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Tag: colliers

  • Real estate investments down by 22% at 4.9 billion euro in CEE

    Real estate investments down by 22% at 4.9 billion euro in CEE

    At the Central and Eastern Europe (CEE) level, the investment flows are down by 22% YoY, with a total value of investment transactions worth about 4.9 billion euro in H1 2021.

    Poland remained leader in the region, with investment volumes accounting more than half of the overall CEE6 invested capital in the first semester of the year.

    Czech Republic and Hungary, with a 20% share and 10% respectively, followed, as Colliers stated in its CEE Investment Scene H1 2021 report.

    The office sector was dominant all over the region in the first semester of 2021 in terms of transactional activity, with a share of 39%% of the total volume of investments.

    It is followed by industrial and logistics spaces that are up significantly as investors diversify into this seemingly Covid-proof sector (25%) and away from retail and hospitality sectors (20%).

    Furthermore, Colliers consultants estimate that CEE 2021 year-end volumes will accelerate to reach similar levels to 2020, of around 10 billion euro.

  • Almost a third of retailers had similar or higher sales compared to 2019

    Almost a third of retailers had similar or higher sales compared to 2019

    The retail segment was arguably one of the worst hit among real estate markets, considering the lockdown during the emergency state, but now consumption is already above pre-crisis highs, though in a different structure.

    All retail players that have online sales expect that this channel will generate a higher percentage of turnover in 2020 compared to 2019, a quarter of respondents estimating increases of even over 50%, according to a survey conducted by Colliers International’s Retail Division among more than 40 tenants and landlords from the retail sector in Romania.

    For the vast majority of respondents (85%), footfall in stores has been lower in the third quarter than compared to the same period of 2019, with quite a lot reporting even more than 40% lower clients entering shops in recent months.

    This looks to be more or less in line with other metrics, like Google’s Community Mobility Indicators, which showed traffic in retail and recreation areas to be, on average, at least 20% below the trend in September.

    Nevertheless, 15% of respondents, mainly coming from food, discount or home decoration segments saw footfall increasing a bit or remaining constant year-on-year.

    In terms of sales figures, 27% of respondents reported sales increasing or remaining fairly in line with 2019 in the July-September period, which means that while fewer people are entering shopping areas, they are spending more per shopping session than in the past.

    Also, retailers with more retail park type locations in their portfolio were less affected, managing to keep traffic in their shops and the level of sales higher.

    Due to the lockdown period when stores were closed, 42% of retailers expect the turnover in 2020 to be lower than in 2019 by 30-50%.

    However, there are also categories that were less affected and which expect total volume of sales to increase in 2020, such as food (supermarket/hypermarket), DIY, home decorations or sports.

    Furthermore, companies are looking for alternative channels to compensate results, thus Colliers survey shows that 1 in 2 want to increase their online presence, only 10% of respondents want to downsize their brick-and-mortar presence while most are focused on omnichannel sales and a mix between in-store and online services.

    Also, most retailers with expansion plans intend to expand their presence in retail parks and dominant shopping centers.

    In another question, the share of retailers reporting less than 5% total turnover from e-commerce is set to almost halve, based on the companies estimates, with just 36% of respondents expecting a somewhat limited impact on their overall revenues in 2020 from online sales.

    On the other end of the spectrum, the number of companies looking to report at least 20% of their revenues from e-commerce has increased to 30% of respondents from 21% as per the similar survey conducted by Colliers at the beginning of this year.

    In terms of rents, a clear majority of retail tenants expect rents to decrease next year, which could suggest that tenants are expecting some way to share the difficult year that was 2020 with the landlords and get support for the period until sales and traffic will recover.

    On the landlords’ side, almost 90% actually expect income to remain constant or even to increase, according to Colliers’ survey about net operating income estimates in 2021, which should result from a full operational year and much lower number of retailers that need short term rent discounts.

