The total supply of modern logistics and industrial (LI) areas in the capitals of the CEE-13 countries amounts to almost 25 million sq.m. . and over 67 million sq.m. at the national level. Poland remains the largest market in the region with a stock of more than 30 million sq m, which represents approximately 45% of the total volume in CEE-13, according to the latest Colliers report.
Investment trends in the LI sector
Dominika Jedrak, Market Research Director, Colliers CEE commented: "There is considerable interest in the LI segment. Investors are looking for a variety of opportunities such as land acquisitions, standalone assets, large portfolios and sale-leasebacks with long-term income. 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. Despite these challenges, the segment remains a key focus for CEE-6 investors.
Shrinking yields and rising rents
The significant yield contraction in the CEE-6 region between 2012 and 2021 is due to weak product supply and increased demand. In addition, rental levels have risen significantly, particularly in the most sought-after markets with low vacancy values. While rental growth may stabilize in the short to medium term, economic pressures will lead to modest reductions in some markets. Despite these fluctuations, the overall outlook for the segment in the extended CEE region remains positive, with expectations for continued growth and results. Capital values per square meter continue to look attractive compared to Western Europe.
Dynamics of demand and supply in the LI sector
The total supply of modern areas for industrial and logistics activities in the markets of the capitals of the CEE-13 countries amounts to almost 25 million square meters and over 67 million square meters at the national level. Despite variations in vacancy rates, demand has been strong in recent years, driven mainly by sectors such as 3PL, retail and distribution companies. Nevertheless, demand is expected to decline in most countries in 2023, due in part to economic and geopolitical factors.
ESG initiatives
Silviu Pop, Market Research Director, Colliers CEE, adds: “ESG initiatives in CEE-6 affect almost 90% of the total pool of modern industrial and logistics areas. The countries of the region have long introduced ecological solutions in their buildings. As a result, facilities with the highest levels of sustainability are emerging, as evidenced by certifications such as BREEAM and LEED. The progress of each of the CEE-6 countries in this aspect is different, but in them it is the greatest against the background of the expanded composition of the region (CEE-13). Growing interest in green technologies and energy efficiency is evident in the Baltic countries, although progress in their implementation varies.
Dynamics of the labor market in CEE-13
The CEE-13 labor market, particularly in the manufacturing and logistics sectors, has seen significant pay differences between countries, with the CEE-6 region seeing significant pay increases. This growth is due to the nearshoring trend and the automation of production processes. While the manufacturing sector registered significant growth on an annual basis, it was more modest in the logistics sector. The growing demand for qualified personnel in the field stimulates enterprises to expand and develop closer to the Central European region.
You can see detailed statistics on average property prices in Bulgaria by cities and neighborhoods HERE