Interest in the industrial sector remained firm throughout the first 8 months in 2015, the Romanian investment market’s enthusiasm for warehouse and logistics properties resulting in a total investment volume of EUR 260.6 million, according to a CBRE analysis. This was a national record reaching seven times higher compared to last year’s total industrial investment volume.
Within the region, industrial investment has also picked up speed, accounting for up to 20 percent of total investment volume (in 2014 and 2015), compared to just 7 percent during boom period 2006 – 2008.
Investors from Czech Republic and US dominated the Romanian logistics investment market this year, with contributions coming only from foreign investors. The currently announced major transactions include CTP Invest’s purchase of Prologis Park Bucharest for around EUR 40 million and also the purchase of Bucharest West for around EUR 70 million, both in the Bucharest market. The Czech developer/investor has become the main actor in the Romanian market with more than 350,000 sq m from the total industrial and logistics spaces.
In terms of site selection developers’ focus remains on investment-grade property in good to excellent locations with a good mix of tenants and including further development land.
The investment market outlook remains favourable as the strong pick up of tenant demand and the resulting drop in vacancy rates combined with yields that remain amongst the highest in Europe, will continue to attract investor demand. Currently several large foreign investors are considering entering the market. With only few income producing assets available for sale, the focus is expected to shift towards the acquisition of sites with development potential for logistics or manufacturing.
“The European industrial property sector is going through a consolidation process with players either picking up smaller players and / or individual assets in order to gain market dominance, or exiting markets where they can’t achieve critical mass. As a consequence significant yield compression was seen in markets such as Poland and the Czech Republic. Romania, which remains one of the least concentrated markets in the region, with no player having a market share in excess of 10 percent, and also is one of the cheapest markets, increasingly looks favourable to such those actors that want to expand their regional or European portfolios. Romania is also attractive thanks to the significant improvements in the occupational sector with both manufacturing and retail growing rapidly, demand for space is accelerating,” Gijs Klomp, head of capital markets commented.
“The market is going through an intense transactional activity from an occupier point of view. As “traditional” markets, like Bucharest, Cluj Napoca, Timisoara have limited large-size readily available space, new hubs appear on the map, like Iasi, Deva and Targu Mures. With demand on the rise and developers interested to start working on speculative developments and / or tailor made projects, investors will follow lead and continue to drive the investment market,” Dana Bordei, head of industrial agency added.
CBRE Group is a commercial real estate services and investment firm headquartered in Los Angeles. The company has more than 70,000 employees and more than 400 offices worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting.