News Article Bucharest Ema Iftimie Globalworth office Romania Top 50
by Ovidiu Nicolae | Interview

Ema Iftimie, Managing Director at Globalworth Romania, spoke with Property Forum about the group’s office pipeline in Romania and the plans for the existing commercial portfolio that has been completed following an investment of more than €900 million.

This interview was first published in Property Forum’s annual listing of "The 50 most influential people on Romania’s real estate market”.

What were Globalworth’s Group operational highlights during 2023 and what is your outlook for this year?

2023 marked our best year in terms of leasing activity, while advancing with our industrial/light logistic developments in Romania and refurbishments of mixed-use properties in Poland. We strengthened our relationship with our tenants, signing contracts with 201 companies covering 314,400 sqm at a Weighted Average Lease Length (WALL) of 6 years, thus extending the average lease length in our standing commercial properties from 4.4 years at the end of 2022 to 4.9 years in December 2023.

Our commercial occupancy rate in our standing portfolio increased to 88.3%, and we achieved a 6.3% increase in our total annualised contracted rent to €201.2 million. We have further internalised property management, ensuring that 97.0% of our office and mixed-use properties by value are now managed in-house. This not only optimises operational efficiencies but also enhances our direct engagement with tenants, allowing us to better meet their needs and expectations.

What are Globalworth’s plans for the Romanian market in 2024? Are you exploring new developments in the country?

We are actively evaluating our investment opportunities, with a keen focus on office spaces across Bucharest. The progression of pipeline projects will align closely with market dynamics and the evolving needs of our tenants. Among the specific projects we have secured are Green Court D, Globalworth West, and Luterana Development. All these are at different phases of planning and showcase our substantial investment and commitment towards enriching Globalworth’s portfolio in Romania.

What was the total lease volume closed in your Bucharest offices last year?

In 2023, we have signed around 140,000 sqm of leases in our Bucharest offices, with almost 70% representing lease renewals with our tenants, who have chosen to extend their collaboration with Globalworth. This has led to an increase in occupancy in our Bucharest office properties to 94.0%.

What are your plans in the industrial segment and what has been the demand for your projects in the past year?

In 2023, we achieved a significant milestone by delivering our first project in Târgu Mureș. Demand for our industrial/light logistic properties during the year remained high, amounting to around 81,000 sqm. As announced in March, we have entered into an agreement with CTP NV, a leading European industrial and logistic developer, to sell part of our wholly owned logistics portfolio.

Will the local market continue to see upward pressure for rents in the office and industrial segments? Will tenants accept further increases in rent?

Headline market rental levels have shown an upward trend during the last 12 months, mostly influenced by indexation, despite the challenges in the market and tenants’ cautious approach to the renewal of expiring leases. This reflects the quality of our properties, our active asset management initiatives, and our approach to sustainable development. The question of whether tenants will accept further increases in rents is complex and multifaceted.

It depends on the value they perceive in terms of location, quality of space, the economic environment, and their individual circumstances. Our approach has always been to manage our portfolio and tenant relationships with a long-term perspective, focusing on high-quality property management and maintaining robust financial health to navigate market shifts effectively. Our strategic emphasis on property management and prioritising liquidity underlines our capability to adapt to market conditions thoughtfully. This approach ensures we can make informed decisions about rent adjustments, aiming to achieve a balance between sustaining our growth and meeting our tenants’ needs.

What trends are you seeing in workspace redesigns considering the adoption of hybrid work? Are you collaborating with tenant companies on improving the office experience for employees?

In navigating the post-pandemic changes, our focus has shifted towards providing flexible and efficient workspace solutions that cater to the evolving needs of our tenants. Recognizing that work is not just about physical tasks but also about being part of a vibrant community, we are committed to reinventing office spaces that foster both productivity and a sense of belonging. Our modern fit-out projects are designed with the future in mind, incorporating flexible layouts, ergonomic designs, relaxation zones, and amenities that draw employees back to the office by enhancing their work experience.

How are you embedding ESG elements in your current and planned property portfolio?

Our commitment to integrating ESG principles into our operations is a cornerstone of our strategy, both for our existing properties and those we plan to develop. Our approach to sustainability is multifaceted, encompassing a range of initiatives designed to enhance the environmental performance and social impact of our real estate portfolio. We have made significant progress in 2023, achieving BREEAM Very Good or higher certifications for 27 of our properties. In Romania, we were able to improve the level of certification, from BREEAM Very Good to LEED Gold, for Tower Center International, our iconic office building located in Bucharest CBD, while certifying for the first time five of our industrial/ light logistic properties in Bucharest, Constanta, Arad and Oradea. 100% of our standing office properties have a WELL Health-Safety rating, further demonstrating the quality of our portfolio.

Moreover, at the end of 2023, our combined standing portfolio comprised 59 green-certified properties, accounting for 92.5% of our standing commercial portfolio by value. We are proud to source 100% of the energy for our properties in Poland and Romania from renewable sources, underscoring our commitment to reducing our environmental footprint. On the Greenhouse Gas (GHG) emissions reduction side, we have set ambitious environmental targets, aiming to reduce our emissions intensity by 46% by 2030 from our 2019 levels for Scope 1 and 2 emissions.

How much has Globalworth invested in Romania to date?

Romania has always been a promising real estate market, where half of our operations take place. Over the past 10 years, we have strategically invested over €900 million in building, expanding and ever-innovating our local portfolio. To name only a few domains of development: building, acquisition, refurbishment, certification, equipment, sustainability, and charity.