construction

Timisoara shopping spree
Timisoara shopping spree 2560 1707 ROMANIA PROPERTY CLUB

The modern retail stock in Timisoara remained stable in the past 12 months, given that the city has one of the highest retail densities nationwide and also reflecting investors’ and retailers’ trust in the long-term economic strength.

Prime rents for shopping center peaked at 55 EUR/ sq m, whereas retail parks rents ranged between 9 to 14 EUR/sq m, marking the city’s high cost for suitable development land.

Following the inauguration of Ikea from 2023 (first expansion outside Bucharest), in 2024 Primark enhanced the city’s attractiveness.

The retailer confirmed Timisoara’s robust and growing economy, by choosing the city as the second destination in Romania and executing a 10 million EUR investment. The tenant that generates high traffic due to its business model set grounds in one of the city’s most appealing shopping destinations – Iulius Town. An impressive mixed-use development, the town’s go-to destination in terms of enjoying modern amenities, Iulius Town represents a key meeting point in the city, due to the synergies generated by the compound. Thousands of white-collar workers are served 5 days a week through the 80,000 sqm office component and convention center, whereas, during the weekends locals enjoy the perks offered by outdoor meeting spaces created by Iulius Gardens. 102,000 sq m of shopping space, the second largest after Bucharest, responds to the needs of all residents and the nearby border population (Serbia, Hungary). In addition to the well-designed service point for the city, a clever asset management team keeps the community engaged through events such as the Street Food Festival, Leisure Sports Festival, racing, and influencer campaigns.

“For Iulius Town, this year was very good, both in terms of new retailers, but especially in terms of the two relevant parameters in the industry, sales and traffic, increasing compared to 2023. We are also happy that, together with the major inaugurations of this year, as was Primark, in August, with the first store outside Bucharest, and Lefties of the Inditex Group, which will open, this autumn, the second Digital Store in Romania, Iulius Town has become the only shopping center that includes all the major fashion anchors present on the market in our country.”

“In recent years, our major concern has been to generate as many experiences as possible for the millions of customers who choose us. Now, we can say that we have a complete shopping center: the largest number of HORECA units and the largest food court in Romania, the best mix of sports shops, the largest diversity of experience and edutainment destinations – park, playground, cinema, fitness center, kindergarten and primary school -, and a medical hub with ultra-specialized services,” said Cristina Brătuianu, Development & Operational Retail Leasing Specialist, IULIUS

Shopping City Timisoara, the other large retail scheme in town, is spanning over 70,000 sq m GLA. The project was designed around complementary shopping needs (brought along a Dedeman big-box) and serves a large catchment area on the west and south sides of the city.

Increased residential development in recent years has created new opportunities for proximity retail formats: 40,000 sqm are under construction with delivery dates up to the end of 2025.

RETAIL PARKS UNDER DEVELOPMENT
PROJECT GLA SURFACE – SQM ESTIMATED INAUGURATION DATE
Esquire Commercial Timisoara, Strip Mall -Calea Torontalului 4,200 Q4 2025
Calea Torontalului Retail Park 4,495 Q2 2025
Prima Shops Lugoj 12,000 Q3 2025
Retail Park Sanandrei 9,000 Q4 2025
Max Village Sacalaz 9,000 Q4 2025
Centrul Comercial Cetatii Timisoara 2,500 Q4 2024
TOTAL SURFACE UNDER DEVELOPMENT 41,195

Source: Hitch & Mosher

The increase in average wages, coupled with a lower housing cost than the other regional poles, leads to a more generous disposable income that powers the retail space.

Local office market registers slowdown
Local office market registers slowdown 720 480 ROMANIA PROPERTY CLUB

The office market in Timisoara registered a slower pace, in line with the regional office markets across Romania for the past few years.

The local modern stock amounts to approximately 300,000 sqm, with headline rents ranging between 13.5-15 EUR/sqm/month.

During H1 2024, the total market activity amounted to 5,000 sq m, half of last year’s total market activity. This is significantly lower than the traditional ~30,000 sqm / year leasing volume in Timisoara. While Cluj fared better during this particular year, with close to 30,000 sqm let, if we analyze the main office markets outside Bucharest (Cluj, Iasi, Timisoara, Brasov) for the past 3-4 years, we will notice an overall slowdown.

If in Bucharest the leasing pace is strong, even accounting for the downsizing and renegotiation trends. The regional cities had a different dynamic in the past three years. The reasons are multiple:

  • Switch in working patterns – hybrid/work from home allowed for employment across the country, with fewer reasons to secure regional hubs; that being said, companies still need a meeting and training point.
  • Recruitment challenges: while in some cities challenges are represented by strong competition among employers that would drive salaries up in margin-focused businesses (strong presence in Iasi and Timisoara), others are more fundamentals – meaning difficulty in recruiting for the right technical skills. Timisoara’s authorities’ efforts to improve student housing, lifestyle appeal to youth, and increase net wages are crucial to the economic future of the city.

