VASTINT ROMANIA TURNS CENTRAL BUCHAREST INTO REAL ESTATE HOTSPOT

Antoniu Panait, managing partner at Vastint Romania, tells Business Review about the impact of Timpuri Noi Square, one of the company’s flagship projects, and the way it reshapes the Bucharest real estate market.

By Anda Sebesi

Timpuri Noi Square is a dynamic new urban hotspot in the city centre. What are its

main features? Our team is extremely proud that we’ve managed to develop a new business hub with our project Timpuri Noi Square, in the central area of Bucharest. Timpuri Noi Square is a mixed project that is going to have an estimated total built area of 150,000 sqm. Reconverting an old factory into a successful and sustainable project, first of all dedicated to a growing community represented by the tenants of Timpuri Noi Square, is one of the project’s main features, combined with some technical details that we brought to the market for the first time. Besides the location, which is certainly one of our most important assets, we have built a project that is going to be sustainable over the years, marking a step forward in the evolution of these types of projects.

What are its key benefits? Vastint Romania has been the promoter of 3-metre floor-to-ceiling height in our class A offices, as well as of great finishes and construction materials, having established a new standard for the Romanian market. We only use energy-saving electrical equipment and LED lighting, HVAC systems with superior ventilation capacity using 100 percent fresh air supply, all our windows are openable at every 2.7 metres, with an emphasis on increased natural light provision and views of outdoor surroundings, but the most important element would be our focus on the community: that’s why we are creating and implementing multiple activities for the people that work in our buildings. Timpuri Noi Square holds a great focus on the people who are populating our buildings. As a result of the great impact that Timpuri Noi Square had on the market, we decided to develop an even greener office hub, Business Garden Bucharest, which strengthens the bond between urban nature and people with more than 30 percent green areas, an amazing reception concept with common working spaces.

What can you tell us about the development of your business on the local real

estate market? Vastint’s history in Romania started more than 10 years ago, when nobody believed that we could change companies’ point of focus from the northern part of the city to the central area. Timpuri Noi Square has shown its success in becoming one of the most important office hubs in Bucharest, hosting great names like Biutiful Downtown, Carnivale Food Market, Zitec, GoPro, Impact Hub, Bolt, and many others. Business Garden Bucharest comes as a complementary project, covering the western part of Bucharest, with a unique landscape and an amazing reception concept, as well as technical facilities that have led to an LEED Platinum certification with the highest score in CEE. Both projects are LEED platinum certified, and taking the first 5 places in the Romanian ranking has been our greatest achievement so far, and has made us more aware about the greatness of our projects and the impact we can have on the market.

What are your short and medium-term plans in Romania? The future will bring a further development phase for the office buildings in Timpuri Square, as well as a new challenge for Vastint Romania, through the Sisesti residential project.

CUSTOMER EXPERIENCE AT THE CORE OF SUCCESSFUL BRANDS

With an international approach centred on three brands - myhive for offices, VIVO! for shopping centres and STOP SHOP for retail parks, IMMOFINANZ offers unique experiences in all its properties: from the modern, collaborative office environment to a complete leisure experience or a practical approach to shopping.

By Anda Sebesi

With more reasons to be optimistic than not, Romania is again set to outpace most EU countries in terms of economic growth in 2020. At the same time, all real estate segments are still displaying robust growth, albeit a bit mellower than the record-setting pace seen in recent years.

As pundits say, the local economy is already adapting to the new reality, as expansion cooled down to around 4 percent in 2019 from 4.4 percent in 2018 and 7.1 percent in 2017. Gaping fiscal and current account deficits, yielding an increased vulnerability to shifts in external sentiment, suggest GDP risks are skewed to the downside, so there will be no defying gravity in 2020 (a growth around 3 percent looks realistic). Yet Romania still exhibits one of the best potential growth rates in Europe, and major structural reforms (workforce mobility, education) could unlock significant growth down the road with fairly little effort. “Romania has had a steady growth of roughly 3 percent since 2013. The economic growth rates put our country on the map for foreign investors, as it is becoming a driver of the region. For example, the transaction volume on the real estate investment market continues to enlarge and is well distributed across the three sectors: office, retail, and logistics properties,” says Fulga Dinu, country manager for operations at IMMOFINANZ Romania.

