New real estate market milestone to be reached, Dunwell says

Industrial sector is about to exceed 4 mln. sqm of A-class warehousing space. New developments in Craiova, Constanta or Iasi.

The Industrial sector could reach out up to 750,000 sqm of logistic projects by the end of this year, leading Romania to the surpass of its 4 mln. sqm milestone, according to the latest forecast by Dunwell, the only and the most active independent real estate agency specialized in Industrial brokerage in the country. Dunwell also states that about 300,000 sqm of industrial projects are under construction now, one-third of the built area being set in the Capital Bucharest or nearby.

“Many important projects, started in 2018, will get finalized this year and the developers have started to look up for new future land developments in the regional cities like Craiova, Constanta or Iasi in order to extend their presence across the country. An increase in the demand for smaller size industrial space is being recorded and we expect  the Eastern side of the Capital Bucharest to become a new hot spot for this type of projects, based on a few key factors such as: the lack of developer and logistics competition in the area, great public transport connection with the city and A2 highway and the workforce availability nearby. Therewith, the North-Eastern side of Bucharest, that connects the city with A3 Bucharest – Ploiesti highway, is also targeted by investors for future industrial projects”, said Daniel Cautiș, managing partner Dunwell.

By the end of 2018, the A class warehousing stock was about 3.5 mln. sqm. Therefore, based on the forecast of projects to be completed by developers this year, Romania could surpass the 4 mln. sqm stock, a performance which reflects the increasing interest of investors in our country.

“The Real Estate market in Romania continues to be on the rise, where the industrial sector has gained significant momentum. The high consumption rate level leads to increased demand for industrial space, creating a great opportunity for investors and developers all together. Whilst by the end of 2018 in the industrial market the registered vacancy rate was under 5%, due to the new for this year we estimate that this rate could rise up to 8%, putting a higher pressure on rents, which, last year, averaged between 3,8 EUR/mp – 4 EUR/mp, at national level”, Daniel Cautiș states.

Among the most active industrial developers in 2018 there was CTP, with nearly 50% of all deliveries, WDP, VGP and Zacaria. For this year, besides the new deliveries announced by the big developers in Romania, remarkable projects are about to rise near the Capital Bucharest from new developers on the market such as MLP or Element Industrial.

The industrial sector, dominated by the evolution of Retail and FMCG

Demand for industrial spaces is high, retail and FMCG companies leading in volumes and take-up.

From a total high of 700,000 sqm of warehousing space contracted in 2018, Retail was  the star of the industry, with 42% of the total market. Companies like Metro Cash & Carry, Auchan or Carrefour were involved in the biggest transactions, accounting for approximately 40% of the total take-up. The FMCG sector also accounted for about 20% of total transactions since last year, both Retail and FMCG surpassing the 60% of the market.

As expected, about 60% of the total transactions in Romania were industrial spaces developed in Bucharest or nearby.

“The high demand coming from Retail and FMCG clients will continue this year, as well, both being related to the consumption rate level in Romania, which plays a key role and a positive influence on the development of new industrial space”, Daniel Cautiș, managing partner at Dunwell concluded.

The demand volume from logistics companies, even after losing the lead position in 2018, it remained quite significant, determining  25% of the total number of transactions concluded last year.

Out of the 500,000 sqm of industrial space leased last year through real estate agencies, Dunwell concluded 15% of the total, surpassing by 5 procentage points its initial objective, of 10% market share. Dunwell also broke a record last year when they transacted the biggest land outside Bucharest in the last five years, with a total area of 230,000 sqm.