    Overall, retail market participants seem to be a bit more pessimistic than those in other segments of the real estate market (like offices or industrial), but that can be explained by the impact that the pandemic has had on this sector. That said, 2 in 3 respondents expect to recover a decent business level for their own company by end-2021.

  • Colliers has monitored construction works for almost 750,000 sq m

    Colliers has monitored construction works for almost 750,000 sq m

    Colliers International has monitored construction works, from foundation to delivery, for projects with almost 750,000 square meters in the last 5 years, in Romania.

    Three quarters are in the industrial area, almost 20% in the office area and 5% in the residential area.

    Construction works are being carried out at a normal pace during this period on the sites monitored by Colliers International specialists or even at an accelerated pace in some cases, amid plans to recover the delays during the state of emergency, when certain construction works were carried out at a lower capacity than normal.

    Monitoring of construction works entails involvement from the planning stage and periodic inspections to ensure construction works comply with the initial plans.

    Verifications consider a number of indicators that vary from the stage of the construction works and the way in which the budget is allocated, to the stage of the necessary authorizations, compliance with contracts or progress in ensuring access to utilities.

    Each inspection is followed by a report on the development of the project, which provides a very clear overview for the developer as well as for the bank that finances the project.

    Colliers International currently provides construction monitoring services for projects with a total construction area of ​​almost 198,000 square meters.

    Among the most important clients of the company are CTP, Iulius Group (among the most important projects we can mention: Palas Iași, United Business Center (UBC) 1 in Cluj-Napoca, UBC1 and UBC2 in Timișoara), AFI Europe Romania or Impact Developer & Contractor ( with Greenfield Baneasa as a reference project) while the banks with which the company currently collaborates are Raiffeisen Bank Romania, Raiffeisen Bank International AG and OTP Bank Romania.

  • 90% of tenants paid their obligations on time to the office buildings owners

    90% of tenants paid their obligations on time to the office buildings owners

    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.

  • Owners and developers of office buildings can earn 10% more from rents

    Owners and developers of office buildings can earn 10% more from rents

    Building Owners and Managers Association (BOMA) or International Property Measurement Standard (IPMS) measurement standards for leasable areas can lead to an increase of the commercial value of office spaces, above 10% per month for owners, according to Colliers International’s consultants.

    The increase comes from the addition of leasable areas omitted from the initial architectural layouts. For example, in the case of an office building with a leasable area of ​​20.000 square meters, this increase translates to additional income from rents of above 300.000 euro per year.

    With over 1.000.000 square meters of Class A offices, in 75 projects, existing or in development across the country, measured using BOMA or IPMS standards over the past 8 years, Colliers International is by far the market leader among real-estate and consultancy companies offering such services on the local office market.

    The main benefit of these consultancy services is that developers and owners of Office Buildings can establish each project’s efficiency and profitability from the perspective of the Gross Leasable Areas of the building as a whole, as well as for each floor.

    In most cases, the increase of Gross Leasable Area is achieved and therefore landlords can rent all the spaces that contributed to the cost of the development of the project, spaces which are sometimes omitted from the initial architectural layouts. At the same time, the risk of having an additional, non-competitive Add-on Factor of Building common areas is avoided.

    “These measurements increase the commercial value of the projects. For a building of 20,000 square meters, a 5% higher leasable area means an additional income that can exceed one million euro over a five-year contract period, considering an EUR 14 average rent per square meter, In some cases we managed to add over 10% more leasable areas”, explains Ramona Savencu, Senior Associate Office Advisory at Colliers International.

  • The office market will have to redefine itself in the next period

    The office market will have to redefine itself in the next period

    Following the recent transformations for the safe return of companies to the office, the office market will have to continue to redefine itself in the next period, to provide spaces that promote innovation and collaboration in the new context, according to Colliers International consultants.

