In H1 2018, the pace of transactions was slow, with 100,000 m² being completed and leased, but CBRE representatives expect a revival of the market in the second semester (H2) of the year, when an area of 500,000m2 transacted is expected. At present, 420,000 m² are in construction, with delivery dates until the end of the year. Of this volume, 49%, representing about 205,000 m², is located in warehouses near Bucharest.
The demand for logistics and industrial space continues to be high, which has led to a fall in the vacancy rate of up to 3% at national level and 4% in the warehouses located in the neighboring areas of Bucharest. In terms of demand, it came primarily from logistics companies (43%), retail (42%) and professional services (8%). Developers still prefer to build on demand from the market or according to the needs of existing tenants, to the detriment of speculative projects.
"At national level, demand will continue to be sustained by manufacturing companies, but also by Third Party Logistics (3PL). They provide logistical services to other companies and thus ensure continued growth in consumption and consolidation of the operations of major retailers. In 2017, we witnessed an increase in demand from automotive, aerospace, electrical and home appliance industries. This trend has continued and will continue in 2018", said Dana Bordei, CBRE Romania's Head of Industrial Service Advisory.
Another direction of the local market, supported by the regional and global trend, is the rapid development of the e-commerce segment. With consumption rising at the fastest pace since the start of the financial crisis in 2008, retail has become the most important sector that boosted demand growth in the logistics market. E-commerce generates significant increases in rental demand because an online-ordered product requires three times more logistics than one traded through traditional retail channels.
Despite a slow first semester, CBRE consultants expect 2018 to be a new year of growth for the local logistics and industrial space market with a rental activity close to 2017.
"In 2017 consumption increased strongly by about 10%, which supported the development of the industrial space market for the third consecutive year. Total rental activity reached the 700,000 m² threshold in 2017, supported in particular by pre-leases and Build-to-Suit type projects. Of the total traded area, 52% was located in the Bucharest area. In the first half of 2018, we noticed an increase in interest for regional cities with a focus on projects in the West, South and Northwest", added Dana Bordei.
Prime rent (reference rent for Class A projects located in the best areas) has kept a constant level of 4.1 euro / m² / month in H1 2018. Ratio of returns (the performance of Class A projects in the most rated areas) for the industrial segment declined from 8.25% to 8.00% at the end of H1 2018. Performance yield is an indicator of an active market where there are significant investments and transactions. CBRE representatives predict that yields will continue to decline in the coming period, given the conditions of the local market and the influence of Central and Eastern European countries. (source: CBRE)
