Romania

Market characteristics

The Romanian I&L market has been arguably one of the most dynamic in Europe (although growing from a fairly small level), with the total modern stock increasing threefold since 2015. The owner-occupied segment is also sizable in Romania, but it is not included in the general market statistics. Bucharest accounts for roughly a half of the stock, but the rapid rise in regional cities over the past decade, with favourable labour market dynamics fuelling consumption there, has given way to increased opportunities in other parts of the country.

Supply, demand & vacancy

Stock & vacancy evolution in Romania

Demand by sector * * Please note: The take-up data for Romania and Bucharest city are based on deals recorded with the support of real estate consultancy agencies. Direct deals are not included as they are not openly declared by the developers/clients; and it can be estimated that direct deals account for approx. 30-40% of all the transactions, therefore they are quite significant.

The total stock of modern I&L space in Romania reached ca. 4.72 million m² at the end of H1 2020, which was a 5% increase compared to the corresponding period of 2019. 50% of existing space is located in Bucharest (2.37 million m²). It is estimated that during the first six months of 2020 developers delivered ca. 120,000 m² of new warehouse space to the Romanian market, which was close to the figure for H2 2019 (100,000 m²) but on the other hand was a decrease compared to same period of 2019 (300,000 m²).

It is estimated, that at the end of June 2020, there were a further 300,000 m² of new industrial space under construction in Romania, with more than 60% located in the outskirts of Bucharest.

The total leasing transaction volume in Romania in H1 2020 reached 250,000 m². Of the leased space, 35% was located in Bucharest (87,500 m2 ).

In H1 2020, new agreements dominated the leasing structure and constituted 81%. In Bucharest, the most significant share of deals were new agreements and renegotiations, which constituted 55% and 37% respectively.

Tenant structure in terms of sectors in the Romanian market was dominated by FMCG (50%), while in Bucharest it was led by 3PL (35%) and light production/manufacturing (33%). That said, large deals tend to move the market, as in the previous year, the automotive sector was the main driver of demand.

Rental rates & lease conditions

 Lease agreements by type * * Please note: The take-up data for Romania and Bucharest city are based on deals recorded with the support of real estate consultancy agencies. Direct deals are not included as they are not openly declared by the developers/clients; and it can be estimated that direct deals account for approx. 30-40% of all the transactions, therefore they are quite significant.

Prime rents in Romania remained stable and ranged between EUR 3.7-3.9/m²/month.

The average lease lengths in Romania are 3-5 years in case of logistics/warehouse premises and 3-7 years in case of production /manufacturing. Developers offer some incentives to tenants, which amount to 1 month rent-free per year of lease. Tenants may also get 1 to 2 months early access to the property.

Outlook

It is estimated that if all projects that are currently under construction are completed, then the total I&L stock in Romania will exceed the level of 5 million m² at the end of 2020. Demand, vacancy level and rental rates are expected to remain stable in H2 2020. A slight increase in vacancy could be noted in the Bucharest market.

Over a longer term, the relative under-supply of I&L space in Romania on a per capita basis (half of Poland's level and 4x below Czech Republic's) supports strong growth in the subsequent decade.

Top 5 lease agreements