    The office will remain the central element within companies, given that the need for intense collaboration and social interaction in the professional sphere is difficult to meet in a virtual environment, the effects of this period being expected to reflect on the way of working and on the workspace organizing.

    Most office space owners rely on a stable market with stagnant rents, but 30% expect it could be necessary to decrease rents by the end of this year or in the first three months of the next year at the latest, according to a recent study of Colliers International, conducted among 60 office owners who have diversified portfolios of space, both in Bucharest and in regional cities.

    Better commercial offers could prevent the increase of the vacancy rate among tenants who may face difficulties in the current context.

    More than half of owners say that they have felt the effects of the Covid-19 epidemic and 39% expect the vacancy rate to rise to some extent over the next 12-15 months, while 35% are more optimistic and bet on stable occupancy rates.

    Companies adopt a “wait & see” attitude to overcome the period of uncertainty

    ”Landlords and tenants need more time to understand the economic impact of Covid-19 before making a decision to renegotiate or renew the lease, whatever that may be. In addition, many companies depend on decisions made in the countries where their headquarter is located, some severely affected by Covid-19, which can have an impact on the immediate decision. On the other hand, due to social distancing and the new rules applicable in office spaces, tenants must carefully estimate the space required, increasing the average from 8 square meters to 15 square meters per employee, which seems to compensate for the impact generated by work from home. In this context, making a decision seems more difficult, and given the uncertainties that exist, it will probably lead to a postponement of the decision until the earliest autumn”, said Sebastian Dragomir, Partner & Head of Office Advisory at Colliers International Romania.

    The volume of transactions in the office market at 50%

    In the first three months of this year, the volume of transactions in the office market was half the level of over 100,000 square meters traded in the same period last year.

    However, net demand rose slightly, from 25,000 square meters in the first quarter of 2019, to 27,000 square meters this year.

    Delays in the delivery of new office spaces

    Regarding the delivery of new office spaces, the initial plans for 2020 entailed the delivery of an area of little over 200,000 square meters, and Colliers International consultants estimate that most of these projects will be delivered this year or in the first months of the year 2021 at the latest.

    In addition, more than 200,000 square meters could be delivered next year from the projects already started, while buildings that have not yet started construction, but were planned to be delivered next year, will most likely be postponed for the period 2022-2023.

    Depending on how the demand will evolve, in 2022 and 2023, the owners could bring to the market another 200,000 square meters in each of the two years.

  • The hotel market could begin recovery this autumn

    The hotel market could begin recovery this autumn

    The hotel industry continues to remain attractive for developers and investors, despite uncertainties in the following period.

    Strongly affected by the coronavirus generated crisis, many hotel operators are counting on reopening during the holiday season to unblock operations and start recovery.

    The market could return to an occupancy rate of 50-60% for hotels operated by recognized brands towards the end of the year, in a scenario in which the epidemiological context remains stable or even starts improving, according to Colliers International consultants.

    In March, Romanian hotels recorded a 68% decline in the number of tourists

    In March, the first official month of pandemic, Romanian hotels recorded a 68% decline in the number of tourists, according to The National Institute of Statistics (INS) data.

    In Bucharest, the occupancy rate was only 15% in March and April, and most hotels closed their doors to economically cope with the significant decrease in turnover.

    The decline is higher compared to other parts of the world, considering that in Europe the number of tourists decreased by only 19% and worldwide the decrease was 57%, according to The World Tourism Organization.

    The average occupancy rate in Bucharest could reach 40-45% at the end of this year and the disposable income of hotels in the Capital could register the same level as before the pandemic, of about 87 euros, in a year or even a year and a half from the time the pandemic was declared.

    Tourists will migrate from small local hotels to hotels operated by renowned brands

    Almost 50% of the total number of rooms in the Capital are operated by international brands or by well-represented local brands and enjoy a much higher degree of trust than locally operated hotels with lower recognition.

    Therefore, it is possible that, as a first trend, there will be a move from local accommodation to hotels operated by well-known brands, even if the price paid will be higher.

