Offices for SMEs, a profitable investment
Investments in office buildings in Bucharest offer one of the highest yields in Europe, approximately 15%. In the next period, there will be a more pronounced segmentation of the Capital’s office market.
In addition to investment funds and developers investing in large real estate projects, we believe that there will be investors who will develop small projects for small and medium-sized companies. “The high demand from these companies and the lack of offices specially built for SMEs are solid arguments for investors who want to capitalize on the current situation in Bucharest,” says Alexandru Petrescu, director of the investment department at the real estate agency Esop.
For an investor who wants to invest $ 700,000-1,500,000 in an office building, SMEs are the best market segment to target.
In a few words, the situation on the market is as follows:
- Demand: the number of requests for quality spaces has increased constantly lately: – we are looking for areas of 100-400 sqm, solid, representative buildings, located in the central or semi-central area, good positioning compared to public transport, quality finishes, and parking spaces. The budgets available to these companies are between 7 and 13 $ / sqm, but the most common budgets are 10-11 $ / sqm.
- Supply: unfortunately, supply did not keep up with demand. The few investments made in office buildings for this market segment either failed to find a balance between quality and price, or areas were chosen that were not benefits a company looking for a new headquarters.
Most SMEs want space in office buildings, but most of the time, their requirements are not satisfied by the current offers on the market at the moment. That’s why their preferences are towards villas. New or renovated villas are required because SMEs also care about their image.
Investments for the SME market segment
Esop representatives believe that there are two ways to invest in this market:
- for those who have financial resources between $ 100,000-500,000, the purchase and renovation of villas is an efficient investment.
- for those who can invest up to $ 1,500,000, the market orientation of buildings for SMEs is one of the most profitable options. Office buildings for SMEs must have areas of 200 – 400 sqm/level, but space must be flexible, in order to rent smaller areas of 100 – 200 sqm. This involves the independent operation of the spaces resulting from the division of a floor.
“It requires an accessible position of the building and a good value for money. The rents that can be requested are between 9-12 $ / sqm, depending on the location and finishes, “said Alexandru Petrescu, Director of the Investment Department of ESOP Consulting.