Speedwell designated Bog’Artas the general contractor in charge for MIRO, the company’s newest office project located in northern Bucharest.
The MIRO project will offer its tenants A class office spaces and has a 23.000 sqm leasable area spread out over 5 levels, large 4.570 sqm floor plates and 1:40 parking ratio.
Presently, approximately 40% of the office space has been leased by KPMG and its employees will move to their new office at the end of 2021.
The project has been granted the building permit and works have already started.
Speedwell has a large portfolio of developments in Romania that includes Record Park in Cluj-Napoca, Triama Residence and The Ivy in Bucharest, Paltim in Timișoara, and Riverside City in Râmnicu-Vâlcea.
The office market in Bucharest and in the major regional cities, Cluj-Napoca, Timișoara, Iași and Brașov, continues to develop, with local and foreign investors having projects under construction or scheduled for delivery with an area of approximately 500,000 square meters that will be put into use in the next 16 months.
This are the latest data of Bucharest Office Market and Office Regional Cities Reports, realised by the real estate consulting company Cushman & Wakefield Echinox.
The most active market remains Bucharest, with projects of about 340,000 square meters scheduled for delivery by the end of 2021, followed by Timişoara (80,000 square meters), Cluj-Napoca (36,000 square meters) and Braşov (25,000 square meters).
The most active developers in terms of surfaces scheduled to be delivered in the next period are One United (94,000 sqm), Iulius Group (60,000 sqm), Portland Trust (45,000 sqm) and Forte Partners (41,000 sqm).
At the end of the first semester, the modern office stock in Bucharest was about 2.9 million square meters leasable area, without taking into account the buildings occupied directly by the owners, while the stock in regional cities was approaching the 1 million square meters threshold, the largest markets being Cluj-Napoca (347,000 sqm), Timişoara (245,000 sqm) and Iaşi (226,000 sqm).
The vacancy rate varies from 10.3% in Bucharest, with values of 4.7% in Floreasca – Barbu Văcărescu and 7.4% in CBD, to 5.6% in Cluj-Napoca or 5.7% in Braşov.
The prime headline rents remained stable, at a level of 19 euro / sqm / month in Bucharest and 15 euro / sqm / month in Cluj-Napoca or Timişoara, after a long period in which the competition between developers kept the local market rents at a competitive level compared to similar cities in Central and Eastern Europe.
The most important office projects to be delivered in regional cities (S2 2020 – 2021)
City
Project
GLA(sq m)
Developer
Delivery
Timişoara
UBC 0
55,000
Iulius Group
2021
Timişoara
ISHO III
17,000
Mulberry Development
2021
Timişoara
Romcapital Center II
8,500
Altus
2020/2021
Cluj-Napoca
Banca Transilvania HQ
16,000
Banca Transilvania
2021
Cluj-Napoca
Record Park
11,500
Speedwell
2020
Cluj-Napoca
Cluj BC (phase III)
8,700
Felinvest
2020
Braşov
AFI Park Brasov I
15,000
AFI Europe
2020
Braşov
Coresi Business Campus U1
10,500
Ceetrus – Ascenta
2021
Iaşi
United Business Center 8
5,100
Iulius Group
2020
TOTAL
147,300
Source: Cushman & Wakefield Echinox
The most important office projects to be delivered in Bucharest (S2 2020 – 2021)
LEED certification is an internationally recognized standard in the design and construction of environmentally friendly and sustainable buildings.
This certificate confirms that the Churchill I and II projects take into account both the environment and the workplace, which can positively affect employee performance.
The project, located by Prague‘s main train station and comprising two office and one residential building, is being implemented by Penta Real Estate in a consortium with SUDOP.
The office buildings Penta intends to build as part of the project will offer a total of 30,100 sq. m. of floor area, of which 3,700 sq. m. will be for retail.
Penta plans to invest EUR 60 million into the Churchill project.
IT&C and computer companies were the most active on the office space rental market in Bucharest, generating over 40% of demand in the first half of this year, followed by the banking and financial sector, with 25% of the area contracted and by medical and pharmaceutical companies, with about 9% of total take-up.
In the first half of the year, the office space rented in Bucharest totalled approximately 100,000 square meters, of which IT&C and computer companies contracted about 40,000 square meters, banking and finance – 28,000 square meters, and pharma companies rented over 8,500 square meters.
