ROMANIA INDUSTRIA L DESTINATIONS 2014 CBRE | RESEARCH | ROMANIA ro NEW PLATFORM INDUSTRIAL AND WAREHOUSE PROPERTIES 3 CONTENT ROMANIA INDUSTRIAL & LOGISTICS MARKET ROADS & HIGHWAYS IN ROMANIA BUCHAREST/ILFOV CENTRAL REGION WEST REGION MUNTENIA REGION NORTH WEST REGION NORTH EAST REGION SOUTH EAST REGION INVESTMENT MARKET MARKET PRACTICE MODERN WAREHOUSE BUILDING STANDARD METHODOLOGY & DEFINITIONS INDUSTRIAL LAND LOCATION DRIVERS FOR EUROPEAN MANUFACTURING CONTACTS CBRE Real Estate Consultancy conrms that information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt their accuracy, we have not veried them and make no guarantee, warranty or representation about them. It is your responsibility to conrm independently their accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE. 4 GENERAL OVERVIEW Country’s essentials Industrial Real Estate Market in Romania has developed since 1995 when institutional international developers entered the market and established industrial & logistic parks with VERVIEW Total population 20,121,641 O class A buildings. Average unemployment 5.1% rate In the last 20 years a stock of 3,261 million square meters has been developed, both owner Average net monthly EUR 395 occupied and developer led, within privately-owned industrial parks. salary in enterprise sector Modern industrial and 3,261,000 sq m Supply warehouse stock Currently, there are no speculative developments under construction, only built-to-suit TIONS 2014: GENERAL projects are on the construction list. A Average vacancy rate 12% Source: INS, CBRE The general vacancy rate for Romania remains stable however vacancy rates in the regions vary considerably. Bucharest, as it has the biggest stock of industrial space, holds the most available space – over 134,000 sq m (vacancy rate 12%). In pan-Romania vacancy rate varies between 10 – 14%, with a total available space of over 170,000 sq m, but with a tendency for decrease, as take-up volume are up q-o-q. ROMANIA INDUSTRIAL DESTIN Demand The total leasing activity (TLA) in H1 2014 in Romania was of over 230,000 sq m, divided between Bucharest (23%) and pan-Romania (77%). The TLA activity in H1 2014 is up 46% compared to levels registered in H1 2013, and almost tripled compared to H1 2012. Take-up represents 67% of TLA at around 153,000 sq m, with only a couple of large renewals performed in Bucharest, Deva and Timisoara, plus two owner occupied deals. The most important transactions in H1 2014 were registered in Bucharest (52,000 sq m), the West Region (120,000 sq m) and South part of Romania (57,000 sq m). Taking advantage of the investment opportunities, a series of occupiers have either bought their already occupied facility or new schemes were they will be the single occupier. Automotive suppliers continue to be interested in locating their production plants in the West part of the country, paying a great deal of attention towards labour force availability. Improvements within the logistic sector are starting to be noticed, taking into account several transactions performed by such occupiers (ex: new lease of Rhenus Logistics). The demand for modern industrial space is focused on storage and production facilities with a geographical advantage; this implies units with accessibility to Western European and Eastern European countries. Thus, industrial hubs in counties like Cluj, Brasov, Timis or Prahova will continue to be preferred. The Class A industrial space is preferred by 81% of the occupiers due to the importance of accessing a well developed infrastructure network such as: highway routes, intermodal transportation facilities and harbour connectivity. The largest transactions recorded in 2014 were: pre-leases and new leases made in the West part of the country, leases and renewals of logistic companies. A significant transaction was the sell & new occupation of former production plant Hanil Electronics in Timis and Bihor County. 5 GENERAL OVERVIEW ROMANIA INDUSTRIAL DESTIN Rents & Yields Total Leasing Activity by City H1 2013 & H1 2014 Prime headline rent for Bucharest Class A properties registered a slight decreased (5%) to EUR 3.8 / sq m Inner Circle H1 2013 / month. In general class A properties tend to have a Outer Circle H1 2014 lower vacancy rate and thus less pressure to 11% decrease headline and net effective rents. Class B 27% Bucharest properties, especially outside Bucharest were 1% 6% confronted with less demand and non-stable 10% Timisoara occupier demand, which is reflected in lower 0% A headline rents. Average regional headline rents Arad TIONS 2014: GENERAL OVERVIEW range between EUR 3.4 – 3.8 sq m/mth, while net 29% 17% effective rents are 8-10% lower. Service charges Ploiesti range between EUR 0.75-1.0/sq m/mth. The rents 66% Brasov for an attached office stand at EUR 6.0-8.0/sq m/mth. Deva 26% In CEE Region, with the notable exception of Other cities Budapest, the prime yield