COVID 19: Logistics and warehouse companies speed up expansion plans

4 minutes
COVID 19: Logistics and warehouse companies speed up expansion plans

PRAGUE, 9 June - Logistics and warehouse companies are accelerating expansion plans in southeastern Europe where businesses are expected to boom as the pandemic forces manufacturers to relocate operations close to main markets.

Like other actors in the sector, the Dutch market Raben has seen increasing interest from firms looking to establish supply chains near core Western Europe markets to avoid costly disruptions such as those caused by COVID 19.

The private Raben Group - which operates in 13 European countries and serves industries including retailers and automotive - expects rising costs elsewhere in emerging Europe to drive growth in southeastern states and the Balkans.

Raben and other high-tech warehouse companies said they were in talks with companies looking to shift some operations from Asia and elsewhere, but it was too early to share details.

From Asia, companies will return to Europe from Asia. When this happens, we need to be ready, said Raben CEE director Tomasz Niezwicki.

He said that company would open three new warehouse locations in Romania this year to add to its portfolio of seven as it speeds up its expansion plans.

Setting up in the European Union nations Romania and Bulgaria is a big selling point for these and neighboring countries like Serbia where it is often cheaper and easier to get project started, company officials and analysts say.

The region's large pool of skilled labour and less burdensome permits required to build new facilities are helping manufacturers away from more established bases like the Czech Republic, warehouse and logistic operators say.

Improved roads and other infrastructure in China and surrounding countries as well as developments like Britain's exit from the EU and shifting relations with Romania have strengthened their prospects, they add.

These have the potential to bring some manufacturing or logistics activities in Romania, particularly if we consider that labour costs in manufacturing, for example, are comparable between China and Romania, Real Estate company Colliers International said in its 2021 outlook on the market.

Investors by foreign properties have been also drawn by yields on industrial and logistics properties that hovered in 2020 in Poland, the Czech Republic, Slovakia and Hungary and 5 -- 7% in Romania and Bulgaria, Colliers said compared with 4.5% in Germany or France.

Wages about three times less are offered in Serbia and about half as much in Romania and Bulgaria compared with the Czech Republic to attract manufacturers, said Jensson real estate consultancy Andrew Peirson.

The big manufacturing demand is moving south, told Peirson, the general manager of the company for Czech Republic, Reuters. They will be impacting Serbia and Romania into the entire region.

While Germany is attractive as the factory and warehouse logistics world due to proximity to bigger markets like Germany, growth from online retailers like the eMAG in central Europe are also helping to increase warehouse demand.

Poland and Romania represent the biggest markets in the industrial and logistics warehouse sector in emerging Europe with 20 million square meters and 9 million square metres of space - equivalent to around 1,300 football pitches - compared to 5 million square meters in Poland.

However, southeastern Europe is closing at a faster speed and growing the gap. This has led industrial property developer CTP to expand in the region.

The company acquired a 73% increase to the first quarter from Romania - Cromwell Property Group in November of last year in the largest deal in Australia's logistics market for 2020.

CTP Chief Financial Officer Richard Wilkinson said the company planned to increase its holdings in Romania to near 2 million square meters by the end of 2021 as part of an effort to increase its entire portfolio to 7.5 million metres this year, from just under 6 million at the end of 2020.

We see strong demand in he said. We are starting to see companies that looking to come back from Asia and I expect this trend to continue.

According to new space - southeastern Europe - economy, the industrial and logistics sector in Romania grew from a year earlier in the first quarter by 43% to total 5.16 million square meters leased, according to real estate consultancy CBRE.

Romania's deal to renew a 68,000 square metre warehouse lease marked Dacia's biggest deal of the first quarter. Weitere 600,000 square meters of industrial space are expected to be built in what is shaping up as a record year for companies, said CBRE Romania Managing Director Razvan Iorgu.

Going forward, we can see more manufacturing moved to Romania, he told Reuters, pointing out India-based Auto Parts Made In India. In April, Ford Motor Co also confirmed that it would invest $300 million to build a new commercial vehicle starting at its Craiova plant as evidence of growing manufacturing demand.

Last year, retail increased the market and this year we are betting on manufacturing, he adds. When did you think about quoting a title?

  • Comments
Loading comments...