Demand for quality warehousing and logistics space is set to continue rising with the arrival of big-name retailers.

Local developers scramble to fill burgeoning demand for quality warehouse and industrial space

Romania has in the past been plagued by a lack of quality warehousing space. This is expected to change in the near future, however, in light of the arrival of big-name retailers with a demand for modern warehouse space.

One project that will help fill this gap in quality space is the new logistics center, Bucharest Distribution Park—a 28-hectare industrial complex in northwest Bucharest that includes 140,000 sqm of industrial and storage space premises and approximately 15,000 sqm of office premises. The project is valued at up to €70 million ($93 million).

The Austrian investment fund Immoeast has acquired the project from developer Bucharest Distribution Park (BDP), run by the Precup family. BDP will continue as project developer while Immoeast will finance all of the project’s development phases. This is the second such deal for the Precups who sold a large logistics park to the same fund in 2005.

IOAN PRECUP Director General of Bucharest Distribution Park

Ioan Precup, BDP Director General, says of the new logistics center, “The project aims to offer the most modern facilities in logistics and distribution. The partnership with Immoeast Austria confers an extra warranty of a high standard product.”

Immoeast is already quite active in Romania, owning about 15-20 real estate projects in the country, with around €1 billion in planned developments. BDP is one of its largest projects. The development design will include three phases, and the entire project is expected to be ready by the end of 2009 or start of 2010.

What gives the project its competitive advantage, Mr. Precup believes, is its location near the Bucharest ring road, soon to be widened to four lanes, as well as its proximity to the major highways heading out of Bucharest, the airports, and railway links to the country’s main harbor in Constanta.

Meanwhile, demand is expected to continue to grow for logistics centers in Romania. “End-users—supermarkets, hypermarkets, and distributors of fast moving consumer goods—are also expected to increase their demand for quality warehousing space,” Mr. Precup says.

According to a CB Richard Ellis report, about 60,000 sqm of industrial space and facilities arrived in 2006, bumping up the existing total to 310,000 sqm. However, analysts say that the supply is still far lower compared to other Central and Eastern European countries. New supply is slowly starting to match the demand. In 2007, around 250,000 sqm of industrial space is expected to hit the market nationwide, and the recent zero availability is set to change soon with the completion of new projects.

Immoeast has been a main driver behind the surge in industrial space as it has clinched a host of deals to develop logistics centers.