CBRE MarketView Snapshot Q3: Retail becomes the driver of industrial deals, doubling its share in the last 5 years

The third quarter brought an increased leasing activity in the industrial segment, where retail and related services companies, such as courier and logistics, leased over 300,000 sq m, with a share of 50% of the total volume, which doubled compared to 2015, according to CBRE MarketView Snapshot Q3.

An important trend in the first three quarters of 2020 is the evolution of retail to omnichannel. On the one hand, retailers focus on the network of physical stores, where CBRE works intensively on portfolio optimization and on the other hand they invest new resources to benefit from increased online sales, developing their logistics capabilities.

“The evolution of retail to omnichannel generates a strong need for logistics space, fueled by the lack of predictability regarding the possible restrictions imposed by authorities in a key moment for retail. The fourth quarter, as a result of Black Friday, Saint Nicholas and Christmas, generates over 30% of total online retail sales and the expansion of logistics spaces influences the shopping experience and, consequently, retail sales“, stated Carmen Ravon, Head of Retail and Land, Omnichannel Real Estate Solutions, within CBRE Romania.

CBRE has recently launched in Romania a range of omnichannel services for retailers who want a quick adjustment to the new market environment by expanding logistics spaces. The new range of services integrates the solutions already offered to retailers (land acquisitions, leasing, portfolio optimization, mergers and acquisitions and property management) and facilitates their access to typical solutions for the industrial sector.

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The modern retail stock in Romania was estimated at 3.84 million sq m, at the end of the third quarter, following the delivery of 90,000 sq m in the first nine months, with the completion of the projects: Dâmbovița Mall and Shopping City Târgu Mureș, NEST Miercurea Ciuc and NEST Oradea. Furthermore, 82,000 sqm will be delivered in the fourth quarter, in Alba Iulia, Baia Mare, Brașov, Slobozia, Sibiu and Timișoara, by starting new projects or expanding existing ones, thus heading towards the 4 million sq m milestone, as reported by CBRE Research data.

“The projects delivered in 2020 were initiated in 2019 or even earlier. Investors continue to be cautious about the development of large projects, with an appetite for small and medium-sized projects, especially for retail parks. Projects, such as the retail park developed by Synergy in Pipera-Voluntari area, could become the engine of the market in the following year”, added Carmen Ravon.

Over 600,000 sq m of industrial spaces leased in the first nine months

A total area of 612,000 sq m of industrial spaces was leased in Romania, in the first three quarters, increasing by 70%, relative to the average share of the similar period of the last three years, according to CBRE Research data.

“Retail doubled its share in total industrial transactions, compared to 2015, a prominent increase if we add the courier and logistics services. Almost half of the total deals of industrial spaces concluded in the first nine months were generated by retail companies, respectively over 300,000 sq m. Even though we notice more and more transactions in the non-food area, we also anticipate large deals from FMCG companies in different parts of the country”, asserted Andrei Jerca, Head of Industrial Services, CBRE România.

The average area leased on the industrial market increased to over 8,000 sq m in 2020, reaffirming the interest of tenants in XXL warehouses and outlining the next step to streamline and secure timely deliveries of goods: last mile logistics and incity logistics, according to CBRE.

The stock of industrial space will exceed the 5 million sq m milestone in 2020

The increasing volume of lease transactions has encouraged the dynamic of new industrial developments. The stock of industrial space in Romania reached 4.84 million sq m at the end of the third quarter, following the delivery of 389,000 sq m in the first nine months. Approximately 260,000 sq m will be delivered in the fourth quarter, so that by the end of the year, the stock of industrial spaces will exceed the 5 million sq m milestone, according to CBRE Research data. Relative to the population of Romania, this volume represents an industrial stock of 260 sq m per thousand inhabitants, below the regional level (347 sq m per thousand inhabitants in Hungary or 510 sq m per thousand inhabitants in Poland), with potential for further growth. Moreover, 250,000 sq m of industrial spaces are under construction and will be delivered in the first three quarters of 2021.

“Almost half of the total existing stock is concentrated in Bucharest, however, if we examine the projects under construction, there is a high interest for the west and north parts of the country. Over 70% of pipeline is in these areas, which developers such as CTP, WDP, Element Development and Global Vision have banked on, by expanding their portfolios. The central part of the country is also becoming attractive and we notice new developments from VGP”, added Andrei Jerca.