“The global pandemic that marked 2020 did not negatively impact the industrial and logistics market in Romania. On the contrary, as deliveries of different types of goods and courier services became essential for lockdown, logistics operations became more important, and more logistics space was needed. Also, consumption must be sustained, so production must continue”, explained Iulia Bușcă, Head of Industrial Agency at Avison Young Romania.
Two thirds of the deliveries of industrial spaces in 2020 were attracted by the areas around Bucharest, thus, the stock of modern industrial spaces around the Capital reached 2.4 million sq m.
For 2021, developers have planned to build over 700,000 square meters of modern logistics and industrial spaces. Also, more than 50% of new developments will take place in the Bucharest area, but also in Timișoara (17%), Craiova (10%) and Bacau (4%). Bacău has been a point of interest for developers for a long time, but 2021 is the first year for which concrete development plans are announced.
The total volume of industrial leasing reached a record number in 2020 – 876,000 sqm – almost double compared to 2019. The largest increase came from Farma, eCommerce, and FMCG.
Bucharest attracted an important part of the leasing activity in 2020 (72%), followed by Timișoara and Craiova.
Forecast
Avison Young experts estimate that the industrial and logistics activity will continue to evolve in the next 5 years, and the stock of modern industrial spaces will exceed 8 million sqm. The main factors for this evolution are:
- The health crisis has caused many Western European companies to rethink their supply chain and consider near-shoring (bringing production closer to the market – especially in Asia).
- In the coming years, we expect more Chinese companies to want to move some of their production to Europe in order to adapt to the current situation.
- Romania is an important logistics center for Bulgaria and Moldova – due to short distances and low transport costs.
- Existing speculative developments make Class A logistics and industrial spaces more accessible to tenants in improper units.
- Due to the changing consumer behavior of Romanians and the intensification of online commerce, international e-commerce companies will wish to have distribution centers in Romania.
- Due to the fact that other real estate sectors (retail, office, HoReCa) have been negatively impacted by the pandemic, the logistics / industrial sector is starting to look attractive to investors and developers.
- The infrastructure projects which have already been begun or contracted will be completed in the next 5 years, including the European Corridor IV Nuremberg-Thessaloniki (in Romania, it connects Constanța with the Hungarian border) and will increase the processing capacity of the port of Constanța.
Modern industrial and logistics spaces in Romania will exceed 8 million sqm in the next 5 years
Avison Young experts estimate that Bucharest will continue to attract over 40% of industrial developments in the coming years, and then regional cities will soon follow.
The complete rehabilitation (along the entire length) of the existing Bucharest ring road will make the East and South areas more attractive, and the construction of the outer ring road (A0) will expand the industrial area around Bucharest.
Thus, it is expected that important international developers, who are not currently present in Romania, will enter the market.
Important international developers will enter the Romanian market
Although until now, the pace of infrastructure development in Romania has been very slow, the new context generated by the COVID-19 crisis puts more pressure on infrastructure development, and Avison Young experts expect this situation to encourage more results in the immediate future. (source: Avison Young)