According to Top 10 predictions in 2020 by Colliers International, last year was a good one for the Romanian investment market, with yields moving a bit lower and overall demand maintaining robust levels. As things stand now, 2020 may actually be the best year in the post-crisis cycle, says the same report. There are already several office deals that could soon close and be worth over EUR 600 million, with several buildings on the market asking yields below 7 percent. And this is only related to the office segment, while industrial and retail submarkets are also doing fairly well, though there are some supply-side limitations here. “Going forward, we’ll be looking for a deepening of various submarkets, from pure class A office buildings to those with a value-added angle or reconversions,” says the same report.

As the local market grows, so does the impact on both the office and retail space transactions.

“Romania is a dynamic market with steady economic growth, which is translated into positive prospects for our retail and office operations. For example, the increase in office space transactions comes on the backdrop of strong demand in the consumer goods sector. In retail, the increased purchasing power has seen shopping centers around the country getting more visitors, and as the minimum wage grows this trend is expected to continue in 2020, offering substantial growth possibilities,” says the country manager, adding that the expectation is for Romania to continue on this steady growth path.

As the real estate industry mirrors economic development, there are still many opportunities for investment. “As key areas in major cities develop, they tend to turn into hubs and trigger a need for a variety of properties to serve the need for office, retail or even leisure space. As a leading owner of office and retail space, we have attracted several new tenants to our properties, but have also noticed that many existing tenants with growing businesses demand additional space in our properties,” says Dinu about the development of the local real estate market. IMMOFINANZ’s main directions are the development of its office and retail portfolio as well as the strengthening of its position as a leading commercial real estate player on the local market.

LOCAL FOOTPRINT With nine office buildings in prime Bucharest locations and five retail properties across the country, the IMMOFINANZ properties in Romania have, as of September 2019, a book value of approx. EUR 645.0 million and represent 14% of the international company’s total standing portfolio.

In the office segment, the company has constantly made signifi

cant investments to provide best-in-class properties and services to its clients. Meanwhile, on the retail side, pans are focused on improving experiences in VIVO! shopping centers.

“We center on three brands - myhive for offices, VIVO! for shopping centers, and STOP SHOP for retail parks. Each brand offers a unique experience – from the modern, collaborative office environment to a complete leisure experience or a practical approach to shopping,” says Dinu.

Speaking about the company’s business strategy, Dinu says that IMMOFINANZ is a long-term oriented value-added investor on the Romanian market, with a clear focus on a high customer orientation which results in a high occupancy rate and a stable cash flow. “Against this background, we will continue on our chosen path by constantly adapting to our tenants’ needs, which nowadays have become increasingly sophisticated and challenging. The office and retail sectors are both very competitive. As an international company and long-term investor in Romania, we are in a very good position to grow with the market,” she adds. As for 2019, the IMMOFINANZ representative says that it was a very successful year in terms of further strengthening its market position and offer to its clients. “Within our office buildings, we have gained a number of new tenants like Sodexo, Rohde & Schwartz Topex, Whole Food Process (trickSHOT), Stradale, and Motul.”

FOCUSING ON A FRIENDLY WORKING ENVIRONMENT As the place where an employee spends most part of their day, the office environment has become a very important element of everyday life and it has to respond to various important needs and desires people have. Hence, the wellbeing of employees and customers has become both a challenge and an opportunity for office and retail developers across the board.

