Romania’s industrial and logistics sector is poised for remarkable growth, with expectations that modern space stock will reach an impressive 8 million square meters by 2025. As of mid-2024, approximately 7.3 million square meters of industrial and logistics space are already available, and over 700,000 square meters are currently under construction. This reflects a strong commitment to enhancing the country’s logistics capabilities.
Despite a 24% decline in leasing demand compared to 2023, total transactions still reached around 342,000 square meters, showcasing sustained interest and investment in the market. Notably, rental activity has shifted towards a more balanced distribution between Bucharest and other regions, indicating a strategic move by employers to tap into better labor conditions and upcoming infrastructure improvements across the country.
While global financing challenges and rising interest rates have affected many markets, Romania’s real estate sector has demonstrated stability. Current yield rates for prime properties are promising, with prime office yields between 7.25% and 7.75%, prime retail yields between 7% and 7.5%, and prime industrial yields between 7.25% and 7.75%.
The market’s performance remains robust, approaching pre-pandemic levels. Historically, annual rental demand has reached 400,000 to 500,000 square meters in strong years, and current trends indicate that demand is likely to rise significantly in the near future.
Manufacturing and light industrial activities now account for nearly 40% of all leases, marking a substantial increase from pre-pandemic levels. Additionally, a vacancy rate of around 5% for prime warehouse space signals a competitive market for tenants seeking larger spaces, which emphasizes the ongoing need for efficient supply chain solutions.
Rental growth is stabilizing, with rates around 5 euros per square meter for build-to-suit projects in prime locations, reflecting a notable increase from the sub-4 euro rates seen two years ago. Some landlords are successfully achieving higher asking rents, particularly in modern logistics developments.
The outlook for Romania’s industrial and logistics market remains optimistic, with substantial growth potential compared to other Central and Eastern European countries. Despite the significant tripling of modern warehousing stock since 2014, Romania still has room for expansion, particularly in per capita terms, indicating a sustained demand for logistics space.
With ongoing infrastructure improvements and favorable trends such as production relocation, Romania’s industrial and logistics sector is well-positioned for steady growth. Key infrastructure projects, including major highways and a new ring road around Bucharest, are expected to enhance market conditions over the next few years, paving the way for a solid year of rental demand in 2024.
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