S Group Holding, set up in the early ‘90s in Liberec, a city of 100,000 inhabitants of the Czech Republic, will finalize Green Gate building, the largest office project to be delivered this year in Bucharest, next month.
Bog’Art construction company owned by businessman Raul Doicescu started works for the project in early September 2012 and 18 months later around 500 workers of the entrepreneur and subcontractors are particularly carrying out fitting works. The building is now 67% pre-rented.
“At present, there are around 500 people on the construction site, and at peak moments there have been even 1,000 workers. In around two weeks we’ll take over the building from Bog’Art and fitting works will last for another month, so that in late April the building will be operational with us, TeamNet and a smaller tenant. The rest of tenants will move in in summer,” stated Sheila Giafer, commercial manager at Green Gate.
Around 120,000 square meters of offices are expected to be completed this year on Bucharest’s office market. Significant spaces are to be delivered by AFI Europe (24,000 square meters in two buildings of AFI Park), Skanska (19,500 square meters in the first building of Green Court) or Atenor (18,000 square meters in the first building of Hermes BC).
TeamNet, a company founded and controlled until 2012 by businessman Sebastian Ghita, will be the most important tenant of Green Gate. It will fill an area of around 11,000 square meters, namely floors 7-10 and part of the 11th floor, the last of the building, where the local headquarters of S Group, will also be fitted.
Floors 1, 2, 3 and 4 have not been rented, yet.
The area is not a usual one for office buildings. As a matter of fact, southern Bucharest only holds 44,000 square meters of offices out of 2 million square meters at the level of the entire capital city, according to JLL consultancy data.
There are no subway stations nearby, so that the developers of the building will make microbuses available for employees. They also bank on the fact that the employees coming by car move travel faster as the most crowded areas in the morning are the ones leading toward northern Bucharest.
Overall, over 3,000 employees would work in Green Gate when the building is rented out, but this will probably last for another year.
“We expect the building to be completely rented out a year after delivery. If we accepted dumping prices, we could fill it tomorrow, but this is not the case. Interest rose after the structure was completed, and this is only normal as this is the first project of the company in Romania,” said Giafer.
She states contractual rents stand at around EUR14-15/square meter, but real rents go down when including the months of free rent offered or the developer’s contribution to space fitting.
With two exceptions, all the companies that have so far signed contracts in Green Fate are from the IT&C area.
The project was developed on a 7,000-sqm area and funded through a loan of almost EUR40 million granted by PPF Bank of the Czech Republic. Sheila Giafer estimates the building is likely to generate rent income of above EUR5 million per annum when it reaches maturity.
Gradually, southern Bucharest is likely to develop in the coming years as it has a quite good road infrastructure and many unused industrial platforms, but the lack of a subway station is still a “risk factor” translating into a lower rent level.
(English version by Catalina Apostoiu)