Business still good in Romania

Regional cities were more active, with Timișoara and Cluj-Napoca adding around 72,000 sqm of modern office space. As expected, gross take-up in Bucharest decreased to 150,000 sqm. Still, the net take-up adds up to over 84,000 sqm, slightly higher than in 2017 and the highest figure for the first half since the credit crunch. Tenants were attracted to central hotspots in Bucharest, with Center-West and central areas dominating in terms of demand (28 pct and 26 pct of take-up respectively).

”The strains on the labour market will test the overly ambitious plans of developers (over 650,000 sqm announced for 2019 and 2020 on the Bucharest office market), as tenants compete with the state for employees and wrestle with an ultra-low unemployment rate (a bit over 2 pct for white-collar workers). Given the slow infrastructure improvements, the submarkets that offer good public transportation (central areas, Center-West or Floreasca/Barbu-Vacarescu) are likely to remain the most attractive. Peripheral northern areas outside Bucharest will be out of reach for the time being, while a new metro line in south-western part of town could open new office submarkets”, says Silviu Pop, the head of research at Colliers International Romania.

Over a quarter of total take-up for modern office spaces was generated by the IT&C sector, which was closely followed by companies from the energy and industrial sector (over 25 pct of gross take-up). Co-working companies also leased a record 16,800 sqm, with the biggest leases coming from two important entries on the domestic market – Mindspace (12,000 sqm) and Spaces (3,000 sqm).Demand from this sector is already double what was seen on the market over the whole 2017 and the demand is predicted to increase.

The first half of the year closed with overall investment volumes of EUR 404 mln, an increase of almost 18 pct y-o-y, which means over EUR 1bln could be transacted this year. hadle exceeded this year. The largest transactions were concluded in Bucharest and include the sale of Oregon Park to Lion’s Head, the first phase of the Campus 6 project bought by CA Immo, the Militari Shopping Center bought by the Prime Kapital/MAS REI partnership). Aother notable deal was the entry of UK fund First Property into Cluj Napoca through the acquisition of the Maestro Business Center office project.

With high yields and strong regional growth, more deals are expected outside the capital.

Over the first half, 330,000 sqm in modern warehouse space was delivered, more than double the level for the same period in 2017. Bucharest accounted for over 110,000 sqm, mostly in western and northern areas, Timișoara had 38,000 sqm and Pitești and Ploiești had 20,000 sqm each. Total reported leases came to just under 110,000 sqm, but Colliers believes that direct (and as such, unreported transactions) make up a significant part of the market, with vacancy still in low single digits.

By the end of 2018, around 750,000 sqm could be delivered to the market, compared to app. 500,000sqm in 2017. The major developers expect to deliver 630,000 sqm while smaller players are also quite active. Moreover, many companies are building warehouse space for themselves, which adds up to around 300,000 sqm; for example,eMAG.ro is expected to finish a 120,000 sqm warehouse this year near Bucharest and a significant part of this could be sub-leased. With modern warehouse stock set to surpass 4 mln sqm by the end 2018, Romania is still lagging regional peers in terms of development, suggesting that there is still room to grow.

The first half of 2018 saw the delivery of Bistrita Retail Park - 15,000 sqm and Focsani Value Center - 6,400 sqm. The second half of the year should be much more prolific, with around 168,000 sqm in new gla. Vacancy was almost non-existent for good retail schemes,as existing brands expanded and new brands entered the market: Pinko, Tumi, Sizeer, Obsentum, Karaca. Hugo Boss was a notable re-entry in the luxury high street area of Radisson Blu Hotel. Another interesting entry was Momax, which opened its first store in Romania in Timișoara, not in Bucharest. Romanian brands, like S-karp, Gerovital, Bebe Tei, Cartofisserie, have also continued increasing their footprint.