Consultants look to logistic sector for real estate market rebound
Real estate consultants believe the logistic sector will be the
first sector of the real estate market to unfreeze as demand for
industrial space rises. Investments will be this way resumed, with
investors being lured by the higher yields compared with retail or
housing ones, reads BUSINESS CONSTRUCT magazine.
Real estate experts believe the logistic real estate market will unfreeze starting next year, at least in terms of transactions, as demand catches up with supply, and the rebound will be a rapid one given the short development period. However, project financing and the uncertain business environment will still be the main problem next year.
"As regards the deal-making level, we expect 2010 to be somewhat better than 2009, and many companies have delayed their projects because of the uncertain business environment," says Viorel Opait, manager of the industrial department of Colliers International.
Rodica Tarcavu, heading the industrial department of DTZ Echinox is of the same opinion and expects the logistic sector to unfreeze next year.
As regards deliveries of logistic space, around 80,000 square metres were put to use this year, with more than half in Bucharest.
No further deliveries are announced by yearend, with the supply decline gradually leading to rising rental prices.
At present, the logistic space inventory amounts to over 900,000 square metres in Bucharest and another 500,000 square metres in the country. The total volume of logistic spaces under various stages of execution tops, though, two million square metres. Still, for this year Opait believes no more logistic projects will be delivered by yearend, with investors being somewhat more interested in retail and office space during this period.
Amid the shrinking demand, owners of logistic space are willing to negotiate rents downwards, with small tenants benefiting the most.
As regards prices, rents range between 4 and 5 euros per square metre now, but the following months' the trend largely depends on the market's development in the last quarter. Still, rents are expected to rise as logistic spaces get filled and the supply will remain constant.
Consultants believe investors will still focus on logistic space development next year, mainly in Bucharest, but in the following years they will also take to the rest of the country.
Despite recent developments, Bucharest still has a two times lower logistic space stock compared with Warsaw and Budapest.