“The first half of this year was challenging; the office market being influenced by the macro-level evolution of the economy. However, the IULIUS company has a solid portfolio of partners, which has grown organically, and fluctuations in our network of office buildings have been minimal, managing to maintain a 100% occupancy rate. Particularly for this year, requests came from the medical sector. “

“We have succeeded in consolidating a unique specialized medical hub in the Iulius Town mixed-use project. The integration of medical operators required compliance with specific requirements much more complex than those of an ordinary tenant, because we are talking about spaces that must meet certain rigors. We are extremely satisfied that we managed, together with our tenants, to integrate all requests and have, today, an extended range of such services”, said Laurențiu Manea, Office Buildings Manager, Iulius Town Timisoara

Benchmarked against Iasi, one of the meaningful regional office markets, with 0 Class A square meters left during the first six months of the year – Timisoara performed by accounting for 15% of the office demand outside the capital city. The vacancy rate for the local market was maintained at around 14.5%. Besides the office component from Iulius Town, another important development is AFI Park Timisoara, a legacy project owned by AFI Europe.

New infrastructure updates create logistics opportunities
New infrastructure updates create logistics opportunities 2560 1440 ROMANIA PROPERTY CLUB

In Q4 2024, the new 25 km South Belt Motorway is estimated to be finalized. The final part of the Timisoara motorway, the 14 km West Belt, shall break ground soon, as the bidding process for a constructor has been completed. The motorway is an important plug for the recently approved 3bn EUR A9 highway, connecting Timisoara to Moravita. A9 will increase the flow of goods and commercial exchange between Romania and Serbia. Another important development is the approval of opening a new border control point at Beba Veche, to decongest Nadlac.

The industrial market in Timisoara is steadily growing, with a modern stock of 742,300 sqm, representing 10.5% of Romania’s total volume of Class A/B+ warehousing capacity. While the vacancy rate slightly increased to 8.2% (vs 6.8%), the second largest industrial hub in the country registers solid market activity, with approx. 60,000 sq m let in H1 2024, 15% of the overall market take-up. Considering the leasing pace, the c.a. 60,000 sq m available and the 66,500 sqm under construction, should sustainably be absorbed by the market promptly. Prime asking rent-stabilized at 4.3 EUR/sqm, with tenants such as Hexing Technologies Europe confirming the region’s strategic location.

One of the key developments during the past year is the consolidation of CTP Park’s presence in Timisoara, following Globalworth’s exit from its industrial portfolio.

VGP is also growing its footprint in Timisoara, through a new 33,000 sq m warehouse under development. The investor secured a blue chip anchor tenant – Continental Tyres, for 20,000 sqm. VGP Park Timisoara is strategically located near the airport, making it an important logistics and industrial hub. The park already hosts seven completed buildings, serving clients across various sectors including transportation, logistics, courier services, automotive manufacturing and electronics. Spanning a land area of 349,098 sqm VGP Park Timisoara offers a total leasable area of 178,861 sqm, with 10,728 sqm currently available for new tenants. The park provides flexible expansion options, modern and innovative facilities, comprehensive support services, cost-efficient operations, and access to a skilled workforce.

Artemis Romania, a Swiss family office owning circa 170ha in strategic locations across Timis, delivered a 10,000 sq m unit for Mondo Style. Other new names that have accessed the Timisoara production market in the past 12 months include Syntronic and Topband.

Located along the Pan-European Corridor IV, which connects Germany and Turkey, Timisoara has access to the Pan-European Corridor VII due to the Bega Canal. The West Region of Romania is the second largest, following Bucharest Ilfov, with a stock of over 1 million sqm modern industrial & logistic spaces.

The progress registered by the infrastructure updates will most certainly unlock new development opportunities in the medium and long term. Industrial & logistics developers might access more affordable land plots and talent pools along the new infrastructure lines, with a value proposition of timely delivery of goods to Western Europe.

2024 Timisoara hotel market trends
2024 Timisoara hotel market trends 2560 1669 ROMANIA PROPERTY CLUB

Despite numerous initiatives such as the European Cultural Capital and follow-up events, the Timisoara tourism market is still under the pre-pandemic figures. Those figures reflect a low pace of development for the hotel market.

In the last 11 years, the Timisoara hotel market grew by only 12%. The highest increase of 19% is in the “4-star” category, according to the data from Est Hospitality. The total number of hotel rooms for the local market is 2,170.