    Romania does not have a very high economic risk due to the slowdown in the tourism sector, as tourism represents only 3% of the Gross Domestic Product (GDP), compared to Spain (12%), for example, or Hungary, where this percentage reaches 7%.

    Thus, Colliers International consultants expect tourism to be supported to a greater extent by other economic sectors, which will recover faster, such as the services sector or transport and logistics.

    Developing hotel sites continued their activity

    In fact, funds allocated worldwide for the recovery of the economy will have direct consequences for the return of the hospitality industry.

    At local level, a package of specific measures for this industry has not yet been announced, which makes it difficult to implement a business plan for the reopening of hotels, but measures such as exemption from local taxes or the payment of income tax for a certain period aid for the payment of employees’ salaries or the implementation of security measures could help operators get through this difficult period.

  • Remote employees miss social interaction and the instant share of ideas

    Remote employees miss social interaction and the instant share of ideas

    Remote work is challenging for most Romanians who have worked from home in the current epidemiological context. Only 13% of them say they have a dedicated workspace at home, half compared to employees in Central and Eastern European (CEE), according to a study conducted by Colliers International among countries in the region, including Romania.

    In this context, most feel isolated and miss meetings with colleagues, even if work from home has meant a better work-life balance for some.

    In absence of an office or a dedicated workspace at home, 45% of Romanians say that the living room is the main area where they carry out their work activities, as is the case for half of respondents from Central and Eastern Europe. As a result, 40% of respondents say that they have difficulties working remote and feel that sometimes they have low concentration because they carry out professional activities in the same space where their children carry out school or fun activities.

    From home, half of the Romanian respondents to the Colliers International study admit that they feel isolated from their colleagues and only 27% still feel connected to the team. In contrast, in Central and Eastern European countries the situation is exactly the opposite – 62% of respondents say they are equally connected to the team even when working remote and only 29% feel isolated.

    Spontaneous meetings with colleagues are what lack most to employees working remote from the region (68%). In Romania, however, 75% of respondents lack especially the physical interaction with colleagues during a working day.

    For 67%, the lack of clear separation between their professional and personal life is most challenging and only 42% indicate spontaneous meetings with colleagues among the aspects they lack the most when working from home.

    The work-life balance has improved

    Even so, Romanians continued to work efficiently. Most respondents (CEE – 51%, Romania – 54%) consider that they remained equally productive during the remote working period, and for 21% of the respondents from CEE and 23% of those from Romania productivity even increased. At the same time, 44% of Romanian respondents say their work-life balances improved since their home became their workplace, a higher percentage than that recorded in Central and Eastern European countries.

    Most companies that are now focusing on remote work have already implemented the “work from home” concept in the pre-pandemic period. Specifically, both in Central and Eastern Europe and in Romania, over 60% of respondents were occasionally working from home before the current context, while 31% of those interviewed in Romania and 23% in countries in the region say they didn’t work at all remotely before.

    The study was conducted in March-April in 25 countries where Collies International operates, by collecting data online among nearly 4,400 respondents, including about a quarter of Central and Eastern European countries.

  • Relaunching retail, tourism and offering support for SMEs, the main lockdown exit measures in Europe

    Relaunching retail, tourism and offering support for SMEs, the main lockdown exit measures in Europe

    All European countries took certain measures to protect and restart their economies after the lockdown period.

    Among governments’ priorities, retail, tourism and SMEs have benefited from most measures, considering that these areas have been the most impacted by the Covid-19 epidemics across Europe, according to Colliers International.

    Romania has so far taken measures like direct funding support for SMEs, as well as deferred taxes and waivers for penalties for late payments and will focus on a retail relaunch strategy after the exit from the state of emergency.

