Colliers presents their Industrial Market of Bulgaria Analysis for the second half of 2018.
The supply of modern logistics and industrial space in Sofia increased by 5% in the second half of 2018 and reached 963,000 sqm. (Fig.1) The new stock totalled 38,000 sqm, with owner-occupied space prevailing over speculative.
The available logistics and industrial space in Sofia increased insignificantly to 7%, concentrated in owner-occupied or class B projects, not meeting tenants’ requirements.
The supply – demand disbalance and the fast absorption of completed speculative space activated developers. New buildings will be added to Transcapital and East Ring Logistics Park.
Bulgaria remained attractive to the light industry manufacturers, creating favourable conditions for their subsequent expansion. These were mostly companies for automotive components and electronics. Among the examples were the German Voss Automotive in the village of Bahovitsa (Lovech district), Leoni in Pleven, as well as the Turkish companies Sarkusuysan and Beydemir Sac Profil and the Belgian Kreon, who chose Shumen. In the meanwhile, manufacturers, already present in Bulgaria, such as Melexis, Witte Automotive and Behr-Hella Thermocontrol (BHTC), continued to expand within the established industrial areas.
The demand drivers for logistics and industrial space were retailers & wholesalers (56%), logistics operators (20%), professional services (12%) and other companies (11%). (Fig.2)
The net absorption in the second half of 2018 was 27,000 sqm and 54,900 sqm on an annual base. The light industry companies and the automotive components producers dominated industrial space demand, investing mainly in owner-occupied facilities.
The average rental rates of modern logistics space remained stable in the second half of 2018. They were 4.7 euro per sqm for class A space and 2.7 euro per sqm for class B. (Fig.3)
40,000 sqm of modern logistics and industrial speculative space is likely to enter the market in 2019, thus balancing supply and demand.
In the next 2-3 years, the projects in the pipeline and currently developed in Sofia Airport area will lead to expansion of the industrial zone. The warehouses there are planned for construction will feature increased height compared to existing facilities. This advantage is expected to boost rental rates – up to 6 euro / sqm / month.
Industrial manufacturers will continue looking for options. Existing projects and development lands in the Eastern zones of Sofia, as well as secondary (between 100,000 and 200,000 inhabitants) and tertiary cities (less than 100,000 inhabitants) will be on their radar.
Rental levels will remain stable in 2019.