Romania’s industrial stock surpasses 4 million sqm milestone, another 1 million sqm to be delivered by end-2020

Romania’s modern industrial stock has exceeded the 4 million sqm milestone during the first semester of 2019, when a new supply of 240,000 sqm was brought on the market. By the end of 2020, about 1 million sqm are expected to be delivered, according to the “Romania MarketView H1” report by CBRE Romania, the global and national real estate market leader.

From the total modern stock of 4 million sqm industrial spaces, regional cities accommodate 55 percent, while the capital city alone is responsible for the remaining 45 percent, with almost half of the total analysed schemes concentrated in the most wanted place to be in Romania by industrial developers.

Industrial developments are scattered around the capital city, especially close to the highways, but the west area concentrates the largest part (73 percent) of Bucharest’s total modern industrial stock. The north part of the city is slowly developing, accounting for 15 percent of the total, and is shaping as the capital’s next industrial hub.

“By the end of the year, another approximately 380,000 sqm are expected to be delivered, most of them located in Bucharest’s outskirts. The under-construction industrial projects have a very small vacancy rate, showing once again the developer’s inclination towards built-to-suit projects with a drop of the speculative building in an expansive market,” said Andrei Jerca, Account Director Industrial Advisory & Transaction Services, CBRE Romania.

From the total area to be delivered in regional cities, the Central part of Romania has 55 percent of the future new supply, while the West and North-West parts of the country have 25 percent of the total industrial facilities.

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A total area of approx. 580,000 sqm is expected to be added by the end of 2020 to the Romanian modern industrial stock considering both under construction and planned industrial projects.

The total leasing activity (TLA) in H1 2019 accounted for 113,000 sqm nationwide, 33 percent higher than the leasing activity recorded in the first half of the previous year. The share of pre-leases represented 18 percent of the total leased area. Bucharest attracted 75 percent of the total leased sqm, while regional cities managed to obtain a quarter of the total.

“The part of Bucharest most tenants want to go to is the north-west side as 40 percent of the TLA is directed to this part, closely followed by the west with 37 percent,” added Andrei Jerca.

At the end of H1 2019, the vacancy rate in Romania reached 5.9 percent, indicating a slight upward trend as industry players have shifted their focus towards new developments as well as the recent investors’ appetite to develop small-sized semi-speculative projects. The asking headline rent remains constant at a level of EUR 4/sqm/month.

“We estimate prime rent to follow a stable pace by year’s end and built-to-suit projects to remain the main approached strategy by the investors when drawing the expansion plans as they already secured land plots suitable for large – scale developments and are waiting for the first pre-lease in order to start construction works,” concluded Andrei Jerca.