Cushman & Wakefield Echinox: Demand for industrial and logistics spaces still growing in Romania

The expansion of logistics companies sustained the demand for warehouse spaces in Romania, according to real estate consultancy company Cushman & Wakefield Echinox. The Q1 2023 demand totalled more than 330,000 sqm, representing a 10% increase compared with the same period of last year.

According to the same source, Romania and Hungary are the only countries in Central and Eastern Europe where the take-up had a positive evolution in the first quarter. By comparison, decreases between 20% and 50% were recorded in Poland, the Czech Republic, and Slovakia.

Andrei Brînzea, Partner Land & Industrial Agency at Cushman & Wakefield Echinox, said: “The demand for industrial and logistics spaces remained relatively strong at the beginning of the year, even in a context characterized by high inflation and interest rates, decelerating consumer demand and overall economic uncertainty. Moreover, Romania continues to be a relevant market in the region, attracting companies which aim to strengthen or expand their presence in the CEE, offering some of the most competitive conditions when it comes to costs (including occupancy costs) and the quality of the spaces built by developers.”

Logistics operators accounted for approximately 50% of the Q1 2023 demand in Romania, with a significant activity also coming from manufacturing and FMCG companies. The demand was mainly concentrated around major logistics hubs in the country, namely Bucharest (32% of the total volume) and Timisoara (25%), but tenants also showed interest towards Pitesti or Slatina.

The net take-up (excluding renewals) amounted to around 200,000 sqm, with more than 50% of it being related to projects due to be delivered in 2024.

Regarding supply, Cushman & Wakefield Echinox said a slowdown of investments was observed in Q1 “given that developers have taken a more cautious approach due to the economic uncertainties and also to the fact that fewer speculative projects are currently developed.” Thus, roughly 100,000 sqm of new spaces were completed in Q1, below the Q1 average of the last two years of 180,000 sqm.

The industrial and logistics stock reached 6.66 million sqm, with vacancy rates of 5.1% in Bucharest and 6.6% at the regional level. The warehouse market in Romania still lags significantly behind the Czech Republic (11 million sqm), with Poland being the indisputable leader in the region, with a stock of nearly 29 million sqm.

Cushman & Wakefield Echinox also said that WDP, VGP and Globalworth – Global Vision were the most active developers at the beginning of this year, as they expanded their portfolios with new projects in Bucharest, Brasov, and Targu Mures.

Developers plan to complete new projects with a total leasable area of 400,000 sqm across the country by the end of 2023, and Bucharest continues to be the primary market. However, Brasov, Timisoara, Slatina, Arad and Sibiu are also set to benefit from new spaces in the coming period.