“The good result was achieved largely thanks to two large deals involving Profi, a chain of supermarkets, which accounted for nearly half of the total GLA leased in 2020. The retail/FMCG sector in total generated nearly 50.2% of all deals, followed at a great distance by production activities (19.4%) of total and 3PL/logistics (14%), said Laurențiu Duica, Partner & Head of Industrial Agency at Colliers International.
Around 120,000 sqm in new modern industrial and logistics spaces are estimated to have come online in the first half of 2020 throughout Romania (100,000 sqm in the vicinity of Bucharest), which is less than half the level seen a year ago, Colliers said in its market report.
A big part of speculative developments were put on hold amid the coronavirus pandemic and some companies have decided to postpone their expansion plans for 2021, meaning that we can expect the overall supply for 2020 to be nearly 30% lower than estimated at the start of the year, analysts said.
The second half of the year is seen to be much more active (nearly 300,000 sqm in new deliveries expected, two thirds in Bucharest) as quite a few big contracts were signed fairly recently and the tenants are expecting to move in. This took overall modern industrial and logistics stock to 4.7 million sqm at the end of June, with Bucharest amounting to 2.4 million sqm.
Healthy competition on the developer side has helped cap rents in spite of the strong leasing market in recent years. Consequently, rents are quite good for tenants, in the area of 3.8-3.9 EUR/sqm for prime industrial and logistics spaces around Bucharest and around 3.7-3.9 in other parts of the country (but in very good areas).
Colliers International notes that amid the pandemic, incentives are higher, with landlords offering more rent-free months than before, which means that in some instances the net-effective rent can reach some 20% below the headline (versus around 13% before).
Vacancy is still comfortably in single digit territory hovering around 7-8% and has not seen any material changes amid the coronavirus situation. Such levels are consistent with a neutral market, but with the significant pipeline of speculative developments (including such deliveries in recent years) plus a competitive market tilting the balance in favor or tenants, the report noted.