The Romanian real estate market in the first nine months: Positive trend to all three leasing sectors

The real estate market continued to show a positive evolution, and in the third quarter of 2019, the positive trend applied to all three leasing sectors, according to CBRE Research data. In the first nine months of the year, approximately 290,000 sqm were leased on the office segment, the main source of the demand being the IT&C companies and the financial industry, while on the retail market a number of 11 new brands chose to enter in Romania, among which Victoria’s Secret and Burger King, advised by CBRE.

The office market overview:

• Companies in the IT&C and financial fields generated over 60% of the total demand
• The western and central areas of the Capital, preferred by half of the tenants

On the office space market, companies leased over 84,000 sqm, in the third quarter, of which 80% represented the net take-up, thus excluding transactions such as renegotiations and renewals of contracts. The demand in Q3 has raised by 15% compared to the same period last year, according to CBRE Research data. Overall, in the first three quarters of 2019, an area of about 288,000 square meters was traded in the Capital, 17% more than the value recorded in the first three quarters of the previous year.

“We study  thoroughly the demand from the office market, going further than the traditional measurement of the offer and we are extremely conscious of the company profile and of the employees’ needs as occupants of spaces and members of the communities in the office buildings. In the first nine months of 2019, the highest demand for office space rentals came from companies in the Computers & Hi-Tech (47% of the demand) and financial (16%) sectors, which leased spaces for a total of 13,500, respectively 4,700 employees. As for the most dynamic areas, they were the western part of Bucharest (with 31% of the traded volume) followed by the central area (with 21%) and by the northern part and Pipera (with 19%)”, explains Tudor Ionescu, Head of Advisory & Transaction Services, Office, CBRE Romania.

The total stock of modern office space in Bucharest reached about 3.16 million sqm, at the end of the first three quarters of 2019, more than half of it being class A office buildings, with an overall vacancy rate of 9.3%, slightly increasing, compared to the same period last year.

About 60,000 sqm offices of this area were delivered in the third quarter, through two Expo Business Park projects, developed by the Portland Trust in the Northern Capital Exhibition area and The Light, developed by River Development in the Politehnica subway station area, in the western part of Bucharest. Currently, western and northern Bucharest are home to 50% of the total stock of Class A premises, according to CBRE Research data.

81,600 sqm of offices are estimated to be completed by the end of the year in Bucharest, composing of six projects, about 40% of this area being already pre-rented. 622.000 sqm are expected to be completed in 26 office projects, between 2020 and 2021, 17% of the area being pre-leased.

The retail market in the first three quarters:

• 11 new brands have entered the Romanian market
• 66,000 sqm of retail were delivered, over 90% being in regional cities

On the Romanian retail market, 11 new brands made their entry in the first nine months, of which four in the third quarter alone, according to the CBRE Research data.

“After witnessing the entry of brands such as Victoria’s Secret or Topshop Topman in the first half of the year, other names decided to enter Romania, more specifically Burger King, Falconeri, Marc O’Polo and Longines. These new brands chose Bucharest as their first location and usually preferred shopping center projects”, stated Carmen Ravon, Head of Advisory & Transaction Services, Retail, CBRE Romania, a company that advised Victoria’s Secret and Burger King in the entry process on the local market.

Nationally, the retail stock reached 3.65 million sqm after delivering 66,200 sqm within a retail park and three expansions, 91% of the new area being located in regional cities. For the fourth quarter, CBRE Research estimates that 130,800 square meters of retail space will be completed as a sum of six new projects and two extensions, 97% of deliveries being also in the regional cities.

“Cities such as Sibiu, Brașov, Târgoviște and Târgu Mureș are expected to attract new retail spaces by the end of 2020, while Oradea or Timișoara already have the highest national density, of 657 and 604 square meters of retail per one thousand residents. Although close in terms of density, the difference between these last two cities is the type of projects, in Oradea the ratio between shopping centers and retail parks is almost equal, while in Timisoara only 15% of them are retail parks versus 85% – shopping centers”, added Carmen Ravon.

Industrial space market: new demand generated over 50% of the transactions

On the industrial space market, a total area of 326,000 square meters was traded in the first three quarters nationally, increasing by 17%, compared to the same period last year, reveal the data from CBRE Research.

“If we study the typology of transactions, we notice that in the first three quarters, the transactions which represented new demand (45% of the leased volume) were the most frequent, which translates into a high appetite for new industrial spaces. In the last quarter, we witnessed an increased activity in pre-lease transactions, which accounted for over half of all transactions. Bucharest – Ilfov remained the most desired area in the first nine months, followed closely, especially in the last three months, by cities in the south of the country, which absorbed 35% of the leased volume“, stated Andrei Jerca, Head of Industrial Services, CBRE Romania.

The stock of A and B class industrial spaces reached 4.3 million square meters at the end of the first nine months of 2019, following the July – September period, when approximately 186,000 square meters were completed in 11 industrial projects. According to CBRE Research data, an additional area of 75,000 square meters of industrial space will be delivered in seven projects by the end of the year, of which about 72% has already been pre-rented.

CBRE Romania, through CBRE Research department, is constantly conducting extensive studies and market reports dedicated to the different real estate segments in which the company is active: office spaces, commercial and industrial spaces, both for developers and investors, as well as for tenants or companies envisaging the entry on the Romanian market.