Branded hotels represent just 17.7% of the market. With one exception – Ibis – the other three units are rather boutique hotels, with less than 85 rooms.

Regarding tourists’ arrivals, the statistics show that for the first semester of 2024, Timisoara is 16% below the same period from 2019 and around 5% below the same period from the previous year. The total number of tourists arrivals for the first six months stands under 100,000 people. In 2019 the total number of tourists’ arrivals was 250,054, while in 2023 it reached 233,289.

However, the branded hotel pipeline looks good for the next four years, mainly due to the pronounced lack of offers. There are five hotel-branded projects in the pipeline, with a total number of 600 rooms, which represents a growth of 18% for the Timisoara hotel market. 2024 will mark the opening of the first 5-star branded hotel in Timisoara.

“Although there is a strong investment confidence in the market, with 600 new rooms announced for the next 4 years, we do not see a positive trend in tourist’s arrivals in Timisoara. A demand driver could be the development of ”Traian Vuia” international airport, which might add new connections with other European destinations and bring additional tourists in Timisoara,” said Mircea Draghici, Managing Partner, Est Hospitality.

Positive Perspectives for Timisoara – Economic overview
Positive Perspectives for Timisoara – Economic overview 2560 1440 ROMANIA PROPERTY CLUB

Timisoara was under the limelight in 2023 as the European Capital of Culture. The program received investments of circa 43 million EUR, 90% of funds provided by public sources. The presence of acclaimed Nobel Prize winners, among which Orhan Pamuk, Nadia Murad, and Eric Stark, and exceptional exhibitions of artists such as Constantin Brancusi, and Victor Brauner brought visibility in the Time Magazine, New York Times, Le Monde, El Pais, and RAI UNO.

The thrilling success of the European Capital of Culture events generated investments in cultural infrastructure – new events space, social and educational centers in various neighborhoods, and two rehabilitated cinema multiplexes. Presently, the authorities are allocating new funds for follow-up events through the Timisoara. Next program, to consolidate the enthusiasm generated in 2023. Moreover, the County Council took the lead by applying to other events that might offer international exposure, such as the 2028 European Gastronomic Region status.

In addition to cultural investments, important steps were completed in transportation, educational, sports, and healthcare infrastructure.

In March, authorities opened a brand new 40 million EUR international airport terminal, with a capacity of up to 1,000 passengers per hour. In Q4 2024, the new 25 km South Belt Motorway shall be finalized; this new road will decongest city-wide traffic. The final part of the Timisoara motorway, the 14 km West Belt, shall break ground soon, as the bidding process for a constructor was completed. The motorway is an important plug for the recently approved 3bn EUR A9 highway, connecting Timisoara to Moravita. A9 will increase the flow of goods and commercial exchange between Romania and Serbia. Another important development is the approval of opening a new border control point at Beba Veche, to decongest Nadlac.

In terms of modern healthcare facilities, the public administration started the official bidding process for building the 230 million EUR Regional Oncological Hospital, which should open in the next three years. This tops investments already finalized or under advanced construction: a new emergency unit for the county hospital, 65 million EUR burn unit, 20 million EUR new maternity building, a children’s hospital building, and a new spa clinic.

Education and a qualitative student pool are key economic pillars that appeal to major corporations considering maintaining or extending their stay in Timis. Thus, the upcoming private and public investments in educational facilities shall consolidate the regional leader status of Timisoara. Authorities allocated more than 20milEUR to modern student housing revamping or building from the ground up. The British International School of Timisoara is increasing its capacity with up to 1,000 seats through a new building on its campus. These modernization efforts should help Timisoara appeal to students, as the registration numbers slightly decreased over the years, in favor of Cluj and Iasi.

In terms of sports and leisure, a 180 million EUR investment in a 30,000-seat stadium (the second largest in the country) began the bidding process, in parallel with the demolition of the existing run-down facility.

The strong economy in Timis not only kept the unemployment rate under 1% but also generated an average net wage of c.a. 1,200 EUR – the second biggest in the country (after Bucharest). The wage increase and the lower housing costs by comparison to all of the other main poles (Cluj, Bucharest, Iasi, Brasov) should make the city more appealing to the young and mobile segment of the population.

VAT Romania breaks ground on the future factory for its operation in VGP Park Arad
VAT Romania breaks ground on the future factory for its operation in VGP Park Arad 1280 854 ROMANIA PROPERTY CLUB

On September 17, 2024, VAT Romania broke ground for its new factory located in VGP Park Arad, a strategic logistics hub adjacent to the A1 motorway and key European routes. VGP Park Arad stands out with its modern infrastructure and green energy options, providing a significant logistical advantage for efficient manufacturing and distribution operations.