    Many European countries are already in the second phase of the Covid-19 epidemics evolution, implementing exit strategies from the lockdown. More than half of EMEA countries monitored by Colliers International in terms of government stimulus and strategy have already outlined and some even deployed a phased exit strategy from their national lockdown, with many targeting retail, tourism and SMEs. In terms of real estate, the vast majority of European countries have focused their initial strategy around the reopening of retail in a variety of forms, alongside schools.

    Focusing on SMEs is relevant due to the structure of most European economies, including Romania’s. Micro-, small- and medium-sized companies make up over 99% of the total number of enterprises in Romania and in the EU, while generating two in three jobs in all economies and a bit over half of the gross value added. So while smaller companies may not be as efficient as the larger ones in terms of value added, they are more relevant from a social impact standpoint.

    Measures maintain social and physical distancing

    Most phased exits concern reopening retail shops and services, with DIY, garden centres and hair salons top of the list. In the vast majority of cases, the HoReCa sector reopening will follow in late May or early June, according to specialists.

    Some European countries also have a school reopening strategy, with kindergartens being favoured over primary or secondary education levels, thus providing greater capacity for parents to return to work. In Southern Europe, however, including Romania, the current guidance states schools will not open until autumn.

    Exiting the lockdown – the great comeback

    Germany, Austria and Switzerland are leading the recovery and these countries have seen a marked improvement in terms of falling numbers of active COVID-19 cases levelling off, resulting in a shift towards exiting the lockdown.

    Other countries around this core of Europe, like Denmark, Czechia, Slovakia and Italy, have also moved into a phased lockdown exit, albeit at different speeds and under slightly different circumstances.

    Additional countries that have seen COVID-19 cases levelling off and adopting a phased exit strategy are within the broader CEE region, including Croatia, Montenegro, Lithuania and Latvia. Israel adds to the EMEA picture.

    Romania, direct funding support for SMEs

    One of the most important measures taken by Romania for the business sector’s recovery has been direct funding support for SMEs, micro enterprises and small businesses, which has been rolled out fairly recently.

    At the same time, the Government allowed companies with no late payments to banks to request postponed loan repayment as long as they hold a certificate issued by the Government which shows a major decline in business in March on account of the state of emergency. Also, some taxes could be deferred and some penalties for late payments have been waived.

    The state also decided to cover a technical unemployment payment of up to 75% of the average gross wage in the economy for people made redundant in this period, which has been, arguably, the most utilized state facility thus far.

    The government promised to shoulder part of the wages going forward if companies rehire these people, but no specifics are currently clear regarding this. While most measures have been geared towards SMEs, government officials also stated that they would come forward with aid for bigger companies.

    Specifically, for the real estate sector, a new law adopted by the Parliament, yet to be ratified by the President, offers landlords the chance to not pay income tax on rental revenues through 2020 if they reduce their tenants’ rents.

    Support measures for real estate in Europe

    Some of the biggest European countries have taken extensive economic measures to protect their economies, including the real estate sector. In Italy, a law decree on 18th March provides a tax credit – 60% of the rent of March 2020 for shops and boutiques, subject to extension. In France, a law protects SMEs from eviction in the event they cannot meet rent or service charge payments, starting 12 March until 2 months after the end of the state emergency.

    In Germany and the United Kingdom, the governments imposed a moratorium on evictions, while in Hungary tenant evictions are suspended until the end of the state of emergency. Other countries, like Greece, pushed for a reduction in rents while also providing compensatory measures to landlords, while in Austria, rent subsidies were offered by the state if certain conditions were met.

    Almost all the countries took measures regarding the financing access for SMEs and the companies most affected. UK, Germany, Italy, France and Austria announced packages estimated at tenths or hundreds of billions of euros each to help the economy. Also, most of the governments announced state guarantees packages or loan payments moratoriums to avoid a complete freezing in the financing sector with dire consequences in the entire European economy.

