about us | newsletter | contact | archive | members area
Nicolae Ghibu, Certsign
Regulations will come gradually and will cover all areas»
  Features:      COUNTRY FOCUS   |   SECTOR ANALYSIS   |

Romanian office market ripening, in both leasing and acquisition

From the investment standpoint, lower rates of return and increased liquidity lure the investors, Andreea Paun, Managing Partner, Griffes said in an interview for The Diplomat-Bucharest.

2018-03-30 11:24:10

1 Photos
The more the merrier, since over 60 per cent of the capital inflows are foreign, predominantly US based. Very coveted trophy assets are now up for sale in the market, starting with the hip modern The Office compound in Cluj-Napoca, to the central, imposing America House in the centre of Bucharest′s business district. While the investment fundamentals are under pressure - with office prime yields compressing form 7.5 per cent to 7.25 per cent, the leasing players are now even more alert."

While the appetite for buying is high, there must be assets to buy, Paun explained: "More and more developers and property owners are looking to differentiate their products by creating an ambiance and a collection of contracts that will make an attractive product. As such, buildings with new design, innovative concepts and technical features have been launched in the market. There is no one new product that does not involve community and collaboration."

Griffes specializes in representing landlords in designing and commercializing their office properties in order to match the tenants′ needs.

"In 2018, we will be delivering Unirii View, developed by Mr. Yves Weerts in downtown Bucharest," said Paun. "Most of the tenants we attracted in the 17,000 sqm Unirii View are growing companies. Five out of six tenants are increasing their capacities, and some are even doubling or tripling their headcount. Unirii View is the proof that tenants look to secure the best spaces, as more than 60 per cent of the building is already pre-leased from the construction phase.

From the occupier perspective, Paun said new companies are entering the market (Amazon, Deutsche Bank), increasing the demand for quality office space and thus shaping the developers′ products.
"In Bucharest, where quality office stock has surpassed two million sqm and vacancy rate dropped below four per cent, there is a mismatch between the shrinking inventory of good product and the queue of many tenants looking for a futuristic workspace," she added. "Besides just new companies, most of the existing companies are consolidating, extending and rethinking their office premises, choosing newer buildings with better amenities for employees, moving closer to a metro station."

According to the quoted source, growth in the office market in CEE/Romania is based on three pillars: a fundamental process – economic growth – and Romania registers one of the largest GDP growths in the EU; a corporate growth which drives demand for professional services; and CEE's rise in global value chains.

Paun explained: "The third phenomenon which supports demand for office space is the growth in foreign business services centres, mainly business processing operations, shared services centres, IT and R&D centres. This process is driven by two forces: the development of international value chains, which consist of both manufacturing and business services, and the very attractive quality of the CEE workforce relative to its cost. With the fastest growing economy in CEE, Romania is quickly closing the gap from its regional peers in terms of standard of living. Moreover, Bucharest is actively participating in the global digital revolution, with one of the fastest broadband connections in the world and generous digital infrastructure for start-ups."

Paun also underlined the main areas of the country that have seen a successful evolution last year.
"While the main cities set the tone, it is often the secondary cities that make the music: they are our economy's source of vitality," she explained. "It is in the secondary cities where breakthrough innovations are generated and where new economic sectors are born. The most dynamic of them usually outpace the growth rate of the primary cities. For example, Cluj-Napoca, Timisoara, Iasi, Constanta, Brasov, or Craiova have grown faster than Bucharest between 2011 and 2015. Now, it's the tertiary cities' turn, and we indeed look at the strengthening of Brasov, but mostly at new stars such as Sibiu, Oradea, Arad, for their potential in human resources and infrastructure."

According to Griffes' Managing Partner, developers are increasingly focused on the efficiency and long-term sustainability of their buildings, while tenants are also becoming more selective when choosing a location for their future premises: "Therefore, most office buildings recently delivered have a green certification, a trend that will be maintained during 2018 as well. Besides the ‘green building‘ etiquette granted by the certification process, most office developments are now benefiting truly green features which will enhance general well-being. For instance, the newest project in our portfolio - Record Park - will offer more than 4,000 sqm green area, a pool with an outdoor deck integrated in a sport facility, pedestrian walkways and alleys, and a river promenade. The 12,000 sqm office building will be developed in centre Cluj-Napoca by Speedwell, an investor who is remarkable in the design and concept of their projects."

