The total leasing activity (TLA) with industrial and logistics space amounted to 431,000 sqm in 2014, up by 39 percent compared to 2013, according to data from commercial real estate services firm CBRE Romania. This year the TLA is projected to surpass last year’s level.
Both logistics players and manufacturers will be driving this growth said Dana Bordei, head of industrial agency with the firm. More and more retailers are looking to open logistics hubs outside Bucharest, especially in the western part of the country. Demand for industrial space outside the capital too will maintain its upward trend in 2015, she added. The availability of local labor force at attractive costs is the main factor manufacturers consider before opening production facilities in Romania. Such was the case of Japanese automotive parts producer Yazaki which leased last year a built-to-space project in Braila (16,000sqm – 45,000 sqm in WDP Braila).
However, in order for this trend to maintain its momentum, it is important on the long-run for the country to invest in the educational system so that it can offer better qualified workers able to manufacture more labor-intensive products, said Bordei. Otherwise, such companies will easily relocate local operations to cheaper locations once the local market becomes too expensive, she warned.
Out of last year’s 431,000 sqm TLA, 26 percent represented relocations, 25 percent represented pre-leases, 23 percent were renewal transactions, 3 percent was new demand, expansions represented 3 percent, the acquisition of distressed assets 11 percent and owner occupied space represented another 11 percent. Some 30 percent of the space leased last year (different types of transactions) was in Bucharest, the same as in Timisoara (30 percent), followed by Ploiesti (20 percent), Arad (6 percent), Oradea (5 percent), Deva (5 percent) and Braila (5 percent).
Half of the space leased last year was for warehouses, 34 percent for manufacturing and the remaining 16 percent for logistics.
The largest transaction closed last year was Continental’s pre-lease of 45,000 sqm for a warehouse/logistics unit in Timisoara Airport Park.
Romania’s stock of industrial and logistics space amounts to 3.26 million sqm (within privately owned industrial parks). Some 25,000 sqm will be delivered this year. Last year’s average vacancy rate in Bucharest was 11.3 percent (124,000 sqm available) while outside the capital this stood at between 10 percent and 14 percent (170,000 sqm available)
Prime headline rent for greater Bucharest dropped to EUR 3.8 percent/sqm/month in 2014 while outside the capital this stood at between EUR 3.4/sqm/month and EUR 3.8/sqm/month. Service charges range between ERU 0.75/sqm/month and EUR 1/sqm/month, according to CBRE.
On the industrial and logistics market CBRE had last year a 62 percent market share (out of the entire stock leased through real estate services firms). It brokered transactions totaling (50,500 sqm) and in the first quarter of this year it brokered another 36,000 sqm, according to company data.