Thus, after almost 50% reduction in Q1 2020 compared to Q4 2019, the decline in office demand in Bucharest continued during Q2, albeit at much lower rate of 19% when compared to the previous quarter.
Total gross transaction volume reached approx. 44,500 m² in Q2 and almost 100,000 m² in H1 2020.
Compared to the first half of last year, demand fell by half due to the COVID-19 crisis. The average transaction size in Q2 2020 was approx. 1,400 m².
Net take up accounted for 16,000 m², or 36% of gross take up during the period. Compared with net take up in Q1 2019, it stood at little over 33%.
JLL was the market leader in Bucharest, with over 36% market share in the first half of the year in terms of transactions intermediated.
In terms of vacancy rate, Q2 experienced a slight increase, from 8.7% in Q1, to approximately 9.3%.
Vacancy rate in the different sub-markets in Bucharest
Sub-market
Stock (m²)
Average rent (Euro/m²/mth)
Vacancy %
1. CBD
320,400
16 – 18.5
4.7
2. Center
342,000
15 – 17
6.5
3. Dimitrie Pompeiu
440,700
12 – 14
8.8
4. Floreasca – BV
520,200
15 – 16
4.8
5. Center – West
439,700
14 – 16
13.3
6. East
51,100
12 – 14
18.1
7. South
41,800
10 – 12
0
8. West
157,900
10 – 13
0
9. North – West (Expozitiei)
222,800
15 – 17
6.5
10. Baneasa – Otopeni
159,800
15 – 17
8.2
11. Pipera North
210,500
11 – 13
35.9
TOTAL
2,906,900
9.3
Source: Bucharest City Report Q2 2020
About 214,000 square meters of offices will be delivered in 2020 in Bucharest, so that the modern stock will exceed 3 million square meters
After strong deliveries of 78,200 m² during Q1 2020, the pace slowed down in Q2 and the office buildings completed during the period added 27,900 m² to the modern office stock in Bucharest.
The projects delivered in Q2 include The Bridge phase 3 in the Center-West sub-market with approx. 21,200 m² GLA, and the Zone 313 in the Floreasca-Barbu Vacarescu sub-market, adding 6,700 m² GLA.
Deliveries in Q2 2020 represent approximately 33% of the volume recorded in Q2 2019, when 85,500 m² were added to the market.
Several important deliveries are waited for the second half of 2020, totaling 108,000 m². Thus this year the modern stock would increase by 214,000 m², exceeding the milestone of 3 million m² in Bucharest.
Among these the largest are Globalworth Square with 25,700 m², and One Tower, adding 23,600 m², both situated in the Floreasca – Barbu Vacarescu sub-market, as well as the second and third buildings in Campus 6, adding another 36,900 m² to the Center – West sub-market.
This expansion will allow Acuva’s team to provide improved local support and a better overall customer service experience to the fast-growing European market.
The new office will be led by Harald Maiweg, Managing Director. Mr. Maiweg is a highly experienced sales executive who has a proven track record in growing new and profitable high-tech businesses in areas such as semiconductors, LEDs and UV photonics in the disinfection channels.
“I’m excited for the opportunity to start a new flagship office for Acuva from scratch,” said HaraldMaiweg.
Acuva, strategic partnership with Italian UV germicidal technology company LightProgress
“Acuva’s world leading expertise in UV-LED disinfection technology and LightProgress’s strong presence and solid foundation in Italian markets, will be hugely beneficial for both companies and European markets and customers,” said Giulia Santi, CEO of Light Progress.
Acuva is best known for its UV-LED disinfection technology called IntenseBeam, which is found in all its water applications.
In response to the novel Coronavirus, Acuva rallied its expert team of R&D scientists and engineers to design and begin development of a UV-LED disinfection handheld device—which can eliminate pathogens in real-time.
In August, the Retro Office House office building located in Wroclaw came under Globalworth’s management.
Thus, more than 500,000 sqm of office and retail space in the company’s Polish portfolio is now managed by Globalworth’s teams.
”Retro Office House is the latest office building for which we are not only the owner but also the manager” says Maciej Kamiński, the Head of Property & Facility Management at Globalworth Poland.
Retro Office House is a new office building in the center of Wroclaw. The building offers almost 22.000 sqm GLA, which is fully leased to such tenants as Infor and Olympus.
