at all that construction costs are rising, it doesn’t help at all that taxes are increasing, and so on. Nevertheless, from what we saw last year, there are still retailers, manufacturers, and others willing to take on these costs through transfers and still have a business model that performs. The expectation of doing nothing today for a higher rent and waiting for a cheaper rent later loses them much more money, so this model also exists.”