The Landmark, the office complex in central Bucharest controlled by Piraeus Bank Romania, will be put up for sale by the lender, as it is set to reach full occupancy this year. In an office market that has expanded by around 75,000 sqm in the first semester in Bucharest, the bank says it has already received offers for the business park, which was completed late last year following investments of more than EUR 60 million.
“There will be an exit for the bank. Although we love this project and we are very proud of it, we will probably sell it because we’re not active in this sector; we are active in the financial one (…) If we get the right price, yes,” Nikos Chaniotis, deputy general manager at Piraeus Bank Romania, told BR.
The project, which comprises three separate seven-storey buildings and a three-level basement parking lot, currently has an occupancy rate of 65 percent, and the bank says the rest of the space will be fully occupied by the end of the year. Afterwards, Chanotis says that Piraeus might start looking closer at exit options. The building also has a retail component that will be priced higher.
“The ground floor and the first underground level are for retail. This was our strategy, first of all to focus on office space and then to go for retail in order to be able to ask for a higher rent,” he said.
The project’s biggest tenant is French energy multinational Total Group, which has its back office operations here. Firms in the IT, legal and energy sectors have also moved their offices into the building, where the longest rental contract signed up to now is for ten years. The owners say that their tenants were attracted by the good infrastructure connections and the fact that the offices have more than 300 parking spaces, something rarely found in the central area.
“We don’t have a timeframe; we are not in a hurry,” said Chaniotis, about the sale of The Landmark, in which Piraeus has a 75 percent stake, while the rest is controlled by one Romanian and one Greek individual. In August, the bank appointed Colliers International as property manager for the buildings.
Although the banker says that Piraeus is not interested in making any other investments in real estate, he notes that he gets requests for financing from investors that are very “bankable” and “actually in some cases they come with full cash in order to buy some assets that have been repossessed by the bank.”
“Most foreign investors, when they come to the Romanian market, they are basically looking at Bucharest and major cities such as Cluj,” added the banker.
Office development trends in Bucharest
The job of finding tenants for The Landmark belongs to Knight Frank Romania, the real estate consultancy managed by Horatiu Florescu, one of the veterans of the office market in Romania. He says this is one of the first business parks delivered in the center of the city in a long time.
“If you ask me, the office market is much safer than residential. My main concern for the coming years is the availability of land for offices. Now, for example, we are working on projects with delivery in 2020, 2021. We are signing a big prelease with a delivery in March 2020,” Florescu, chairman and CEO of Knight Frank Romania, told BR.
He says that the next big area for office development is Expozitiei, and that he is working on a couple of “big transactions” in this area that will be announced in the next two to three months. The CEO adds that Bucharest’s business hub will remain in the center, including the Barbu Vacarescu, Dimitrie Pompei and Expozitiei areas, while the center-west and south are the parts of the city where investors can still find land.
“We can’t say that the market is overheating,” said Florescu, asked about the office segment. “If you compare our numbers with Amsterdam or Paris, we have a very small market.”