The property was acquired by Globalworth in the summer of 2019 for around EUR 59 mln.
AFI Europe signed a new agreement with NEPI Rockcastle for the acquisition of four class A office projects in Romania, with a total leasable area of 118.500 square meters.
The value of the transaction amounts to 290 million euros, and the takeover of the portfolio is scheduled to be completed in the next four months.
What projects has AFI Europe acquired?
Floreasca Business Park, Calea Floreasca no. 169, Bucharest, with a total area of 36,470 sqm;
The Lakeview, Barbu Văcărescu St. no. 301-311, Bucharest, with a total area of 25,907 sqm;
Aviatorilor 8, Bd. Aviatorilor no. 8A, Bucharest, with a total area of 8,203 sqm;
Timișoara City Business Center, Coriolan Brediceanu Str. no. 10, Timișoara, with a total area of 47,936 sqm.
After the completion of this transaction and with the office projects under development (AFI Park Brașov and AFI Tech Park 2-3), AFI Europe will manage a portfolio of offices with a total leasable area of almost 300,000 sqm.
In the office segment, AFI Europe Romania has developed and manages AFI Park 1-5 and AFI Tech Park, both located in Bucharest, and AFI Park Brașov, in the center of Brașov, which will be opened this autumn.
GTC annual in-place rent went up 11% to €145.4m (€130.6m in Q1 2019)and gross margin from rental activity up by 1% to €30m.
Occupancy kept high at 95%, profit before tax and fair value adjustments of €13m and profit after tax of €3m, earnings per share of €0.01
Cash and cash equivalents amounted to €196.6m as of 31 March 2020.
GTC had 19.000 sq m of newly leased or released space and completed Green Heart (N3), Belgrade, project.
Three office buildings are under construction to bring €11.1m rent upon completion and stabilization: Matrix B Zagreb, Advance Business Center II Sofia, Pillar Budapest.
New office space delivered in the first half of the year reached nearly 105.000 square meters, in tune with Colliers International’s estimates, but total demand in Bucharest was down by nearly 28%, to a bit over 124,000 square meters, while new demand halved after an exceptional year, to under 45,000 square meters.
Overall, Colliers International consultants do not expect to see too much in terms of new contracts, except for companies that are actually pressured to relocate or expand, in the context in which their representatives have no clarity on how work processes will take place in the future or how their own business will evolve.
Building activity in the office market continued almost normally during spring, even in the pandemic lockdown context, and there are no major delays for buildings due in 2020, with a potential pipeline of about 230,000 square meters, mainly already fully contracted or mostly pre-leased, according to data from Colliers International.
The first half of the year saw a delivery of nearly 105,000 square meters in new modern office spaces, with the bulk coming online in the first quarter of the year. Two thirds of the total surface resulted from Ana Tower and the third phase of Globalworth’s Campus project.
Besides the drop in demand as companies have to cope with uncertainties, another aspect likely to press new demand in the future should be the rise of spaces for sublease.
This is because some companies that had relocated in recent years had also leased a large buffer space in case they continued to hire people and expand the business; now that these plans seem out of the window, this may free up quite a bit of spaces for sublease.
Furthermore, work from home, either a few days a week on a permanent arrangement (during this state of alert), should also free up space going forward.
No major changes have been seen in terms of rents until now, but Colliers International consultants say that we are likely to see moves.
Over the near term, there are quite a few forces acting on the rent side: first, because tenants may not feel inclined to move, due to incurring costs, and their current landlords may not be as flexible with offering lower rents; meanwhile, than companies willing to take on new spaces (via a relocation or pure new demand) will likely lead to landlords being sensibly more generous (especially via incentives/gratuities rather than lower contractual rents). Also, there are quite a few major spaces, fully fitted, available for sublease at competitive rents.
An important observation to make is that without the Pipera Nord submarket and class B buildings, vacancy would still be comfortably in single digit territory for class A office buildings.
On the other hand, as things stand now, we will likely see lower demand going forward as well as pressures on rents.
Vacancy is likely to climb towards 13-14% by year-end, with total demand for 2020 likely to cool down to a more mellow figure around 200,000 square meters, roughly half seen in 2019 and below the 300,000 square meter average seen this cycle.