The new location is designed to accommodate the mid-term growth projections and meets the increasing demand and technical complexity of the product portfolio. The manufacturing facilities, offices and an employee canteen will be united under one roof of more than 21,000 sqm. The building will be certified following the BREEAM (Building Research Establishment Environmental Assessment Methodology) sustainability standards for green buildings and will aim for the Excellent level of certification. The new facility will be fully operational by early 2026 with an expected move-in date in the second quarter of 2025 – ensuring a smooth transition and minimal disruption to the ongoing operations.

VAT, the globally leading developer and manufacturer of high-performance vacuum valves, multi-valve units, and vacuum modules, is leasing the hall to support their global strategy, creating also numerous job opportunities in technical fields.

The investment in the growth of VAT Romania will create many job opportunities in areas with highly technical competencies such as mechanical engineering, automation, CNC turning and milling, as well as support functions. The plant will also host engineering, IT and other functions that go beyond the ‘pure’ manufacturing scope, and which support the build-up of further competencies required for a lead factory.

7 Things to Consider for the Structural Safety of Your Asset
7 Things to Consider for the Structural Safety of Your Asset 2560 1707 ROMANIA PROPERTY CLUB

A guide compiled by Mariana Garstea, General Director Sixense Romania

When developing a new building in an urban environment with neighboring structures in the influence area, it is essential to consider several important aspects related to geotechnical and structural monitoring.

These considerations are not only legal obligations, but also to make sure that the development of your project does not encounter blockages from the owners of the neighboring buildings and the control bodies, and most importantly, that your building is safe and durable. Here is a brief guide to keep in mind.

Risk Assessment

It is necessary to first identify the risks your asset is exposed to. Each building has a series of specific risks, which are crucial to understand. We are talking about risks associated with the location, including ground stability, groundwater levels, and the impact on adjacent constructions. Therefore, it is also important to understand how construction activities might affect neighboring buildings, including potential settlement or vibration-induced damage.

Based on the identification and definition of these risks, a geotechnical and structural monitoring program is then developed, tailored to the actual on-site conditions.

Creating a Geotechnical and Structural Monitoring Program

Next, a customized monitoring plan needs to be developed. This plan should address specific, well-defined questions and objectives and include appropriate tools to provide accurate information.

It is important not to copy or use monitoring programs from other projects without a detailed analysis of the on-site situation.

Contracting Geotechnical and Structural Monitoring Services

Seek to collaborate with a dedicated, specialized, and professional partner who truly knows what they are doing. It is important to look at their reputation, portfolio, demonstrated expertise, and supporting evidence. For example, certifications such as the laboratory authorization for testing and analysis in construction, ISO or compliance with quality standards should not be overlooked.

Geotechnical and structural monitoring is not a process to be left to just anyone: it’s not about „just putting a sensor here” or „selling another piece of equipment”. This mindset will not provide any real benefit or value to your construction project. Given that this is a long-term service, it is crucial to choose carefully and with full knowledge.

Using Modern Technologies

Like any other field, geotechnical and structural monitoring has evolved significantly. Today, there is a vast array of technology and digital tools that make monitoring easier, more efficient, and more precise, providing truly high-quality and accurate data.

Do not shy away from using technology. Monitoring today employs sensors for deformation, pressure, or vibration to manually or real-time monitor the behavior of a construction. The data obtained is highly precise and can help you identify problems before they become critical or incur high costs.

Explore automation and AI for predictive analytics and automated alerts. AI can help in identifying patterns and predicting potential structural issues before they escalate. Remember: this is not science fiction, it is the level of development and evolution of the industry today.

Compliance with Current Regulations

Romania has a well-documented legislation on geotechnical and structural monitoring or on tracking the behavior of buildings over time, P130/99 and NP 074/2022 being the most relevant. Information is readily available, so the old excuse of „I didn’t know” cannot protect us from responsibility in the event of an incident or accident due to structural issues.

Monitoring activities should comply with current legislation (which clearly specifies things such as frequency, responsible parties, project stages to consider etc.) to ensure compliance.

Periodic Reporting and Communication

The reporting system is also extremely important. Especially since decisions are based on information and data received from monitoring, it is crucial to ensure that reports are not received „yesterday” when they are needed now. Additionally, the data must be interpreted to turn it into actionable information and accompanied by recommendations for interventions and concrete measures if necessary.

Maintenance of Equipment

Geotechnical and structural monitoring activities also involve regular maintenance of equipment. For data accuracy, optimal functioning and correct instrumentation are required. Ongoing support and maintenance are something any monitoring partner should ensure right from the start.

Behind geotechnical and structural monitoring activities, there are several important factors to consider. All the criteria above must be integrated and ensured for a developer or investor to have a structurally healthy project.

© Romania Property Club, 2024 — All rights reserved.

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