The sector is not immune to economic and geopolitical influences

The total supply of modern I&L facilities on the capital markets of CEE-13 countries is almost 25 million sq m. and over 67 million sq m. at the country level.

Investment trends in the Industrial & Logistics sector

There has been significant interest in the I&L asset class, with investors looking at a variety of options including land acquisitions, single assets, large portfolios, and long-income sale and leaseback arrangements. However, the sector is not immune to economic and geopolitical influences, including higher financing costs, price mismatches between buyers and sellers, and limited product availability.
Dominika Jędrak, director of research and consulting for Poland and Central and Eastern Europe at Colliers

Despite these challenges, the I&L sector remains the main focus of investment in the Central and Eastern European region (CEE-6).

Profitability compression and rent increases

Significant yield compression in the CEE-6 region in 2012-2021 resulted from low product supply and high demand. Additionally, rent rates have increased significantly, especially in the most sought-after markets where the vacancy rate is low. While rent growth may stabilize in the short to medium term, economic pressures may lead to marginal reductions in some markets. Despite these fluctuations, the overall outlook for the I&L sector in the wider CEE region remains positive, with expectations for continued growth and performance. Capital values ​​per square meter they still look attractive compared to Western Europe.

Supply and demand dynamics in the Industry and Logistics sector

The total supply of modern I&L facilities in the capital markets of the CEE-13 countries is almost 25 million sq m, and at the national level – over 67 million sq m. Despite differences in vacancy rates between CEE countries, demand for I&L space has been strong in recent years, driven mainly by sectors such as 3PL, retail and distribution. However, most countries saw a decline in demand in 2023, which is partly due to economic and geopolitical factors.

Sustainable Development Initiatives

Sustainable development initiatives in the CEE-6 region cover almost 90%. total resources of modern industrial and logistics space. CEE-6 countries have been implementing green solutions in buildings for a long time, resulting in facilities with the highest levels of environmental certification, such as BREEAM or LEED. Progress in implementing ESG varies in individual CEE-6 countries, but in this respect it is the most developed group of countries among the wider CEE-13. A growing interest in green technologies and energy efficiency is visible in the Baltic countries, although progress in the implementation of ESG principles is at different levels.
Silviu Pop, Research Director, Romania and Central and Eastern Europe

Labor market dynamics in the CEE-13 region

The labor market in the CEE-13 region, especially in the manufacturing and logistics sectors, recorded significant wage disparities between countries, with a noticeable increase in wages observed in the CEE-6 region. This increase is due to the nearshoring trend in logistics and automation of production processes. While the manufacturing sector has seen significant year-on-year growth, the logistics sector is growing at a more modest pace. The growing demand for qualified staff with logistics and production specializations drives companies to expand and develop closer to the Central European region.

Migration trends and labor dynamics

Several countries, notably Romania and Bulgaria, experience significant annual changes in their migrant population. The Western Balkans are also a significant source of migration to other European countries. Despite the challenges associated with recruiting employees with specific competencies, the region remains an important internal migration corridor, providing industries with opportunities to acquire employees with diverse experience and skills. Moreover, labor markets are still more favorable than in Western Europe.