MARKETBEAT - Citybuild.bg

MARKETBEAT
INDUSTRIAL SNAPSHOT
BULGARIA
Q4 2014
A Cushman & Wakefield | Forton Research Publication
OVERVIEW
SOFIA INDUSTRIAL MARKET HIGHLIGHTS
Besides it, supply remains subdued by factors like the
reluctance of occupiers to commit to pre-leases with 6+
months delivery periods.
The space delivered by developers and owner-occupiers in
Q4 amounted to 13,700 sqm across two projects. The total
modern stock expanded by 3.7 per cent year over year to
826,000 sqm as supply underwhelmed.
The volume under construction contracted, manly influenced
by Q4 completions. Supply potential is found mainly in out-oftown industrial parks, predominantly located East of Sofia’s
ring road and in Elin Pelin municipality. Land sales or build-tosuit have been the preferred and sometimes the only possible
choices for developers for the last couple of years and attitude
is only slowly changing.
That said persistent demand in the prime Sofia Airport area
provides conditions for extensions of existing projects. Trade
Center Europe is already expanding its storage space offer by
Building 1 and Tishman International executives said publicly
an expansion of their logistics center was on the cards in
2015.
Former retail big boxes are also emerging as a source of
supply due to low demand from retailers and a combination of
accessible locations and generally good quality of the stock.
DEMAND
Leasing activity in the end of 2014 was mainly represented by
relocations and renewals. All in all, it underlined a pattern
from the last couple of years of occupiers to limit risks and
commit to a project only once they have secured a new client
or contract that will be served from the respective location.
Forton
Polygraphia Office Center
47A Tsarigradsko Shose Blvd.
1124 Sofia, Bulgaria
www.forton.bg
For more information, contact:
Deyan Todorov, Insert Title
+359 2 805 90 90
[email protected]
25,000
Prime rent (€/sqm/month)
€3.75
SOFIA INDUSTRIAL SPACE COMPLETIONS
sqm, thousands
Glorient Investment BG delivered the first speculative phase
of East Ring Logistics Park of 6,000 sqm prime warehouse
space and this was the only notable completion in the fourth
quarter of 2014 as well as the first product for the leasing
market since 2012.
826,000
Pipeline in sqm
120
100
80
60
40
20
0
2010
2011
2012
2013
2014
Source: Cushman & Wakefield / Forton. All data as of Q3 of the respective year
unless otherwise stated
SOFIA INDUSTRIAL SPACE STOCK & PIPELINE
sqm, thousands
SUPPLY
Stock in sqm
1 000
800
600
400
200
0
2010
2011
2012
STOCK
2013
2014
ACTIVE PIPELINE
Source: Cushman & Wakefield / Forton
SOFIA INDUSTRIAL TAKE-UP
sqm, thousands
Stronger deal making toward the year end
partly offset constrained market activity
throughout 2014. The lack of good quality
brownfield or new speculative space
reduces the possible options for occupiers
and prolongs the negotiation process in general. Developers
have slowly been coming back to the market but this has not
yet resulted in any significant on-the-ground activity.
140
120
100
80
60
40
20
0
2010
2011
2012
2013
2014
Source: Cushman & Wakefield / Forton
This report has been produced by Forton AD for use by those with an interest in commercial property
solely for information purposes. It is not intended to be a complete description of the markets or
developments to which it refers. The report uses information obtained from public sources which Forton
AD believe to be reliable, but we have not verified such information and cannot guarantee that it is
accurate and complete. No warranty or representation, express or implied, is made as to the accuracy or
completeness of any of the information contained herein and Forton AD shall not be liable to any reader
of this report or any third party in any way whatsoever. All expressions of opinion are subject to change.
Our prior written consent is required before this report can be reproduced in whole or in part. Should you
not wish to receive information from Forton AD or any related company, please email [email protected]
with your details in the body of your email as they appear on this communication and head it
“Unsubscribe”. ©2014 Forton AD All rights reserved.
