Globalworth, a leading owner of offices in Bucharest, Romania and Poland and 30% owned by JSE-listed Growthpoint Properties, is benefiting from a shift by financial services and fintechs in Europe to relocate their back-office and other units to central and eastern European countries, where skills, utilities and other services cost less.
Large companies in developed Europe are struggling in the once considered unheard-of environment of high interest rates and inflation that has seen the costs to companies of goods and services soar. Business Report was granted a rare opportunity this week to visit several of Globalworth's Bucharest office properties.
Office vacancies are at an all-time high in South Africa due to an oversupplied market that was made worse by the work-from-home trend that arose out of the Covid-19 pandemic.
In contrast, Globalworth's office occupancies in Bucharest sit at a low 10%, which is also better than the 15%-16% average for the rest of Romania.
Also boosting the office market in the city was a decision by the city government through the pandemic not to allow the development of commercial property development in the inner city, a decision which after three years still stands. While the decision has been good for Globalworth in that it has lessened competition, it has also prevented it from doing any further new developments.
Walking through Bucharest, it is impossible not to miss the aged and often dilapidated city infrastructure, and the prevalence of the uniform, square and dull grey cement buildings that marked the architectural style of the Communist government when Romania was part of the former Soviet Union during the last century.
This difference is particularly marked when one compares it with, for instance, the inner cities of neighbouring Poland, which are modern and have benefited from massive EU loans and investment by Western companies once it had fallen out of the grasp of the Communist government.
But for all its under-development, unemployment in Romania sits at a very lowly 1%, a low percentage attributed in part to a skilled and well-educated people, and to the growing investment into the country. More than 400 000 people in Romania are employed in the information technology sector, a big number considering the population is around 22 million.
Some of the large corporates with offices in the city include OMV, Petrom SA, British American Tobacco, Mega Image, Lukoil Romania and Dante International.
Another factor attracting companies to the city is its transport infrastructure, which includes trams, underground metro and buses. While some of it is visibly old, it works.
Also, the city boasts one of the best internet connectivity systems in the world, thanks to the fact that it is relatively new and has been installed to cater for the growing usage by the information technology firms operating in the city.
Globalworth's seven A-grade office properties in the city, all relatively new buildings, have to compete with other major European cities to attract tenants, and consequently feature the very latest in facilities, and have been built to high environmental standards.
For example, the 29 000 square metre Globalworth Square, completed in 2021, is one of few buildings in Europe that produces its own energy via a geothermal system under the floor, a facility that considerably reduces the buildings' cooling and heating costs.
Other features of the group’s buildings include the most technically advanced and biggest inner city conference centre, the biggest LED wall screen in Europe, among other LED screen features in the buildings, that helps with advertising revenue, and ambient chillers that assist with air conditioning.
With the world of work also changing from the desk-with-chair in box office concept of yore, most of the offices that BR visited featured fun pause rooms for staff that provided, among other comforts, gaming and table-soccer facilities, and even couches.
Globalworth’s 16-floor Unicredit HQ building was ranked 17th in the 2013 world list of most impressive banks in the world, and it also received BREEAM Excellent environmental accreditation. Sitting in the heart of Bucharest's CBD, its occupancy is 100%.
The BOC is the biggest office building in Romania in terms of its lettable area of 51 700 square metres, and after being delivered in 2009, was nominated for the best “Office-in-Use” property in the 2015 BREEAM (Building Research Establishment Environmental Assessment Method) awards.
However, when BR walked through the offices of many of Globalworth's tenants on Monday, and while the group does boast a high occupancy rate by tenancy, most of the desks were empty, a factor undoubtedly due to the work-from-home, or hybrid office-home work model.
How long companies will continue to pay for unused office space is anyone's guess, but for now there is little doubt that office developers and owners in South Africa and north of the Equator are undoubtedly hoping that people will all one day just return to their offices.
BUSINESS REPORT