has remained stable. Prime 11% headline rents for other CEE Capital cities range *Source: CBRE Research between EUR 3.80/sq m/mth (Greater Bucharest) and EUR 4.50/sq m/mth (Greater Budapest). Headline Rent by Regions Outlook A number of important deals started 6 – 8 months ago are expected to be finalised by end of the year, 4.2 thus take-up volume should see a substantial increase y-o-y. 4 h t n Headline o m Class A In Bucharest we expect a series of new leases and / 3.8 m relocations from 3PL occupiers, mostly within existing q s units. / R U 3.6 E In Pan-Romania demand will consist of new leases Headline Class B and new demands from production occupiers, 3.4 mainly for built-to-suit facilities. Number of investment transactions up and other important deals to be signed by end of the year. 3.2 West Central South East Bucharest North West Prime yield Prime Rent Country City Trend y-o-y (%) Trend y-o-y EUR / sq m / month Romania Bucharest 10.00 3.80 Czech Republic Prague 7.50 4.25 Serbia Belgrade 12.00 4.50 Slovakia Bratislava 8.50 4.25 Hungary Budapest 9.50 4.50 Bulgaria Sofia 11.50 4.00 Poland Warsaw 7.10 4.00 6 ROMANIA INDUSTRIAL REGIONS INDUSTRIAL REGIONS BOTOSANI NORTH-WEST MARAMURES SATU MARE NORTH-EAST SUCEAVA SOUTH-EAST SALAJ BISTRITA-NASAUD IASI SOUTH NEAMT WEST BIHOR CENTER CLUJ MURES MUNTENIA VASLUI TIONS 2014: ROMANIA INDUSTRIAL REGIONS HARGHITA BUCHAREST & ILFOV A ARAD BACAU ALBA COVASNA VRANCEA TIMIS SIBIU BRASOV GALATI HUNEDOARA BUZAU GORJ CARAS SEVERIN PRAHOVA ARGES BRAILA VALCEA TULCEA ROMANIA INDUSTRIAL DESTIN DAMBOVITA IALOMITA BUCHAREST MEHEDINTI OLT CALARASI CONSTANTA DOLJ TELEORMAN GIURGIU CBRE considers the regional split as above evaluating client’s enquiry history and regional infrastructure development . However the development regions of Romania refer to the eight regional divisions created in Romania in 1998 in order to better coordinate regional development as Romania progressed towards accession to the European Union. The development regions correspond to NUTS II-level divisions in European Union member states. Despite becoming increasingly significant in regional development projects, Romania's development regions do not actually have an administrative status and do not have a legislative or executive council or government. Rather, they serve a function for allocating European Union PHARE funds for regional development, as well as for collection of regional statistics. They also coordinate a range of regional development projects and became members of the Committee of the Regions when Romania joined the EU on January 1, 2007. Bucharest Muntenia Center West North-West North-East South-East South Bucharest Arges Brasov Timis Satu Mare Suceava Constanta Caras Severin Ilfov Dambovita Sibiu Arad Maramures Botosani Tulcea Gorj Prahova Covasna Bihor Iasi Valcea Buzau Hunedoara Neamt Mehedinti Braila Alba Bacau Dolj Ialomita Cluj Vaslui Olt Salaj Vrancea Teleorman Bistrita-Nasaud Galati Giurgiu Mures Calarasi Harghita 7 INFRASTRUCTURE IN ROMANIA ROMANIA INDUSTRIAL DESTIN BOTOȘANI PLANNED MARAMUREȘ SATU MARE UNDER CONSTRUCTION SUCEAVA IN USE Suplacu de Barcău Zalău BISTRIȚA-NĂSĂUD IAȘI A Oradea SĂLAJ TIONS 2014: INFRASTRUCTURE Cluj-Napoca NEAMȚ BIHOR Nădășelu MUREȘ Gilău CLUJ Turda Târgu Mureș Câmpia Turzii VASLUI Ilieni HARGHITA BACĂU ARAD Arad Vest ALBA Arad 10 Sebeș BRAȘOV Șoimuș COVASNA TIMIȘ Izvin Săliște SIBIU Șanovița Cunța Făgăraş VRANCEA GALAȚI Traian Vuia Timișoara Deva Șelimbăr Lugoj Sibiu Cristian Brașov 6 Tălmaciu IN ROMNIA HUNEDOARA PRA- Comarnic BUZĂU ARGEȘ HOVA CARAȘ-SEVERIN VÂLCEA BRĂILA Ploiești TULCEA GORJ Pitești Vest Bărcăneşti Dumbrava Pitești DÂMBOVIȚA IF IALOMIȚA Centura Slobozia București MEHEDINȚI Ovidiu OLT CĂLĂRAȘI BUCUREȘTI Călărași Constanța DOLJ Agigea GIURGIU CONSTANȚA TELEORMAN • 200,000 km of Total Road Length • 19.8 km North Bucharest ring road under construction and 32 km for South Bucharest ring road under planning • 15,000 km of Total National Road Length in use • 2 Pan-European Road Corridors – IV and IX • 634 km Highway Length in use • 12 International Airports, plus additional 3 National Airports • 196.2 km Highway Length under construction for A1 Highway (Pitesti – Nadlac) and A10 Highway (Sebes – Turda). • 2 Black Sea Ports • 882.5 km Highway Length under planning for A3 Highway • 8 Danube river Ports (Bucuresti – Bors), A6 Highway (Lugoj – Calafat) and A10 Highway (Sebes – Turda). • 10,000 km Total Rail Length 8 BUCHAREST & ILFOV Bucharest, as the capital city is the most important economic centre in the country, accom- modating the headquarters of many international and Romanian corporations as well as the country’s authorities. The city offers modern warehouses and industrial business parks, including units of below 800 sq m. The main modern industrial parks are located in the proximity of A1 highway , West part of Bucharest which links the capital to West of Europe.