Consultants say we will continue to see this type of transactions considering that Romania keeps the global trend.
„The lack of workforce will test the ambitious plans of real estate developers (over 650,000 sqm were announced for 2019 and 2020 for the Bucharest office space market), considering that tenants are competing with the state for employees and facing a low unemployment rate (a little over 2% for people with higher education). Given the slow progress on infrastructure improvements, the areas offering access to a good public transport service (central markets, Center-West or Floreasca/Barbu-Vacarescu) will remain the most enticing. The attraction for the northern peripheral areas outside of Bucharest will remain low, while the new subway line in south-western Bucharest could open the way for new office space markets”, said Silviu Pop, Head of Research within Colliers International Romania.
According to Colliers consultants, the overall lease demand in Bucharest fell to 150,000 sqm. The net demand exceeded 84,000 sqm, slightly above last year’s level and a new post-crisis record high for the first half.
Tenants focused on Center-West and central areas (28% and 26%, respectively, of the overall demand). Over a quarter of the overall office space demand was generated by the IT&C sector, which is followed by companies in the energy and industrial sectors (nearly 25% of the overall demand).
Since the start of 2018, the Bucharest office space market has seen deliveries of 33,000 sqm and another 150,000 sqm are expected to be delivered in the second half of 2018. Regional cities were more active, with Timisoara and Cluj-Napoca adding some 72,000 sqm of modern office space.
The first half of 2018 ended with a total investment volume of EUR404 million, up nearly 18% from the same period in 2017, and the EUR1 billion mark is likely to be exceeded in 2018.
The biggest transactions were concluded in Bucharest, on the office and retail segments (the sale of Oregon Park to Lion’s Head, the sale of the first phase of Campus 6 project to CA Immo, the sale of Militari Shopping Center to the Prime Kapital/MAS REI) association.
Moreover, the first half of 2018 also saw an increase in the number of investors and the size of transactions, considering that the average value of assets sold rises to approximately EUR40 million, compared with EUR25 million a year before. It probably is the biggest average value of the last decade, a sign of market maturity.
On the industrial segment, the first half of 2018 saw deliveries of 330,000 sqm of modern storage space (excluding the spaces developed directly by potential tenants). Deliveries in Bucharest were registered mainly in western and northern areas, totalling over 110,000 sqm, with the city of Timisoara adding 38,000 sqm, and Pitesti and Ploiesti adding 20,000 sqm each.
Approximately 750,000 sqm could be delivered on the market by the end of 2018, compared with nearly 500,000 sqm delivered in 2017. Major developers alone expect to deliver 630,000 sqm, while small/independent developers are pretty active too.
Also, autonomous storage spaces, built and held by large companies operating in the FMCG and retail sectors, exceed 300,000 sqm. eMAG.ro is to complete a 120,000-sqm warehouse in the vicinity of Bucharest in 2018 and a large part of it could be subleased for a period of time.
Even though the modern storage space stock could exceed the 4 million sqm mark by the end of 2018, Romania still lags behind other countries in the region, which suggests there still is room for growth.
The retail segment is expected to see deliveries of 168,000 sqm in the second half of 2018.