Companies leased nearly 550,000 sq. m of logistics and industrial spaces in the first half of the year, with over one third of this volume being related to pre-lease agreements, mainly in projects set to be delivered in 2024. 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 sq. m, bringing the transactional volume for the first half of the year at 547,000 sq. m, 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% out of the Q2 2023 gross take-up and 72% 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.
Rodica Târcavu, Partner Industrial Agency Cushman & Wakefield Echinox: ”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 million sq. m 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.”
The largest transaction closed in Q2 2023 pertained to a pre-lease of 47,000 sq. m signed by Intercars within VGP Park Brasov, followed by a 25,000 sq. m expansion of the existing space contracted by Maersk – IB Cargo (the freight forwarding and logistics provider which operates the regional IKEA distribution center) in CTPark Bucharest West and by a new lease transaction of 12,600 sq. m concluded by EKR Elektrokontakt within Mures City Logistics.
The total modern stock reached 6.77 million sq. m at the end of June, as developers delivered new projects with a total leasable area of 202,000 sq. m across the country in the H1 2023, with 104,000 sq. m completed in Q2. The total development activity in H1 2023 slowed down when compared with H1 2022, when it accounted for 300,000 sq. m, as we estimate the new supply for the rest of the year at around 250,000 sq. m.
The overall vacancy rate slightly decreased at a level of 4.8%, 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 €4.25 – €4.50 / sq. m / 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.