Paun underlined that the demand from business centres for office space in Romania is very strong because of the stellar growth of the sector in the country and Bucharest's specialization as CEE's IT hub.
"ABSL Romania estimates that by 2020, the number of jobs in the business services sector will almost double, reaching more than 200,000," she continued: "Romania (Bucharest and Cluj- Napoca, especially) has a large, educated labour force with a good technical background, which, combined with the excellent internet infrastructure, has made it ‘the' destination for IT companies. Names such as Microsoft, IBM, Oracle, Amazon, EA Games and Deutsche Bank have all chosen to locate their offices in Romania. Companies from the IT sector have been the main drivers of demand in the last five years, followed by the business services (BPO/SSC) and professional services sectors. This trend is also expected to continue over the following two to three years, with more sophistication over the type of activities - R&D centres, engineering activities, development of own software products instead of "on command" apps, deployment of marketing and sales efforts."

According to Paun, the most sizable opportunity for the Romanian office market in 2018 is the growth in global value chains, meaning as services become more complicated in the CEE countries, and the more the production increases, the more likely Romania is to attract foreign investments and new players.
"Proximity to major production hubs such as Germany and Hungary, and the growing manufacturing industry in Centre-West Romania, will trigger the development of complementary services to support the industry sector, and this will reflect into the office development," said Paun. "Also, the outsourcing segment will create more complex jobs and we will witness an increase in the specialization of the players, translated into a more focused design and choice of workplaces.

"At Griffes, we are creating value for the office properties we represent. We perform value engineering when leasing office spaces and we look to match the ‘brick and mortar' to the very alive, constantly-changing climate of the tenants."

There are 0 comments:

Validation Code

0 Comments  |  4695 Views
Daily Info
Black Sea Oil & Gas signs the gas sales agreement with Engie for natural gas supply from the MGD project

Black Sea Oil & Gas together with its co-venture partners, Petro Ventures Resources and Gas Plus International, announced the signing of the gas sales agreement with Engie thr...

Bucharest Stock Exchange and other capital market representatives establish the Romanian Investor Relations Association

Companies listed on the Bucharest Stock Exchange (BVB), those with potential to become listed companies jointly with funds managers and Investor Relations (IR) professionals f...

GapMinder fund invests in FintechOS, a start-up that develops AI solutions for the financial services industry

FintechOS, a company specializing in accelerating the digital transformation of financial institutions, has attracted 600,000 Euro of funding from the GapMinder investment fun...

The Romanian labour market needs a well-thought approach, says FIC

The Foreign Investors Council (FIC) has signaled in the past 2-3 years that its members are anticipating increasing strains on the Romanian labour market because starting with...

Romgaz posts a net profit of 1.02 billion RON in the first nine months of 2018

Romania's natural gas company Romgaz posted a net profit of 1.02 billion RON in the first nine months of 2018, a decrease of 14 per cent compared to the year-ago period. Total...







More on Features
Cryptocurrency exchanges. The new outsourcing El Dorado?

Customer experience has become the new competitive battleground for crypto exchanges. Cryptocurrency exchanges seeking to maintain or gain an advantage in this highly comp...

Blockchain how it's made and what can we do with it

In the context of the "fourth industrial revolution" that everyone is talking about these days, The Diplomat - Bucharest analyses how an emerging technology like blockchain...

US calls for coherent, long-term strategy

As USA celebrates 4th of July, its eyes are wide open on the latest developments in Romania's ongoing struggle for the rule of law. Still, the country is one of the fastest...

French investments at a glance: Interest still high

France, Romania's fourth largest foreign direct investor, has been around since the early 1990s, with flagship names the likes of Societe Generale or Groupe Renault taking ...

Romanian energy industry: Challenges to Overcome

With a national strategy draft still to be approved, Romania faces many challenges, as the energy market is striving to find a way to attract major investments that are cri...

Global efforts to develop low-carbon, energy-efficient solutions

Interview with Robert Tudorache, Secretary of State, Ministry of Energy

Fresh Delivery (P)

Up to speed with the courier sector in an interview with Gian Sharp, CEO at Urgent Cargus