The total volume of warehouse space in Georgia amounts to around 1.8 million square metres, of which around 1.2 million square metres is owner-occupied and the remainder is leasable. The largest share of total leasable space is located in Tbilisi – 61%, with 23% in Batumi and 10% and 6% in Poti and Rustavi, respectively.
From the 627,000 square metres of leasable warehouse supply, 89% is dry storage and 11% cold storage. The total capacity of cold storage amounts to 243,700 tons.
A significant proportion of total leasable warehouse floor space is classified as Class B (59%) and Class C (39%). Only 2% of total warehouse supply in Georgia can be classified as A class space.
The broad categories with the highest occupied space are food and beverage, representing 42% of occupied space in listed warehouses and building materials – occupying 14% of stock. Transport companies take up to 13% of space.
The warehouse market in Tbilisi is more developed than in other Georgian cities. The only A class warehouse storage in Georgia with a leasable area of 10,000 square metres is the recently developed facility by Gebrüder Weiss near Tbilisi Airport, which was fully occupied at the date of this research. The company plans to develop an additional 37,000 square metres as a second phase of development.
Even though Poti has a lower share in total stock than Batumi, warehouse real estate is more developed. The Free Industrial Zone (FIZ) and Clearance Economic Zone (CEZ) in Poti provide better prospects for development of the warehouse market. It should also be noted that the average vacancy rate in Poti is lower than in Tbilisi and amounts to 15%.
Of all sectors in the Georgian real estate market, the industrial market is the least developed. With the exception of the recently completed Gebrüder Weiss facility in Tbilisi, modern A-class space is non-existent and developer-led schemes have not yet started. The market is further characterized by a very high share of (local) owner-occupied stock and a limited amount of international occupiers.
After the collapse of Soviet Union state-owned industrial buildings came into possession of individuals. This event promoted the growth of the low class warehouse supply and currently, majority of this buildings are occupied by the local companies. International and local brands mainly take up A and B class warehouse space located in Tbilisi. It should be noted that low indices of exports is one of the major factor of obstacle the development of warehouse market.
Given the country’s strategic position and potential as a gateway between Europe and CIS/Asia, it is anticipated that development of the warehouse market will accelerate in coming years. Increased investment in infrastructure, including the recently completed Kutaisi Airport, the Baku-Tbilisi-Kars railway and development of Georgia’s port capacity will likely facilitate growth in the sector. Combined with Georgia’s confirmed orientation to Europe, featuring the recently signed Association Agreement and DCFTA, these public initiatives should result in strongly improved conditions for growth of the industrial real estate market.
Recent government support for local producers will likely fuel demand in the regions as well, with strong potential for centrally located hubs such as Kutaisi and Khashuri. Port-related cargo transport is developing well, although the gravitation is shifting towards the northern part of the Black Sea Coast, with recent developments in Poti and the confirmed government investment in a new port in Anaklia.
Governments stated policy and strategic location is giving Georgia the opportunity to become regional hub for the neighbor countries. Entrance of international large-scale distributor companies and progress of manufacturing industry will also accelerate the development of warehouse market in Tbilisi.
Given Georgia’s relatively narrow economic base, the potential of the industrial real estate market will remain modest for the coming years, but with strong economic growth and public investment initiatives, the market is ready for further development.