Office buildings nowadays have to offer much more than simple work-spaces, and this is IMMOFINANZ’s major focus. “We have noticed that employers have started to recognise that a thoughtful, progressive environment can reflect brand value while improving workers’ experiences. It is not so much about working spaces anymore, but about living spaces, with employees’ wellbeing becoming a priority. This is why our myhive concept stands out, as it is entirely created with respect and care for the needs and desires of modern people,” explains Dinu. In Romania, at the end of 2019, IMMOFINANZ started a refurbishment process of two office buildings located in its IRIDE business park, and the process involves a full modernisation and a relaunch under the myhive concept. The refurbishing targets include a redesign of the main lobby areas in order to allow plenty of natural light, as well as the implementation of an attractive and warm architectural design. The process also involves a reconfiguration of the main entrances, a redesign of the common areas and the upgrade of the mechanical, electrical and plumbing systems. “The myhive IRIDE | eighteen and myhive IRIDE | nineteen buildings will reopen this year, with an important share of their areas already having been leased,” says Dinu. Currently, IMMOFINANZ has three myhive office buildings: Iride Tower, S-Park, and Metroffice, all located in Bucharest. The company’s strategy and its focus on customer care have ensured a high occupancy rate of around 95% percent across its entire portfolio. In the office segment in 2019, IMMOFI-

“IN THE LAST YEARS WE HAVE SUBSTANTIALLY STRENGTHENED OUR POSITION AS PROVIDER OF HIGH-QUALITY OFFICE SOLUTIONS IN OUR CORE MARKETS,” OLIVER SCHUMY

NANZ Romania signed lease contracts for almost 50,000 sqm. The company has already signed two big leases - Rohde & Schwartz Topex and Sodexo – totaling more than 11,000 sqm in one of the two new myhive buildings that will open this year. “Today, office buildings have to be sustainable, have a modern design and provide diverse services to fulfill their tenants’ needs while also contributing to their general comfort. This is also IMMOFINANZ’s major focus. With the myhive experience including hotel atmosphere and community building, we are constantly striving to keep up with our clients’ constantly changing needs and demands,” says the IMMOFINANZ Romania representative.

A 360-DEGREE RETAIL EXPERIENCE Due to a very high-paced contemporary way of life, it is paramount for developers to offer people in their shopping centres a 360-degree experience. Therefore, retail spaces have been focusing on doubling down on shoppers’ experience, with shopping centres offering not just a great entertainment opportunity but also striving to be pillars of their communities by offering support and resources for cultural, educational, and social activities. As a result, IMMOFINANZ focuses on good quality experiences supplemented by leisure places, children’s playgrounds, and family areas. At the same time, the company carefully monitors consumer trends on both the international and the local markets, and it continuously seeks to update and adopt them. “Our VIVO! shopping centers are fully rented and we continuously register footfall increases,” Dinu adds. In Romania, the company is now in full process of evaluating its retail portfolio, in order to further upgrade the VIVO! shopping centers.

Furthermore, at the end of 2019, the company finished a modernisation process and re-opened VIVO! Cluj-Napoca as an ultramodern shopping and leisure space. “In the newly-refurbished shopping centre we have launched new and famous brands such as Peek & Cloppenburg, which has become the largest fashion retail shop in Transylvania with an area of more than 3,500 sqm. Also as premieres for the region we have opened Zara Home and Oysho (part of Inditex Group) as well as Pepe Jeans, Skechers, ACBC, and Nespresso. Moreover, several other brands that were already present in VIVO! ClujNapoca have reopened their stores under new concepts,” she says.

The refurbishment of a substantial part of VIVO! Cluj-Napoca has practically placed the city on the international retail map. The mix of new famous fashion brands and new store concepts, plus the entertainment, leisure and family areas have generated very good footfall numbers for the company ever since the reopening at the end of 2019. “Currently, we are prospecting the market and gathering data in order to be able to provide our customers with a better shopping experience in all our Romanian VIVO! shopping centres,” says Dinu.

Speaking about how the company adapts its retail concepts to Romania, so that they can meet both current and future standards in the sector, Dinu says that considering that the world is rapidly digitalizing, it is necessary for everyone to adapt to this global trend. Technological developments heavily impact consumer behaviour and therefore customers’ desires are becoming more and more sophisticated and moving from providing a product to offering a service or an experience. “As a retail landlord, IMMOFINANZ is very much focused on creating good quality experiences that are supplemented by leisure places, children’s playgrounds, and family areas. Based on the diversity of services provided, our VIVO! shopping centres have become real hubs for the communities they serve. And it is our goal to support the development of the communities we are part of,” she says.

overall property portfolio included 216 properties as of September 30, 2019, with a combined value of roughly EUR 5.1 billion. They are mostly located in the core markets of Austria, Romania, Germany, Poland, Czech Republic, Slovakia, and Hungary.

