With only two medium sized office buildings completed in the second quarter of 2013, totaling 7,800 square meters, the office supply completed in the first half of the year reached approximately 80,000 square meters. The modern office stock in Bucharest is estimated at 2.04 million sqm, with Class A stock accounting for 51% of the stock, JLL said in a report.
CSDA Siriului, partially financed with EU funds under program Axis 4 “Supporting the development of regional and local business” was fully leased at completion, while the second building, located on Armand Calinescu Street, recorded occupancy of up to 50% on its delivery date.
The total leasing activity in the first half of 2013 reached 123,000 sqm, which is similar to the total area leased in the same period in 2012 (126,000 sqm).
“Prime headline rent remained unchanged over the last 12 months at 18.5€/sqm/month (since Q3 2013). Over the last quarter, a generous increase of the incentive packages, in both rent free periods and fit out contributions, was noticed. These are applicable to lease requirements exceeding 2,000-3,000 m2 for existing buildings, while in the recent past these were mainly applicable to larger pre-leases which were crucial for projects to secure finance and start construction works. In addition, the market has slowly changed to a tenant’s market, which we estimate to characterize the office sector for at least the following 12 months,” reads the report.
The second half of 2013 pipeline has been revised down to 40,000-50,000 sqm. The pipeline for the next 2 years, 2014-2015, is estimated at 180,000 – 200,000 sqm, with some projects expected to be completed in 2014 but, due to the large volume, we are of the opinion that delivery may easily slip to 2015. In addition, a couple of phased business parks may start construction works or their additional phases by the year end, based on pre-leasing activity.
According to the report, no modern shopping center was delivered in Romania in the second quarter of 2013. Following some revisions, the modern shopping centre stock is estimated at 850,000 sqm in Bucharest and at 1.5 million sqm for the rest of the country.
In recent months, three retail schemes re-emerged on the Bucharest retail market, but with no clear dates regarding the opening or the commencement of construction works: 63,000-sqm ParkLake Plaza, 60,000-sqm Mega Mall and 35,000-sqm Victoria City Lifestyle.
“Retailers remain cautious in expanding their networks and focus mainly on prime projects. Mass market retailers who are already present in most of the well performing shopping centers in the country are starting to assess the new retail projects, but the conditions they are prepared to offer make it difficult to justify new developments,” according to JLL.
Rent for both prime shopping centers and prime high street units remains at EUR55-EUR65/sqm/month. The highest rents are achieved in Baneasa Shopping City and AFI Palace Cotroceni which are considered the two most dominant retail schemes in Romania.
The report also says that currently, Bucharest’s retail pipeline for 2013 and 2014 is estimated at around 60,000 sqm consisting of two retail schemes, Promenada Mall and Vulcan Value Center. On a country level, two projects are set for completion in the second half of 2013: Corall in Constanta (18,000 sqm), developed and anchored by Cora with a 50-store shopping gallery attached to the hypermarket and AFI Palace Ploiesti, a downtown shopping center developed by AFI Europe and anchored by Cora as well with an announced GLA of 28,000 sqm.
Two major production facilities were officially opened in the second quarter of 013 in Romania. In June 2013, the owner-occupied facility of Lufkin Industries Oil Field Division, was officially opened within Ploiesti West Park with ca. 35,000 sqm (in 3 main buildings). Jones Lang LaSalle reported the completion of the construction works in the Q4 2012 market report. The second project, also officially opened in June 2013, is located in Eurobusiness Industrial Park in Oradea, north-west of Romania, a greenfield investment of around 27,000 sqm, owned by the US-based company Plexus, the report also reads.
Gross take-up in the second quarter of 2013 in Romania totaled approximately 52,000 sqm. Activity was recorded in Bucharest, Oradea and Timisoara. In this quarter, Bucharest’s gross take-up is estimated at 14,500 sqm, the report reveals.
In June 2013, Bucharest’s graded hotel market consisted of 77 hotels with about 9,500 hotel rooms. The city’s hotel market is highly corporate led and is therefore well supported by 4-star hotels, which account for 60% of the entire hotel room stock. The 5-star segment constitutes 22% and the 3-star segment 18% of the total room stock supply, JLL also said.
The total investment volume recorded in the first half of 2013 is estimated at EUR62 million. The only significant transaction concluded was the acquisition of The Lakeview by the AIM-listed fund, New Europe Property Investors. This transaction is the largest institutional transaction in the office sector in Bucharest since 2010.