Cushman & Wakefield Echinox: Over 0.5 mln sqm of industrial and logistics spaces under construction in Romania

Industrial and logistics projects accounting for more than 0.5 million sqm are currently under construction and due to be delivered by the end of 2024 in Romania. According to data from real estate consultancy company Cushman & Wakefield Echinox, 60% are already pre-leased.

Roughly 555,000 sqm of industrial and logistics parks are currently under construction and are planned to be completed in the Q4 2023 - Q4 2024 period, with 315,000 sqm being already pre-leased, the company’s report said.

Bucharest (154,000 sqm), Brasov (108,000 sqm), Bacau (50,000 sqm), Slatina (50,000 sqm), and Timisoara (34,000 sqm) are the primary locations where developers will expand their footprints in the next 15 months.

Andrei Brinzea, Partner Industrial Agency Cushman & Wakefield Echinox, said: “In a context where the economic uncertainty continues to impact the tenants’ expansion plans, developers may adopt more cautious approaches when it comes to commencing new investments in industrial & logistics facilities, on the short term at least. This caution can also be noticed in other markets in the region, a region where the new supply has seen a y-o-y decrease by 16% in the first 9 months of 2023.”

“However, we estimate that the developers’ appetite for new investments will bounce back in the medium term, given that we are already witnessing a downward inflationary trend and a stabilization of the financing costs, elements which could stimulate the tenants’ needs for new industrial premises.”

According to the same report, the year-to-date new supply was 252,000 sqm across Romania. The total yearly development activity in 2023 is estimated to be lower compared with 2022 (821,000 sqm), as the Q4 pipeline is seen at around 183,000 sqm.

In terms of demand, a gross take-up totalling 716,000 sqm was recorded in the first nine months of 2023, reflecting a 22% year-over-year drop. Cushman & Wakefield Echinox says the new demand continues to be the main driver of the leasing market, with a share of over 70% out of the gross take-up registered in Q3 2023 and also during the first 9 months.

In addition, the Romanian market has recorded the highest demand growth between 2020 and 2023 compared with the pre-pandemic levels among the CEE countries (Poland, Czech Republic, Romania, Hungary, Slovakia, Bulgaria). The average quarterly demand for industrial and logistics spaces at the national level has increased by 254% since 2020, to 267,000 sqm vs. 75,400 sqm in the 2010-2019 period.

Cushman & Wakefield Echinox also noticed a slight increase in the prime headline rents in Bucharest and the main industrial & logistics destinations in Romania, to between EUR 4.25 and EUR 4.65/sqm/month in Q3 2023. The upward trend is expected to continue going forward, albeit at a slower pace, given the limited pipeline of speculative projects.