1
MARKETBEAT
INDUSTRIAL SNAPSHOT
BULGARIA
Q4 2014
A Cushman & Wakefield | Forton Research Publication
SOFIA INDUSTRIAL SPACE VACANCY
sqm, thousands
Distributors and retailers remain active and are looking for
small-size units of warehouse and office space at one
location.
Vacancy notched up but remains low by both historic and
industry standards at 3.1 per cent.
Out of Sofia most of the demand is concentrated in the lightindustrial segment. The occupiers are looking at locations
within the city limits with public transport access and sufficient
parking space, or in well-developed industrial and business
areas in the satellite areas of bigger cities.
Aside from new developments, a case exists for brownfield
options, as demonstrated by two recent transactions: Slam
Clothing (part of Seth GmbH) leased the former
Technomarket store totaling 4,695 sqm in Vidin and
Oceanfenders Ltd., a subsidiary of Lalizas Holdings and
maker of marine equipment, acquired a factory of close to
13,000 sqm in Pernik.
RENTS
After a rise in the third quarter, prime rents were seen stable
in general. They are moving ahead of occupier demand
thanks to barely existing vacancy in prime projects.
With supply-demand balance generally unchanged, highspecification logistics projects in inner Sofia are expected to
trade at a premium over the €3.75 monthly rate for the
broader market which also encompasses nearby
municipalities like Elin Pelin and Bozhurishte.
INVESTMENT FOCUS
800
600
400
200
0
2010
2011
2012
OCCUPIED
2013
2014
VACANT
Source: Cushman & Wakefield / Forton
SOFIA PRIME INDUSTRIAL RENTS AND YIELDS
4,25
€/sqm/month
Plovdiv is about to reaffirm its position as manufacturing hub
following the Sensata Technologies/Sensor-Nite Industrial
acquisition of close to 68,000 sqm lot in Maritsa municipality.
According to public reports in Q4, the company is developing
electrical components factory. Meanwhile, Bulgarian Property
Developments delivered 5,300 sqm for Nexans Autoelectric, a
car cabling supplier, in Pleven.
1 000
13,00%
12,50%
4,00
12,00%
3,75
11,50%
11,00%
3,50
10,50%
3,25
10,00%
2010
2011
2012
RENT
2013
2014
YIELD
Source: Cushman & Wakefield / Forton
TRENDS AND FORECASTS
●
Improved sentiment is expected to bring new
developments to the market but the pace has been slow
●
Manufacturers have taken over logistics and distribution
businesses as the main source of demand
●
Upward pressures on rents remain in place,
strengthening the case for investment in income
producing properties
Given the recovery in offices, logistics projects with strong
office component could be potential targets for investors. On
the back of improved sentiment in general and healthy
fundamentals yield expectations are seen down to 11.25 per
cent for prime multi-tenant product.
Meanwhile, evidence suggests Bulgaria gets recognized by
an increasing number of international manufacturers and
retailers as possible logistics hub. This in turn could translate
into future land sales or build-to-suit projects.
Forton
Polygraphia Office Center
47A Tsarigradsko Shose Blvd.
1124 Sofia, Bulgaria
www.forton.bg
For more information, contact:
Deyan Todorov, Insert Title
+359 2 805 90 90
[email protected]
This report has been produced by Forton AD for use by those with an interest in commercial property
solely for information purposes. It is not intended to be a complete description of the markets or
developments to which it refers. The report uses information obtained from public sources which Forton
AD believe to be reliable, but we have not verified such information and cannot guarantee that it is
accurate and complete. No warranty or representation, express or implied, is made as to the accuracy or
completeness of any of the information contained herein and Forton AD shall not be liable to any reader
of this report or any third party in any way whatsoever. All expressions of opinion are subject to change.
Our prior written consent is required before this report can be reproduced in whole or in part. Should you
not wish to receive information from Forton AD or any related company, please email [email protected]
with your details in the body of your email as they appear on this communication and head it
“Unsubscribe”. ©2014 Forton AD All rights reserved.
2