Strada Nicolae Iorga 5 Et. 2
RO-010431 București 1 București
+40 374 084 000 (Main)
Avison Young in Bucharest
Bucharest is the capital of Romania and its largest city, with a population of more than 2.2 million. The region’s strategic sectors include ICT, automotive, aerospace, media and creative, retail, energy and environmental technology. A highly skilled, multicultural workforce makes Romania a very attractive destination for international service and production outsourcing. Several leading international technology companies, such as Oracle, HP, IBM and Microsoft, are located in Bucharest. Romania’s post-recession economic stability has had a positive impact on all asset classes, positioning the country as one of the most vibrant commercial real estate markets in the Central and Eastern European region.
The Bucharest market’s aggregate class A and B office inventory exceeds 2.5 million square metres (sq. m). Most office product was built within the past two or three decades. Although the office inventory has expanded significantly in recent years, vacancy rates have remained within healthy parameters as new deliveries offset take-up. Together, the North and Pipera submarkets comprise half of Bucharest’s total office space while the central business district and West areas rank as the next-largest, respectively. Office investment is dominated by institutional players, with some portfolios exceeding €1 billion in assets. The IT and outsourcing sectors have been the main leasing drivers over the past decade.
Bucharest has a generous offering of all types of modern retail premises. Retailers benefit from the dynamic population’s rising disposable income levels. Bucharest’s shopping center stock exceeds 1 million sq. m, reflecting a density of about 500 sq. m per 1,000 residents. The retail warehouse sector, also has a significant presence in Bucharest, with diverse occupants that include national and international DIY chains, discounters and hypermarkets, along with furniture, fashion, sport, shoe, cash and carry stores, outlet centers and other big-box retailers. High street retail, which is a long way away from achieving its potential, is distinguished by the high-fashion stores along the main boulevards. Typical occupants are banks, telecom outlets, supermarkets, drugstores and casinos. Secondary shopping areas contain ample ground-floor and small-to-medium-sized units.
The Romanian industrial market has witnessed constant growth over the past five years. Main occupiers include logistics, retail and manufacturing companies. Developers are accelerating construction as demand remains high and supply stays rather low. Most of the country’s industrial space is located in Bucharest, which has approximately 2 million sq. m of developed area and ongoing low vacancy. Bucharest captures most of the logistics and retail sectors’ business, while outlying areas attract mostly production and manufacturing, due to a combination of affordable labour and well-located transportation infrastructure.
Romania receives strong interest from international investors seeking alternatives to the low returns offered by mature Western European markets and the high risks associated with Eastern European countries that are not part of the EU. Bucharest’s economic stability, combined with banks’ increasing appetite for loans, will likely result in yield compression throughout the investment sector in coming years.