The Modern Industrial and Logistics Space Stock in Romania Reached 6.3 Million Square Meters in 2022, Making it the Third Largest I&L Market in 12 of the Largest Economies in Central and Eastern Europe, and Developers Have an Additional 650,000 Square Meters of Modern Spaces Under Construction, According to the "ExCEEding Borders" Report Published by Colliers.

Insufficient Supply

Beyond Romania's still insufficient supply compared to the rapid economic growth of the last decade, Colliers consultants attribute the solid market performance to the country being increasingly seen as a regional distribution center by companies targeting Southeastern Europe, with some even considering a larger geographic region. The reshoring trend is also starting to generate visible demand.

Bucharest and other regions with strong industries, such as counties in Transylvania, Prahova, or Dolj, represent the majority of the modern industrial and logistics (I&L) stock in Romania.

The rapid growth of regional cities in the last decade, with favorable dynamics in the labor market fueling consumption in these cities, has opened up more opportunities in other parts of the country. In other countries with a developed regional economy and larger geographic distances, the share of the capital city in the industrial space market is much smaller.

For example, Warsaw represents less than a quarter of the total modern warehouse stock in Poland, while Prague accounts for a third of the stock in the Czech Republic. Bucharest has a similar share in the total economy as Prague and Warsaw – around a quarter – but the industrial and logistics space stock around Romania's capital represents over half of the total.

Automotive Sector on Top

When combining various sectors, it is clear that the automotive industry is the largest industrial domain. It represents at least a quarter of the country's industrial production, with two major automobile manufacturers (Dacia and Ford) present in Romania, along with several auto parts producers delivering specialized products for certain categories of cars assembled both locally and in other parts of Europe.

Most production units are concentrated in a few areas of the country, mainly around the cities of Ploiesti, Pitesti, and Craiova, as well as in several parts of Transylvania.

Keeping track, Belgian company Avesta Battery and Energy Engineering (ABEE) recently announced the construction of a factory for electric network batteries in the Galati area, with an investment of 1.4 billion euros, making it one of the largest greenfield investments in the country's history.

Vacancy Rate

The vacancy rate for premium warehouse spaces remained in the single digits, around 6% on average, which is slightly above the ECE-12 average. Rental rates for Class A warehouse spaces in Romania have increased slightly, reaching between 4 and 4.5 euros per square meter at the end of last year, but continue to be one of the lowest levels in the ECE-12, due to strong competition in the market.

However, it seems that things are gradually changing, as by mid-2023, even a rent of 4.5 euros per square meter has come to seem low in areas with limited supply of high-quality industrial space.

The total I&L stock for the ECE-12 region has grown to over 65 million square meters, with 25 million square meters located inside and around the 12 capital markets. Poland maintains the largest I&L market and is approaching the 30 million square meter mark.