  • 70% of employees want to continue working mostly from home

    70% of employees want to continue working mostly from home

    7 out of 10 Romanian employees want to continue to work mostly from home even after easing the measures to prevent the spread of coronavirus and after the state of emergency ends, according to Colliers International.

    Out of these, 60% believe that working remotely would be useful at least 1-2 days a week, and 10% would like to work even 3-4 days from home in the next period.

    Office buildings in the portfolio managed by Colliers International continued to be operational during the state of emergency, with no projects under conservation, so it is expected that activity will be resumed gradually starting May 18th.

    A quarter of employees expect to return to the office in May, but their work in office buildings will resume gradually, depending on the evolution of the coronavirus epidemic and further measures announced by the authorities. At the same time, it is expected that some companies will continue to apply remote working policies for a longer period, at least for employees who have children, in the context of suspending the activity of schools until fall.

    To ensure employees’ social distance within the office, employers need to consider some changes in the set-up of the space and furniture, especially in the case of open space offices. It is necessary to ensure a recommended distance of two linear meters between employees, which means that it will be necessary to increase the space allocated per employee from 8 square meters, which is currently the average in class A office buildings, at over 15 square meters per employee. In this context, some companies will have to allow a percentage of employees to continue working from home, so that the rules on social distance and rotation can be respected.

    New security measures in office buildings

    Measures that can be implemented by companies to prepare their offices for the return of employees include rotating offices from open spaces so that they do not face each other and directing the team to alternative office work areas. At the same time, temporary transparent plastic barriers can be installed in the reception areas to separate visitors from the reception desk, and high partitions can be installed in the offices between facing desks. Last but not least, in conference rooms, after removing a number of chairs, floor markings can be applied to indicate a safe 2 meters distance between seats, Colliers International consultants recommend.

    To reduce touching door handles, the doors of offices and conference rooms should be left open, unless there is an absolute need for privacy. There should also be signs in office buildings informing visitors about the distance rules, hand washing and sanitizing or wearing masks in public areas. Using signage, unique clockwise paths can be created through the space, and by adding arrow tape on the office floor, the recommended direction can be indicated.

    At the same time, building owners will have to regularly ensure complete sanitation of heating and cooling systems and air treatment plants, according to Colliers International consultants, as well as actions aimed to ensure periodic disinfection with an increased frequency and special solutions for sanitary and common areas. To align with the new hygiene rules, owners of office buildings will have an additional minimum cost of 2,000 euros per month for a medium-sized building.

  • 9 of 10 nonfood retailers expect turnovers to be affected by the Covid-19 epidemics

    9 of 10 nonfood retailers expect turnovers to be affected by the Covid-19 epidemics

    Nonfood retailers in Romania are among the most affected by measures taken during the state of emergency to prevent the spread of Covid-19.

    45% of retail tenants expect over 30% decrease of their turnover in 2020 and another 39% foresee up to 30% declines as a result of these at least 2 months of no trading, with slow recovery expected in the second half of this year, according to a study conducted by Colliers International’s Retail Division among 84 tenants and 21 landlords from the retail sector in Romania.

    Medium to long-term effects are still difficult to evaluate, especially considering uncertainties regarding possible further measures that could be applied by authorities after May 15th. However, retail landlords already have support measures in place for tenants that are affected by the emergency state, like suspending rent payments for the no trading period, potentially with later means of compensation, or closing part of the centers in order to reduce the value of the service charge that is supported by tenants. Colliers International’s study is part of a broader analysis of the overall real estate market outlook, based on relevant insights from all market segments, which is presented in this period with the objective of bringing some clarity about the market.

    88% of the retailers applied for technical unemployment measure

    Retailers’ reaction to the government’s decision to close non-essential stores was immediate and in order to minimize impact of the current context. As a result, 62% of tenants suspended or delayed rental and utilities payments and 52% applied for rent reductions when stores will be reopened, according to Colliers International’s study among retail tenants active mainly in fashion, food and beverage, cosmetics, services, entertainment, services or beauty.

