Ana Dumitrache, Managing Director of CTP Romania: “It’s in our power not to lose the momentum; it’s in our power to create a better market for us. We’re all responsible for that, not only us, the builders: all the players.”
During their market presentation held at CEDER 2023, CBRE showed that rents on the industrial and logistics market were growing and that this increase would have to continue to catch up with what is happening in the rest of Europe. Ana Dumitrache, who took part in the Logistics Panel held during the conference, highlighted the importance of this increase, mentioning that, in her opinion, the rents were bound to go even higher: “It’s the really first time when we hear €4.5/sqm for a good warehouse. […] I think whoever wants space, they better grab it, because the rents will be going up like this.”
Daniel Cautis, Managing Partner of Dunwell Industrial Brokerage, and moderator of the Logistics Panel also mentioned that, as compared to the increase in the cost of construction, of 25 to 35% in the past two years, the rent increases were never higher than 10-11% at best.
As a response, Gijs Klomp, Business Development Manager at WDP admitted that this state of facts was liable to make some projects not worthwhile: “Financing costs [and] construction costs are significantly higher, and then your margin starts to get squeezed to the point that […] it doesn’t make sense anymore to develop.” On a more positive note, he added that “that gap between new product, which is being quoted at today’s rents, and existing product, which is still cheaper, will narrow down when the existing product fills up.”
When it comes to the readiness to pay higher rent for better quality, Ana Dumitrache believes the maturity of the market has increased: “Our clients are willing and able to pay for a quality product, which saves their money on utilities, and on workflows, operational burden […]; if we […] are delivering premium, so we expect a premium rent for that, we always did, but now people really understand why, and are willing to accept it.” She followed this up by saying that the real estate agents needed to take an active stance in presenting the benefits of a better product to the tenants, to bolster the increase in rental prices.
