Business Construct: The Half a Billion Euros ‘Swarm’ in Northern Bucharest

Calea Floreasca, Barbu Văcărescu and Dimitrie Pompeiu roads are getting prepared for new office buildings, to be inaugurated this year or next year. Apart the offices developments, in the area also appeared residential construction sites, mainly targeting the corporatists working in the area. How it is going to change the most effervescent zone in Bucharest in the following period?

Only seven-eight years ago, in the area Floreasca-Barbu Văcărescu in Bucharest there were only the former headquarters of Oracle group, a Porsche showroom, some older buildings and a lot of available land for constructions. Meanwhile, the zone has completely changed, as the investors developed and transacted buildings of hundreds of million Euros in this perimeter.

Moreover, this part of Bucharest succeeded in establishing two records – the tallest building in Romania, Sky Tower, and the most expensive mall sold in Bucharest, Promenada Mall, being at the same time the headquarters of companies such as Oracle, Raiffeisen, PwC or Carrefour. And what is built by now is only a half of what will look like the new office centre of Bucharest.

The modern office stock currently existing in the areas Barbu Văcărescu-Floreasca and Dimitrie Pompeiu reaches nearly 550,000 sq. m, more than 30 pct. of the total stock in Bucharest, according to data from Colliers International. Taking into consideration an average occupancy of 10m per employee, in this area are currently working nearly 55,000 people, according to ZF.

Pipera South and Floreasca are also among the most wanted zones in Bucharest by the office tenants, considering that the vacancy rate of the buildings here is nearly 7 pct., compared to an average of 13 pct. in entire Bucharest. The average rents are approx. EUR 13-17 per square metre per month in these areas, according to information from real estate consultants.

„Studying the results in the last five years, we concluded that both zones have contributed with 30 pct up to 45 pct. to the transactions closed every year. The stock will continue to grow in the two areas, as nearly 400,000 sq. m are planned for development by the end of 2018”, said Daniela Popescu, head of research within Colliers International. She added that it was expected that this part of Bucharest to continue to attract an important part of the request on the office transactions market.

The real estate development company Globalworth, is from far the most active investor in the area, with three office projects ongoing, Bucharest One, Gara Herăstrău and Globalworth Campus, totalling over 150,000 sq. m. Globalworth is investing over EUR 200 million in these three projects, according to estimations of Business Construct.

Bucharest One is the most advanced construction site, with the structure already erected and big part of the glass facades being also mounted. The building, an investment of nearly EUR 100 million is scheduled for completion in this end of this year, being the second tallest building in Bucharest, after Sky Tower.  In the close vicinity of Bucharest One, on Gara Herăstrău St., Sweden’s Skanska is currently working to its third building within Green Court project. Skanska already sold the first building, with tenants such as Orange and Schneider Electric, to Globalworth, for EUR 42 million.

„We are currently working on the third building, which we intend to complete the second quarter of 2016. The zone became the real business hub of Bucharest (…). We can see it developing every day, with good projects, both completed or still in construction, which represents an advantage for the companies looking for attractive office spaces and growth opportunities”, said Marcin Lapinski, CEO of Skanska Property Romania.

Right next to the building bought from Skanska, Globalworth is also developing its Gara Herăstrau office building, an investment of nearly EUR 12 million, according to ZF data.

Close to Green Court there is also in construction the project Oregon Park of Portland Trust, company controlled by British Robert Neale, one of the first foreign investors to start office development in Bucharest in the late 90s, the first completed building being Opera Center.

Portland Trust is now developing the project Oregon Park, on 44,000 sq. m, involving an investment of nearly EUR 90 million. Moreover, the project was subject to one of the largest office transactions this year, as the IT giant Oracle pre-rented 20,000 sq.m. The first two buildings of the complex, A and B, have an area of 20,000 sq. m and 24,000 sq. m respectively and will be completed next summer.  Robert Neale has declared for Ziarul Financiar in the beginning of June that it had the construction permit for the third building, including 27,000 sq. m.

On Dimitrie Pompeiu Blvd., close to Pipera metro station, there are also new construction sites. For example, Belgian group Atenor is now erecting the A and C buildings within Hermes Business Campus project, after completed last year the first building, currently fully let. Close enough from Hermes Business Campus, Austria’s Immofinanz is also working extensively at the first building within Metroffice complex, which will include 20,000 sq. m.

„The construction works started in the end of last year, and their completion is scheduled for the second quarter of 2016”, said Sorin Vişoianu, country manager office & logistics for Romania and Bulgaria within Immofinanz Romania. He says that the main reasons for investing in this office complex were due to the fact that the real estate market was giving signs of recovery. „Slowly, Romania is reconfirming its significant development potential and benefits from important export markets, such as Germany, Austria and other Western countries. (...) The fact that there are a lot of projects ongoing confirms our point of view: the Romanian economy entered an ascending path and is developing fastest than other countries in Central and Eastern Europe.”

Metroffice is the first phase of a long term plan of Immofinanz, involving the redesigning of the entire area within Iride Business Park complex, controlled by the Austrian developer, in order to make room for the future Iride City. The project will include office, commercial, as well as residential buildings.

The potential of the area Floreasca-Dimitrie Pompeiu for the residential market too was already seized by several investors, which have started the construction of apartments. An example is the residential compound City Point, developed by the Israeli companies Shikun & Binui and Red Sea Group on a plot situated behind the Traffic Police headquarters in Bucharest.  Close to City Point there is also the residential complex Metropolitan, developed by two local investors, Robertino Georgescu and Dan Drăgulin.

Apart from residential, the area will remain known as a business centre and in the future the area Calea Floreasca-Barbu Văcărescu and Pipera South could „merge“.

„As perspectives, considering that the two zones are currently five minutes apart, that Portland Trust is developing Oregon Park, a project situated at the border between the two zones, that there are 95,000 sq. m in construction in Pipera South, to be delivered in 2016, it is very likely that the two zones “merge”, considers Mihaela Gălăţanu, head of research at DTZ Echinox.

The Pipera passage which crosses the area brought its contribution to the traffic flow, but in rush hours the area is more and more difficult to access and leave with surface transportation means. The presence of the metro is a huge plus, but if in the area there will be another 30,000 people working, apart from the 50-60,000 already doing it,  the problem of the infrastructure will become bigger and bigger. (source: zf.ro)