32 C
Bucharest
August 17, 2022
BUSINESSBUSINESSCOMPANIESECONOMYEDITORIALOP-EDOPINIONPOINTS OF VIEWReal Estate

Avison Young : The modern industrial stock in Romania has exceeded 5.4 million sq. m in H1 2021

More deliveries have come from cities other than Bucharest in H1 2021

With close to 200,000 sq. m of class A industrial supply delivered in the first half of 2021, the modern industrial stock in Romania exceeded 5.4 million sq. m., according to a recent Avison Young report. Bucharest attracted less than half of the deliveries, which is a trend Avison Young’s experts expect to see more of, due to the appetite of developers and tenant companies to expand their operations to secondary and tertiary cities, in order to cover more territory in terms of distribution

“The industrial developers have plans to deliver another 450,000 sq. m of class A logistic space by the end of 2021, which will mean that 2021 will probably be just as prolific as the previous two years, continuing the impressive growth trend. This evolution should be in line with the last few years. For example, in 2020, two thirds of the deliveries of new stock occurred in the second half of the year. The developers appear to continue to secure plots of land for development”, said Iuliana Bușcă, Head of Industrial Agency at Avison Young

The recent increase in construction materials costs will translate into less speculative deliveries – as developers do not wish to spend the extra cost without the certainty that it will be recouped via rent. This may push some of the delivery plans to 2022, Avison Young’s experts explain. The pipeline for the rest of 2021 is still concentrated in the Bucharest area, but Timisoara will also attract an important share.

During the first half of 2021, there were approximately 350,000 sq. m of modern industrial and logistic space leased, which equates to the first half of 2020, when approximately 340,000 sq. m were leased, according to the Avison Young report.

The demand coming from manufacturing activities registered a surge in the first half of 2021, as well as from retail – from 13% in 2020, to 18% in the first half of 2021. As expected, the demand from eCommerce is increasing exponentially – from about 3% in 2020 to 9% in H1 2021, the Avison Young report shows.

Generally, there is an appetite for expansion coming from existing tenant companies, as well as international companies, especially eCommerce, looking to enter the Romanian market and establish regional distribution centres locally”, explained Laurentiu Duica, Senior Vice President at Avison Young.

Bucharest attracted 66% of the demand in H1 2021, a decrease from the 72% in 2020. Deva, Timișoara and Pitești also attracted significant demand.

In terms of vacancy, the decrease in speculative developments translates into tightening of the gap between supply and demand, which, together with the fact that developers are looking to fill up the existing buildings, result in a downward pressure on the vacancy rate, which is now on a descending trend. Overall vacancy in Romania is at 6.0%, while vacancy in Bucharest has reached 7.1%, the Avison Young report shows.

Avison Young’s experts expect the modern logistic stock to continue to expand, as there is plenty of growth potential, and also to see new international developers enter the Romanian industrial market in the next few years. The occupancy costs should remain stable, as the context generated by the construction materials crisis counterbalances the downward pressure on rents.

Also, Avison Young’s experts observe that tenants’ requirements for industrial and logistic space are becoming more specific, geared towards saving energy: isolation, lighting, charging stations for electric vehicles etc.

Related posts

Alpha Bank Romania supports the entrepreneurial environment by the IMM Prod, Garant Construct, Rural Invest and Innovation programs

NINE O'CLOCK

PM Dancila: Government maintains holiday vouchers to public system employees. Gross minimum wage rise as of Jan. 1, 2019, wage and pension growth as outlined

NINE O'CLOCK

Metrorex – Alstom contract renegotiation memorandum passed

Nine O' Clock