In recent years, interest in the warehouse and logistics sector has increased significantly, driven by rapid economic growth and increased domestic and foreign trade. This was reflected in increased demand and rental prices for warehouses across Tbilisi. In parallel, supply has accelerated. However, the supply of modern warehouses in Tbilisi is still limited and we expect that the sector will continue to develop in this direction over the next 7-8 years.
Supply: Currently, the supply of warehouses in Tbilisi stands at 920 thousand square meters, of which, 94% are dry warehouses, and the remaining 6% are cold storage facilities. Although the supply of dry warehouses in 2024 has increased by 30% compared to 2020, a large part of the existing warehouses are Soviet-era buildings or very low-quality warehouses, which generally do not meet the demand criteria. Taking into account the issued construction permits and announced projects, a 33% increase in the supply of warehouses is expected by the end of 2026, of which the majority are high-quality warehouses.
Demand: Galt & Taggart surveyed 40 large companies, which account for 38% of the total demand for warehouses in Tbilisi. The results show that the demand for warehouses will remain at a high level in the medium-term. However, most of the surveyed companies will satisfy their demand by building their own warehouses.
Rent prices: After increased demand for warehouses and rising operating costs, rent prices also rose. In 2024, the average rent in new contracts for dry warehouses in Tbilisi was about $5-6 per square meter excluding taxes, which is a significant increase compared to previous years. In addition, the variation in rent is high, taking into account the quality and purpose of the warehouse. In the short-term, prices are expected to stabilize at the current level. However, in the medium and long-term, price dynamics will be affected by the demand/supply balance, operating cost dynamics and sector regulations.
Logistics models: The logistics industry in Georgia is developing in a different direction compared to European counterparts. In particular, outsourcing of warehousing and logistics services is less common, and most companies own warehouses and manage logistics operations in-house. This trend emerged as companies grew in size but faced a limited supply of large, modern warehouses, leading them to develop their own facilities. Having built in-house expertise over time, they now prefer to continue managing logistics internally. In developed countries, this function is mainly performed by 3PL (Third-Party Logistics) providers. This allows companies to fully concentrate on their core business and not get involved in logistics management. According to Galt & Taggart survey, at this point there is no willingness from local companies to switch to 3PL services in the medium-term. Currently, these services are mainly used by international companies in Georgia.
