The year saw some interesting developments and strengthened recent trends. For instance, for the second year in a row, the share of spaces leased for production purposes stood at roughly one third of total leasing activity, up from 10-15% in “normal” years. This attests to the major investments taking place right now in the industrial scene; furthermore, it is worth pointing out that most production companies prefer to own the space they operate.

Otherwise, just over half of the total leasing activity came from Bucharest and its surrounding areas, but this is still well lower than what we have seen for most of the past decade. This cements the rise of regional centers as hotspots for industrial and logistics operations. While this doesn’t mean that Bucharest will decrease in absolute terms, we expect that it will matter a bit less as time goes by despite remaining the single biggest I&L destination in the country.

The year’s biggest deal saw fashion retailer LPP expanding their leased warehouse area by c.42,000 sqm just west of Bucharest; this takes LPP to a local footprint of over 130,000 sqm, making this one of the biggest local tenants. Shoe retailer Deichmann pre-leased a 20,000 sqm warehouse in Bucharest which it aims to transform into a regional distribution center, while car parts manufacturer Federal Mogul closed a sale and leaseback deal with WDP for their Ploiesti facility, totaling 19,000 sqm. A new factor in Arad pre-leased a similar surface, while in Bucharest, GXO signed a 15,000 sqm lease, with the aim to expand towards 50,000 sqm in the future, for Chinese controled retailer Trendyol.

Incidentally, the biggest deals describe quite well the local market and trends, including the fact that Romania is increasingly seen as a regional distribution center for the South-Eastern part of Europe (though, in some cases, for the wider Central and Eastern European area). With the rapid progress when it comes to infrastructure improvements as well as Romania’s entry into the Schengen area as a full member as of 2025, the country’s appeal is only set to improve.

Rents & Vacancy

Rents have broadly stabilized over the last year, with an average surface BTS warehouse in a prime location commanding a 4.5-5.0 EUR/sqm asking rent in Bucharest and the majority of the top cities. It is worth noting that before 2021, rents were well below the 4 EUR/sqm level, showing that a significant upward adjustment has already taken place. Meanwhile, vacancy remains in low single digits throughout most of the country (estimated at around 5%) and with a somewhat limited number of speculative developments, this offers tenants a fairly small room for maneuver.

Outlook

Barring any shorter-term uncertainties caused by geopolitical developments or internal economic weaknesses, we consider Romania’s long-term potential for the industrial & logistics market to be quite substantial. Romania boasts the biggest productivity-labour costs gap in the EU in certain areas, including transportation and storage. We looked at hourly labour costs and at hourly value added for transportation and storage, then created a ratio between the two; based on this metric, in Romania, gross value added in the economy almost triples what a company spends on its employees, which is the best ratio in the European Union by far. In other words, despite the wage growth spurt of the past decade in Romania, the country remains quite competitive on a European level and even on a global one. This should keep Romania a prime destination for companies seeking to establish a regional foothold and maintain a competitive edge, particularly relevant given the ongoing trend of near-shoring amid the reshuffling of global relations.