Relative to population and student migration patterns, Timisoara enjoys a right-sized stock of modern offices amounting to 300,000 sqm, with an expected pipeline of at least 24,000 sqm. The vacancy rate rose close to 15%, similar to Bucharest.
Headline rents for class A offices range from 14.0 to 15.5 EUR/sqm/month. During 2022, Timisoara registered the strongest office demand outside Bucharest (more than 50,000 sqm). However, during the first half of 2023, the demand was modest, in line with Q1 2023 in the capital city. The slowdown does not discourage existing or new schemes to develop during the next 18 months.
IULIUS TOWN Timisoara is the city’s main urban regeneration mixed-use scheme that Iulius Group rolled over Romania’s most important regional poles. The project is a large integrated retail–office development. United Business Center, the office component, offers more than 80,000 sqm of modern LEED Certified class A infrastructure to numerous tenants in the IT&C and automotive sectors. The impressive roster of blue-chip tenants features Amazon, IBM, Microsoft, Endava, Bitdefender, Intel, Atos, Ness Digital, Cognizant, Autoliv, NTT Data, Visma Software, and many other reputable companies. The benefits offered by the city’s dominant retail scheme, along with medical educational and leisure facilities within walking distance made the case for employers looking to attract talent.
The first landmark modern office development in Timisoara is the City Business Center, presently named AFI Park Timisoara. Totaling 48,000 sqm over 5 buildings with modular floor plates, the property is home to reputable technology and support centers of multinational companies such as Wipro, Accenture, SAP, Hella, etc. Facilities such as retail areas, a sky bar with a panoramic view, and a 5’ walking distance of the old city contributed to the resilience of the scheme that delivered its first building in 2006 and the last in 2015. The most notable fact about the property is that it is the only large commercial building sold twice in the city. NEPI Rockcastle purchased the project from local developer Mulberry Development and later sold it to AFI Europe.
Mulberry Development invested the proceeds into a mixed-use multi-phased project, called ISHO. The scheme includes a residential and a hotel (future Radisson Blu) component, a 700-spot multi-story parking, and a three-phased integrated office development spanning over 50,000 sqm of class A offices. Large occupiers such as Bosch Service Solutions, Visteon, Canon, SSI, Regina Maria, Deloitte, and KPMG chose ISHO as their operating base in the region.
In terms of future deliveries, it is important to flag that one of the established developers in Bucharest extended its presence in Cluj and Timisoara. Speedwell is developing a mixed residential–office scheme located on the former Paltim factory. Ultra-centrally located, overlooking Bega River, the 16,000 sqm of brand-new offices and old villa reconversion are expected on the market by the end of 2024. The developer announced earlier this year it has acquired 24,000 sqm of land, the former 1 iunie textile factory, where it intends to build a multi-purpose scheme – residential, offices and retail.
One of the items that commercial developers should account for in Timisoara is the generous centrally located landbank, as 25% of the city’s area is still unbuilt, according to the City Hall. While this might seem attractive as it allows for competitive land acquisition, it is important to pace development and carefully plan an exit. The low unemployment rate, the variable number of students, and their desire to live in the city postgraduation are to be accounted for when planning an investment, due to the possibility of competitive schemes that can benefit from a good location.