Because of time needed to negotiate deals, travel difficulties of decision-makers in international companies as well as uncertainties likely to linger into next year, 2021 may not look exceptionally good, but it could still surprise positively if the recovery quickens, with labour market indicators offering some encouraging prospects for now.
Most tenants complied on time with their contractual obligations to owners of the office buildings managed by Colliers International in the first half of this year, even though in some cases the rented spaces remained unoccupied for some time, due to the state of emergency.
Thus, the share of tenants who paid their debts on time remained constant, on average, compared to the same period from 2019, of almost 90%, despite the effects of the pandemic on their activity, according to data from the property management division of Colliers International.
There are signals in the office market that contractual obligations, which include rent, utilities and service charge, will continue to be met and paid on time by tenants in the future, even though there are uncertainties about this sector and expectations that it will undergo major changes in the coming years, at least from the perspective of the balance between office work and home work.
Tenants of industrial spaces managed by Colliers International have also mostly tried to pay their obligations on time, although there are slight differences in the number of companies that were able to meet all contractual obligations in the first half of this year compared to the same period from 2019.
If, in the case of some projects, there were tenants more affected by the current context, being forced to delay payment obligations (production facilities), in others there was an even higher rate of companies that paid on time (storage facilities) compared to last year, or even projects in which this happened for all tenants.
Tenants of retail spaces located on ground floors of class A office buildings were, explicably, the most affected in the last period. This has resulted in a decrease in the number of retailers that have been able to comply with their contractual obligations towards owners of office buildings managed by Colliers International.
However, owners of office spaces have been open to find solutions, together with the retail tenants on the ground floor of the buildings, so that the recovery would be as fast as possible. These included, in the first phase, deferrals to rent payments, and other concrete measures could be established in the next period, once the evolution of the market becomes clearer.
Colliers International manages a total portfolio of over 550.000 square meters of industrial and office spaces
Colliers International manages a total portfolio of over 550.000 square meters of industrial and office spaces, including the office projects Equilibrium, Business Garden Bucharest, The Office in Cluj-Napoca, The Bridge, Hermes Business Campus, Stefan cel Mare Building, Art Business Center, the office portfolio owned by Adam America, the office portfolio owned by Smartown Group, Allianz Office Building Brasov and Vox Technology Park in Timisoara, as well as three industrial parks in Timisoara, Brasov and Arad and the ELI Park 1 industrial park developed by Element Industrial in the north of the Capital.
In the last 3 months the asset management & leasing department of Globalworth has signed contracts for a total area exceeding 28.000 sqm.
Nearly 50.000 sqm of leased space in Globalworth buildings in Poland consists of new contracts, the prolongation of the existing lease contracts and the expansion of the leased spaces.
Noteworthy is the very good leasing result in the second quarter of this year (28.500 sqm), which is particularly marked by the coronavirus pandemic.
The companies that have decided to extend cooperation with Globalworth in Poland include, among others:
DXC – one of the largest end-to-end IT services companies (prolongation of the lease contract in Renoma in Wroclaw);
Rockwell Automation – global provider of solutions for the industry (expansion of the leased area in A4 Business Park in Katowice).
Castellum has officially received a WELL certificate for its Eminent office building in Malmö, thus being first to cross the finish line in a race that has involved several property developers in the Nordic region.
Today, almost all new buildings are certified according to either one of the most prevalent systems such as the Swedish Miljöbyggnad, or international standards Breeam or LEED.
All of which focus entirely on energy and environmental sustainability.
The WELL Building Standard – launched in 2016 – focuses on the people that will inhabit the buildings. It is the only international building oriented towards human well-being in the working environment.
The aim is to increase well-being by developing environments designed to support health and quality of life. Today, there are more than one hundred WELL certified buildings in the world, with Castellum’s Eminent now being the first such office building in the Nordic countries.
The basis for Eminent’s WELL certification is seven areas that focus on human health and well-being. All in all, this can increase both productivity and job satisfaction, while decreasing sick leave.
Well-being: Atmosphere that supports well-being;
Comfort: Good indoor climate;
Nourishment: Access to healthy food;
Fitness: Promote movement and good ergonomics;
Water: Access to clean drinking water;
Air: Good ventilation, air filtration;
Light: Qualitative and functional light.
Castellum has several large WELL projects underway, for example Kungspassagen in Uppsala, GreenHaus in Helsingborg, E.ON. in Malmö and Torsgatan in Stockholm.