“Following the reorientation of our portfolio in recent years, IMMOFINANZ has successfully returned to a growth course. Our latest acquisitions in the office and retail sectors combined with major completions have strengthened our sustainable earning power and grown our property portfolio more than five billion Euro”, comments Oliver Schumy, CEO of IMMOFINANZ. He also points to the financial stability of the group: “We have received an investment grade rating from S&P at the beginning of 2019 and, as a result, joined a very exclusive club.”

“In the office segment, we have 58 standing investments totaling approximately EUR 3 billion in capital cities of our core countries and larger German cities. They have 1.08 sqm of rentable space,” says Oliver Schumy, CEO of IMMOFINANZ . The company owns office properties in the capital cities of Austria, Romania, Germany, Poland, the Czech Republic, Slovakia, and Hungary, plus some in Dusseldorf, Germany. According to him, Romania belongs to the company’s core markets and accounts for about 15 percent of its overall portfolio volume.

Schumy adds that in the retail sector, the company has 100 properties with a total value of more than EUR 1.6 billion. “There are 90 STOP SHOP retail parks and 10 VIVO! shopping centres. The largest regional markets in the retail segment are Romania, Poland, and Slovakia.” In a next growth step the company will extend its STOP SHOP network to around 100 locations, the CEO adds.

A RESPONSIBLE APPROACH: CARING FOR THE ENVIRONMENT… IMMOFINANZ is committed to the responsible use of natural resources, the use of climate-friendly technologies, a systematic energy-saving strategy, the refurbishment of building elements which are worth preserving and the construction of efficient new buildings. These central points reduce operating costs and emissions and also make an important contribution to environmental protection and tenant satisfaction.

Corporate goals include the steady reduction of energy consumption as well as an increase in the energy efficiency of the standing investment portfolio. Prior to the start of new activities or projects, the environmental impact is estimated and the results are integrated into the decision process. Plans also include the gradual expansion of sustainability certifications for development projects and standing investments. These certifications reduce environmental risks and contribute to an environmentally-friendly use of space and an increase in efficiency.

…. TOWARDS TENANTS AND CUSTOMERS…. The satisfaction of IMMOFINANZ’s tenants is an essential factor for achieving and maintaining high occupancy levels and strong tenant loyalty. This, in turn, is a guarantee for efficient property management. Tenant loyalty through high customer satisfaction and the acquisition of new tenants therefore represent strategic goals.

IMMOFINANZ portfolio

MY HIVE OFFICES

FURTHER MYHIVE LOCATIONS UNDER DEVELOPMENT IN VIENNA, DUSSELDORF AND BUCHAREST – GREATER FLEXIBILITY FOR TENANTS WITH MYHIVE 2.0.

24 properties in 6 countries

Rentable space 579,920 sqm

Occupancy rate 94.2%

STOP SHOP RETAIL PARKS

POSITIONED AS LEADING RETAIL PARK OPERATOR IN EUROPE – FURTHER GROWTH TO APPROX. 100 LOCATIONS THROUGH ACQUISITIONS AND DEVELOPMENTS.

88 properties in 9 countries

Rentable space 635,494 sqm

Occupancy rate 97.6%

VIVO SHOPPING CENTER

CONVENIENT SHOPPING WITH ENTERTAINMENT FACTOR. EUROPE’S BEST RETAIL BRANDS AS STRONG ANCHOR TENANTS.

10 properties in 4 countries

Rentable space 311,161 sqm

Occupancy rate 92.4%

…. AND EMPLOYEES IMMOFINANZ employees’ expertise and commitment are key requirements for the company’s long-term success. Numerous activities in the area of human resources create an environment in which talents can optimally develop and where cooperation is promoted at all levels. These activities are particularly directed towards underscoring IMMOFINANZ’s attractiveness as an employer and to retaining and further developing employees.