    In addition, to support business recovery, 88% applied for the technical unemployment facility, 48% will use the tax payment delay offered by the state and 33% will suspend the financing payments until the end of year.

    On the other hand, 67% of retailers are concentrating to compensate for the loss from the brick and mortar presence with alternative sale channels, but only part of the loss is expected to be recovered though this channel. About 36% expect online sales to grow this year, of which half count on at least 20% increase. However, 22% of retailers believe sales will decline even on this channel, due to low consumption appetite.

    62% of retail landlords suspended rent payment for non-trading retailers

    Landlords of retail spaces also reacted rapidly in the current context, closing part of the shopping centers, where it was physically possible (67%), renegotiating terms with third party suppliers (45%) and even with banks (29%).

    Almost all of them have also used some available state benefits, such as delay of tax payment (52%), technical unemployment (48%) and delayed bank payments (24%).

    To support their tenants during the Covid-19 crisis, 62% of landlords have chosen to charge only service charges from retailers, in order to keep the retail centers clean, safe and the technical equipment in good order while trading is partially closed.

    In this context, landlords are also expecting to see declines in net operating income in 2020, with 67% estimating a decline of up to 30% and another 24% considering more pronounced declines this year.

    The retail market is expected to recover starting Q4 of 2020

    First signs of recovery in the retail market are expected starting with Q4 2020, but with more consistent results in 2021, which shows that both retailers and landlords are confident in a relatively fast recovery.

    More exactly, 67% of landlords and 51% of tenants expect to return to satisfactory business levels compared to levels before the Covid-19 epidemics by the end of 2021.

  • Tenants expect to return to the office over the summer in Bucharest

    Tenants expect to return to the office over the summer in Bucharest

    Almost 70% of landlords and tenants in the office market believe that the Covid-19 epidemics will continue to affect their business throughout this whole year, with first signs of recovery being expected starting with 2021, according to a study conducted by Colliers International among 60 landlords and more than 100 tenants.

    While most tenants expect their workforce to return to the office before autumn, office market representatives worry that the impact of the epidemiological crisis on the real estate market will be at least similar to the financial crisis from 2009.

    92% of tenants will return to their offices in the summer of 2020 at the latest

    25% of tenants expect to resume activity within the office as early as May, while 67% believe this will happen over the summer, according to Colliers International’s study among tenants, of which close to 30% represent companies with more than 1,000 employees, which are relevant in the current office environment.

    About 55% of them are already dealing with negative or somewhat negative impact over their business due to Covid-19, with those active in medical, retail and shared offices being the most affected. Only 16% say that their business has not been affected so far and 6% are even positively impacted to some extent.

    While a quarter of tenants don’t have a clear picture of how the Covid-19 outbreak will affect them in terms of employees, 41% expect to maintain their workforce size and about 17% even estimate increases this year.

    However, 70% of tenants expect a decreasing trend in rents as a consequence of the Covid-19 outbreak, out of which 23% expect a major correction. Another 20% do not see the rents changing at all, while none of the interviewed tenants expects an increase in rents going forward.

    45% of landlords expect rents to remain stable

    Most landlords are betting on a flat market with stable rents, but 30% are rather expecting they will need to decrease rents by the end of this year or in the first three months of 2021 the latest.

    Better rent deals could help prevent a vacancy rate increase among tenants that could be facing difficulties in the current context. More than half of landlords say they are already impacted by the effects of the Covid-19 epidemics, and 39% expect vacancy rates to increase to some extent in the next 12 to 15 months, while 35% are more optimistic and count on stable occupancy rates.

    The office market is expected to recover starting 2021

    Some office market decision makers worry that the impact of the epidemiological crisis on the real estate market could be at least similar or even bigger compared to the effects of the financial crisis from over a decade ago. The concern is visible among more tenants (75%) than landlords (38%), while the rest are more optimistic and expect a lighter effect.