Strong investor interest is set to continue with some significant deals under way to be signed. Reasons for this increase are a wider acceptance of this segment - previously seen as niche- increasing allocations into real estate, partially due to a low-interest-rate-environment and an expected rebound of economic activity in Europe and bottomed-out rents expected to go up in line with economic growth.
“Central & Eastern Europe (CEE) is among the regions to benefit strongly from these factors. Rock-bottom rents combined with increasing industrial production support the believe we will start seeing rental growth in a number of markets soon. On top the region offers great potential for developers still based on a rapidly improving infrastructure network and the increasing sophistication of the I&L segment on the back of effects online shopping has on the way goods need to be delivered to the end-user”.– said Joerg Kreindl, Senior Director, Head of CEE Industrial at CBRE.
“We have seen significantly increasing activity in the I&L sector across CEE during 2013, based on which we decided to double our headcount in our Industrial division to 30 consultants to serve our Clients with the best possible quality. We have been involved in some of the largest agent represented transactions in the CEE region, including the largest industrial transaction ever done in Romania - 45,000 sq m leased by Carrefour, 45,000 sq m leased by two major automotive suppliers in Slovakia, over 40,000 sq m leased by DHL in Poland and a 20,000 sq m build-to-suit project for Steelcase in the Czech Republic. In Hungary during the last year CBRE assisted a leading logistics company to find several warehouses on 14,000 sq m. In total CBREs Industrial Team has negotiated over 400,000 sq m of industrial space on behalf of its Clients in CEE.” – added Kreindl.
With improvements in connectivity between Western Europe and CEE, and the growth of industrial production and manufacturing, there will be greater outsourcing in 2014 to specialist logistics companies. The quest for efficiencies places a premium on highly-accessible facilities and high through-put urban sites. Centralization of operations and inventory control are among the key advantages of XXL warehouses that saw significant growth in demand last year.
Conditions are in place for a widespread resumption of development in 2014. Other than build-to-suit schemes, the I&L development pipeline has been very thin for some time. Improvements in the economic and occupational market conditions combined with significantly increased investor interest have encouraged developers to begin bringing schemes forward in a number of locations.