Romania A more cautious approach

There has been a slowdown of the development pace, as the main players on the market adopted a more cautious approach in the current macroeconomic context, an approach which will put pressure on rental levels in the coming months, according to data from the Cushman & Wakefield Echinox real estate consultancy company.

The leasing activity on the industrial and logistics property market registered another strong quarter in Q2 2023, with a gross take-up of over 215,000 sqm, bringing the transactional volume for H1 of the year at 547,000 sqm, corresponding to a slight growth when compared with H1 2022. The new demand continues to be the main driver of the leasing market, with a share of 90 pct out of the Q2 2023 gross take-up and 72 pct overall in H1 2023, demand which is coming from various sectors, among the most active being retail, distribution of general goods, automotive and logistics.

Most transactions signed during this period targeted projects located outside Bucharest, the most sought-after cities being Brașov, Timișoara, Oradea or Arad.

The leasing activity on the logistics and industrial market has been effervescent throughout H1 and we may once again see a total annual take-up of over 1 mln sqm in 2023. Romania is a dynamic and attractive hub for many companies, both existing ones and those aiming to expand in the region in order to streamline their logistic operations. In this context, we are optimistic about the market's evolution going forward, both in terms of supply and demand.
Rodica Târcavu, Partner Industrial Agency Cushman & Wakefield Echinox

The largest transaction closed in Q2 2023 pertained to a pre-lease of 47,000 sqm signed by Intercars within VGP Park Brasov, followed by a 25,000 sqm expansion of the existing space contracted by Maersk - IB Cargo (the freight forwarding and logistics provider which operates the regional IKEA distribution centre) in CTPark Bucharest West and by a new lease transaction of 12,600 sqm concluded by EKR Elektrokontakt within Mures City Logistics.

The total modern stock reached 6.77 mln sqm at the end of June, as developers delivered new projects with a total leasable area of 202,000 sqm across the country in the H1 2023, with 104,000 sqm completed in Q2. The total development activity in H1 2023 slowed down when compared with H1 2022, when it accounted for 300,000 sqm, as the new supply for the rest of the year is estimated to be at around 250,000 sqm. The overall vacancy rate slightly decreased at a level of 4.8 pct, while a further drop is expected by the end of the year as a result of a more cautious approach adopted by developers.

The prime rents in Bucharest and in the main industrial and logistics destinations in Romania stood at a level between EUR 4.25-4.50 sqm/month in Q2 2023, with higher benchmarks applied to new projects located near Bucharest. Given the limited supply and the sustained ongoing demand, asking rents are expected to maintain this current upward trend in H2 and also in the first half of 2024.