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ROMANIA Industrial Market Snapshot
ROMANIA
Industrial Market
Snapshot
Fourth Quarter | 2018
Fourth Quarter | 2018

MARKET INDICATORS

Market Outlook

Prime Rents:

No change is expected in the following period.

Prime Yields:

Given the limited availability of prime assets, slide

Supply:

yield compression is expected in the following months. The level of new supply is shown in developers’ confidence in the market.

Demand:

Demand remains on a positive trend, with both retail and industrial companies having expansion plans

both retail and industrial companies having expansion plans Overview During 2018, the industrial & logistics stock

Overview

During 2018, the industrial & logistics stock in Romania continued to increase, reaching a total volume of 3.48 million sq. m. In Q4 2018, new supply amounted to approximately 185,000 sq. m. With a total stock of more than 1.65 million sq. m, Bucharest remains the main logistics hub in the country.

Occupier focusm, Bucharest remains the main logistics hub in the country. The last quarter of 2018 was

The last quarter of 2018 was the best performing one in terms of demand, with 286,000 sq. m transacted, recording a 75% increase compared with the previous quarter. Net take-up represents a share of approximately 80% from the total take-up.the main logistics hub in the country. Occupier focus In Q4 2018, Bucharest was the most

In Q4 2018, Bucharest was the most sought-after destination by tenants looking to expand their operations, given that more than half of the total demand was recorded in the capital city.

Bucharest was followed by Deva, with a share of 15%,

Timisoara – 14% and Ploiesti – 11%.

In the last quarter, the most active tenants were key retail and FMCG companies, such as Auchan, Carrefour, Procter & Gamble or Pepsi, who have decided to consolidate their storage areas.

Prime Industrial Rents – December 2018

LOGISTICS LOCATIONS

US$

GROWTH %

SQ.M

SQ.M

SQ. FT

1YR

5YR

MTH

YR

YR

CAGR

Bucharest

4.25

51.0

5.40

0.0

1.2

Brasov

3.75

45.0

4.77

0.0

3.2

Timisoara

3.75

45.0

4.77

0.0

3.2

Constanta

3.75

45.0

4.77

0.0

3.2

Prime Industrial Yields – December 2018

 

LOGISTICS LOCATION (FIGURES ARE GROSS, %)

CURRENT

LAST

LAST

10 YEAR

Q

Q

Y

HIGH

LOW

Bucharest

8.75

8.75

8.75

12.00

8.75

Brasov

8.75

8.75

9.50

10.50

8.75

Timisoara

8.75

8.75

9.50

10.50

8.75

Constanta

9.00

9.00

9.50

10.50

9.00

With respect to the yield data provided, in light of the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

Recent performance

regard to the specifics of the property. Recent performance Yield - Country Average Rental Growth -

Yield - Country Average

Rental Growth - Primeof the property. Recent performance Yield - Country Average Yield - Prime Rental Growth - Country

performance Yield - Country Average Rental Growth - Prime Yield - Prime Rental Growth - Country

Yield - Prime

Rental Growth - Country AverageYield - Country Average Rental Growth - Prime Yield - Prime 13.00% 15.0% 11.00% 10.0% 9.00%

13.00% 15.0% 11.00% 10.0% 9.00% 5.0% Rental growth (y/y) 7.00% 0.0% 5.00% -5.0% 3.00% -10.0%
13.00%
15.0%
11.00%
10.0%
9.00%
5.0%
Rental growth (y/y)
7.00%
0.0%
5.00%
-5.0%
3.00%
-10.0%
Dec-08
Dec-10
Dec-12
Dec-14
Dec-16
Dec-18
Yields

Investment focus

WDP acquired a 23,000 sq. m warehouse in Brazi (near Ploiesti) from Carrefour in a sale and lease-back (for another ten years) transaction. Prime industrial yields remained stable,

at 8.75%, but we expect a slight compression in the following months.

Outlook

With more than half a million sq. m planned for delivery in 2019, the industrial & logistics market will continue to develop at the same rapid pace. Taking into account the increasing demand recorded last year, developers are mainly focused on building on a speculative basis. In terms of occupancy costs for industrial & logistics spaces in Romania, prime headline rents will remain relatively stable.