On the one hand, the market is dominated by international buyers. On the other hand, the number of domestic players interested in acquiring real estate is increasing. They accounted for 14% of the market at the end of 2018, while in Poland for example, this rate stands far below 10%.
What are investors looking for in Romania? Top quality assets in particular, including retail, residential, industrial and – of course – office projects. These are mainly located in the country’s biggest urban areas, among which Bucharest is considered to be most attractive. According to the latest data provided by JLL, the total office stock in the Romanian capital increased by 6.7% to approximately 2.8 million square meters over the first half of 2019. This volume is impressive, and forecasts state that Bucharest’s total office stock will soon approach 3 million square meters. Considering this, we can assume that Bucharest is closing in on such office markets as Prague or Budapest where, in both cases, estimated overall stock exceeded 3.5 million square meters so far.
A booming market and a strong labour force
Skanska established operations in Romania in 2011 and focused on Bucharest’s office market since the very beginning. Some may call this a very good decision, and I could not agree more.
Bucharest is a vibrant city which has developed extensively over recent years. It is now attracting investors from all over the world – not only European ones, but also US, Chinese or even South African.
The example of such an activity was the recently concluded transaction of Oregon Park office complex for EUR 170 M. South African capital was involved and it is considered as the second largest deal in the history of the capital city real estate market.
Bird’s eye view of Floreasca-Barbu Vacarescu where Skanska is developing its second office complex – Equilibrium
Why do they choose this particular location? The answer is quite simple and can be described in figures. Romania represents the CEE’s second highest population, followed by the second largest number of graduates who support business with proper qualifications and skills needed by employers. Bucharest, as in the case of any other capital city, benefits from the interest of investors the most. Rapid business growth across the city, especially in the BPO/SSC & IT sectors, has resulted in a strong demand for A-class office buildings. From our perspective – as a developer – this process is extremely important and exciting as it affects our business directly.
Bucharest’s constant evolution is shaping its office market, and other sub-markets, attracting different types of tenants. Recent years have shown a strong shift towards Centre West, which is booming and becoming the Romanian capital’s version of a Silicon Valley. The reason behind this? Politehnica University of Bucharest and its talent pool has attracted and continues to attract many IT companies which decide to set up their operations in its vicinity. This trend was proved by results for 2018, with Centre West & West accounting for over a third of the total take-up in Bucharest. Yet, other areas such as CBD or Floreasca-Barbu Vacarescu still remain very attractive to tenants thanks to their location and business-retail-residential profiles.
Businesses need WELL designed offices…
…which is why I feel more than happy to attend a special meeting in Vienna organized by Skanska in collaboration with JLL for investors interested in Romania’s capital city.
During the event, we had the pleasure to present Skanska’s office projects – Campus 6 and Equilibrium – which are currently being developed in two of the abovementioned sub-markets. They both attracted a lot of attention. Why? I guess their attractive location and top quality, powered by an increasing number of concluded lease agreements, played a crucial role in both cases.
Campus 6 complex by Skanska is located in the Center-West part of Bucharest, one of the fastest developing city’s districts
Campus 6 complex is located in Centre West, just a few minutes’ walk away from Politehnica University of Bucharest, with access to wide variety of transportation means connecting the project with many of Bucharest’s districts. The complex will comprise a total leasable area of 82,000 square meters and consist of four A-class buildings. What do I like most about this project? The running track on the rooftop on one of its buildings, which provides an excellent view on the city. This is not a whim, but one of the solutions we offer to provide the best conditions for employees’ health and well-being.
I can proudly say that Microsoft Romania appreciated this project’s high quality and became one of our anchor tenants there. The company has secured around 23,000 square meters of office space in the second and the third building of the Campus 6 complex.
Both buildings are the first office properties in Romania to introduce WELL certification to the market, having already obtained pre-certification.
Equilibrium office project in the Floreasca-Barbu Vacarescu area in Bucharest is one of the best examples of futureproof office developments
The same high interest from tenants is also noticed in the case of Equilibrium, which is located in the northern part of Bucharest, in the Floreasca-Barbu Vacarescu sub-market. This is the area in which we developed our first office project in Romania, Green Court Bucharest. This business and commercial area constantly attracts new tenants, and that’s why we want to offer them contemporary, futureproof workplaces.
Both projects stole hearts of our guests and the feedback we received after the meeting in Vienna confirmed investors’ growing interest in Romania. This makes me strongly believe that the best is yet to come when it comes to making further investments on this market.
By Adrian Karczewicz | Head of Divestments CEE at Skanska Commercial Development Europe