Warehouse Aerial

Romania’ logistics and real estate landscape for nearshoring

Timea Szarvashegyi - Profile
written by Timea Szarvashegyi
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Future logistics
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An interview with Mihai Patrulescu, Head of Investment Properties at CBRE Romania

With more than 115,000 professionals in over 100 countries, CBRE is the global leader in commercial real estate services and investment. Mihai Patrulescu leads the Investment Properties department at CBRE Romania. We spoke with him to know more about Romania’s logistics and industrial real estate landscape and how it is changing to accommodate nearshoring.

How do you evaluate the potential of nearshoring for Romania?

Recent events like the pandemic and war in Ukraine have intensified discussions about nearshoring, with friendshoring becoming a growing trend. While these trends take time to solidify (around five years), I believe nearshoring and friendshoring will be key for Romania in the coming years.

When you look at the past five years, have you already noticed an evolution in leasing activity?

Yes. Before 2020 and even in 2021 and 2022, the leasing activity in Romania was driven by storage and logistics. Over the years, this has changed and in 2023, for the first time, we saw an increase in leasing not only for storage and logistics but also for production from 7% in 2022 to 18% in 2023.

How does production differ from a nearshoring perspective?

In contrast to storage and logistics, production you don’t just move because it offers benefits in the short run. Companies that are choosing to nearshore production to Romania, believe Romania is the best strategic choice – today and in the future. This shows that chances are high that nearshoring to Romania will only keep on gaining importance.

Will this benefit the entire country or are some regions more prosperous than others?

When it comes to nearshoring, you need demand, but at the same time, you need the potential to absorb it, and that’s where Romania has really evolved. Until 2021, Bucharest was the main driver with a total leasing activity of around 82%. In second place you had the Western and North-Western regions of Romania with around 20%. Why? Because infrastructure in Romania used to be quite poor due to the proximity to Hungary, that didn’t impact the West of the country. As you can imagine, that also means there is quite some untapped potential in other regions of Romania.

How will infrastructure improvements impact nearshoring potential?

Over the past five years, Romania’s infrastructure has undergone a significant transformation. Highway kilometres have doubled, and projections suggest another doubling in the next five years. These new highways are already opening up previously underdeveloped regions, creating new employment opportunities (data point on job growth, if available). This improved infrastructure will likely lead to a more balanced distribution of economic activity across Romania, with a rise in leasing activity in these previously untapped regions.

Is it possible to evaluate the potential of the different regions of Romania?

The evaluation of the potential of different regions in Romania reveals distinct advantages and opportunities for developers and investors. The West/North-West region stands out for its skilled labour force and strategic position as a gateway to Western Europe, making it highly sought after. In the Southern region, limited competition, affordable labour costs, and excellent transportation access present opportunities that have been underutilised. The Central Region boasts a highly skilled workforce, coupled with plans for a highway connecting Brasov and Bucharest, making it an attractive investment destination. Meanwhile, in the East/North-East region, factors like limited competition, cost-effective labour, and advantageous locations such as Iasi and Galati offer promising prospects for development and investment.

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