Market research – offices for SMEs
For the transition economy in which Romania is located, SMEs represent the main contributor to the state budget. These SMEs, which were born at the initiative of small entrepreneurs, are the backbone of Romanian capitalism. Encouraged often only by promises, SMEs have learned to rely on their own strengths to succeed.
And many have managed to bring quality products and services to the market, to obtain awards, and to have their value recognized. “We believe in SMEs and their economic growth. That is why we offer them real estate consulting and intermediation services, using as the first point of contact our web page: www.esop.ro”, says Irina Nastase, Commercial Department Director at the agency ESOP.
Although it benefits from less investment than the class A office market, the office space market for small and medium-sized companies is starting to take shape.
The offer can be divided into 3 categories:
- 1 space in office buildings
- 2 spaces in villas and apartments in villas
- 3 spaces in blocks
- Spaces in office buildings
The stock of class B office spaces is estimated to be around 180,000 sqm, and the prices are between 12-15 $ / sqm. “Class C office space is little discussed in the market studies of real estate companies because it is difficult to estimate the stock of offices in this category. The prices requested by the owners are between 7-11 $ / sqm, and these spaces are sought by a large part of the SMEs that have decided to relocate their office in a business center.
The offer of class C offices consists of new buildings built by private investors or companies, but also of spaces of former state enterprises that after the revolution have restricted their activity, and the available spaces are arranged and rented “, says Irina Nastase from ESOP. Class C offices are located in central and semi-central areas. The owners try to adapt their offer as well as possible to the tenants’ requirements. The available spaces are flexible, and the surfaces between 100 and 1000 sqm can be compartmentalized on request.
Class C office offers:
- North Area $ 11 / sqm 130-390 sqm
- Floreasca area 10 – 11 $ / sqm 30-1100 sqm
- Unirii area $ 9-11 / sqm 30-150 sqm
- Fabrica de Glucoza Area 10 $ / sqm 1000 sqm
- Victoriei Square area 10 $ / sqm 100-350 sqm
- Dorobanti Area 9-10 $ / mp 130-200 mp
- Stirbei Voda area $ 9-10 / sqm 450 sqm
- Splaiul Independentei area 9-10 $ / sqm 120-400 sqm
- Calea Calarasilor – Muncii area $ 8-9 / sqm 40-500 sqm
- Baneasa area 8-9 $ / sqm 150-1500 sqm
- M Eminescu Area 8 $ / sqm 280 sqm
Class C office spaces’ requests in new or renovated buildings are between 100-400 sqm, proper positioning, and parking spaces. The companies that choose such locations are medium-sized companies, which want to optimize the space in which they operate. They are willing to pay between 7-10 $ / sqm for useful office space.
Usually, these companies start from blocks where the problems with the tenants’ associations become more and more challenging to solve, but also because they want to pay for effective office space and not for annexes and spaces that cannot be used efficiently in a building built for another purpose. These companies are interested in the excellent visibility of the building so that customers can easily find them, parking spaces, etc.
The most common budgets on this market segment are: 6-8 $ / sqm for spaces between 100-200 sqm and 8-10 $ / sqm for spaces of 200 – 400 sqm. Companies’ budgets are fixed and can rarely be supplemented. There are very few companies in Romania that have a rate of profitability so high as to afford, to 15-20 employees (for which they need 150 -200 sq m) to allocate larger budgets of $ 7 – $ 9 / mp.
- Office spaces in villas and apartments in villas
These spaces represent a point of attraction for companies that need 100-300 sqm. Parking spaces, low maintenance costs, and slightly unconventional air are some of the elements that attract a company to move to the villa. The prices requested by the owners are between 6-12 $ / sqm.
The budgets allocated by the companies are most often between 6-10 $ / sqm. Unirii, Calea Calarasi, Armeneasca, Eminescu, Barbu Vacarescu, and Stefan cel Mare are areas with more affordable prices. The areas with higher prices and a better quality of the spaces are Cotroceni, Domenii, Dacia, Polona, and Primaverii.
“Landlords must be flexible to requests from tenants because although villa spaces are preferred to block spaces, there are currently enough spaces in class B and C office buildings that can meet the needs of companies with budgets of 7-12 $ / sqm”, says Irina Nastase from ESOP.
- Office spaces in blocks of flats
Although it concentrates a large number of companies, the office spaces in the blocks of flats are losing their attractiveness with each passing day. High maintenance costs, problems with tenant administrations, lack of parking spaces are just some of the shortcomings of a block office. For companies with small rental budgets, often, however, these spaces are the only solution. The offer of office spaces in the block is very generous, far exceeding the demand, and the prices are between 3-6 $ / sqm.
The central and ultra-central area of the capital remains in the top of preferences. The most sought after areas are Victoriei Square, Magheru, Romana, Dorobanti, Unirii, Alba-Iulia Square, etc. The budgets of the companies that rent spaces in blocks of flats are between 3-5 $ / sqm. “It can be said that in this market segment the last word belongs to the tenants who have a choice, and the owners who do not realize the imbalance on the market between supply and demand, risk staying with the apartment free for half a year or even more “, says Irina Nastase from ESOP.
Forecasts for 2003
In the first months of 2003, ESOP expects the real estate market to maintain the dynamism it had in the last quarter of 2002. Economic forecasts are optimistic. The positive signals sent after Romania’s invitation to NATO make us believe that many companies will want to start the new year in a new office. We consider that most relocations on the SME market segment will be made in class C or B office buildings and villas.
In the case of new companies entering the market, renting apartments in blocks of flats, for which a smaller budget is needed, could be the first phase of business development, all depending on the financial results of the first years. In 2003, the opinion of Irina Nastase from ESOP is that in class C office buildings the spaces will be rented for 7-10 $ / sqm, in villas, most transactions will be made for 6-9 $ / sqm, and in blocks companies that have budgets of 3-5 $ / sqm, will find quality spaces.