CBRE Sibiu Real Estate Report A4 Bleed 5 Mic

8/15/2019 CBRE Sibiu Real Estate Report A4 Bleed 5 Mic

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SIBIU Real-Estate Overview

CBRE RESEARCH

Photo source: soundofice.eu


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Sibiu is one of the Romanian’s largest city and capital of Sibiu County, located in the heart of the country. The total surfaceof the county is 543,200 ha, the equivalent of 2.3% of the total Romanian territory. According to the National Institute ofStatistics Sibiu has 147,245 inhabitants, that means 35% of the county population;

In 2007, the city was designated the European Capital of Culture, an event that made it more popular to foreign investors.

The city of Sibiu is part of the IV Pan European corridor that connects the Black Sea with the border of Hungary.

The city has a good road connection with Bucharest and Timisoara, both towns are at 280 km distance from Sibiu (cc. fourhours’ drive).

Sibiu can be easily reached by air, the city is served by International Airport Sibiu, which is located at 6 km from citycenter. The airport has direct ights to Vienna, Munich, Stuttgart, London, Dortmund but no direct ights to Bucharest.216,000 of passengers pass through Sibiu annually.

FIGURE 1: SIBIU HIGHLIGHTS

Sibiu, a small place for big dreams

147,245

Universities

5

Unemployment rate

4.65%

25,000

Office Stock

Students

50,000sq m

GDP per Capita

7,898EUR

Retail Stock

City Population

426,294County

95,000sq m

CBRE - Sibiu Real Estate 2016


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OFFICE STOCK

The Sibiu Office Market has arelatively new history of around 5 years, with substantial developmenthappening between 2011 - 2015.

The modern office stock is estimatedat 50,000 sq m of class A and B, which is equivalent to almost 1.5%of the Bucharest office stock – with22% of Bucharest’s population.

In terms of development, in Sibiuthere are 2 office buildings with agross rentable area bigger than12,000 sq m, while the majority ofthe office buildings have a rentablearea which varies between 1,000 –5,000 sq m.

Sibiu Business Centre is animpressive two towers office building with a total GLA of 14,500 sq m officespace. The project was EUco-nanced, it was delivered in 2011and is 97% leased.

For the next period there are underconstruction and announcedprojects of over 20,000 sq m in thesemi-central and periphery areas, alldeveloped by localentrepreneurs/local private investors,speculatively.

Sibiu

Office

3

DEMAND AND VACANCY RATE

The demand for office space in Sibiuis generated especially bynancial-banking sector, BPO(Business Process Offshoring), SSC(Shared Services Center) and

automotive companies. Some of themost renowned companies presentin Sibiu are: Arvato, Conectys,Stefanini IT Solutions, SykesEntrerises, BearingPoint,Continental, Marquardt, Visma, CGS– Computer Generated Solutions.Such tenants are looking for A and Bclass office schemes with a very goodIT infrastructure.

The overall vacancy rate for class Aand B in Sibiu stands at around 13%,

whereas the vacancy rate for class Aoffice buildings is estimated at 5%,compared with the vacancy rate forclass B office buildings which isestimated at 21%. Due to a relativelylarge amount of office space underconstruction in the periphery area, itis predicted that the vacancy rate willremain on a growth path during thenext period.

COMMERCIAL TERMS

Asking rents in A-class modern officebuildings remain stable at 9 – 12EUR/sq m/month and for B-classbetween 6 - 8 EUR/sq m/month.

Service Charges - Include water,electricity, security, heating,air-conditioning, service, cleaning ofcommon areas, taxes, insurance andall other maintenance andoperational costs of the building andcommon areas. Service charges are

more oen quoted in EUR net plusapplicable VAT. A typical servicecharge in an A-class building in Sibiu varies from EUR 2.5 up to 3.5 /sq m/month.

Parking Places – the rent for aparking space is around EUR 25 – 50per month. Parking spaces areallocated according to a pre-denedparking ratio. Depending on thelocation, the ratio varies from 1space per 70 – 100 sq m of leased

office space.

Common Ratio - calculated as apercentage of the space added to thenet rentable area. This include lilobbies, ground oor lobby,corridors, toilets available for alltenants and guests, etc. Marketstandards for the add-on factor inSibiu are in the range of 10 - 13%.

Security Deposit – The equivalent of3 - 6 months’ rent or a letter of bank

guarantee.



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Top of motivational factors for employees:

1. Private healthcare; 2. Lunch coupons;

3. Sport card; 4. Transport offered by the employer;

5. Reimbursement for studies or trainings;

1 Modern Office Stock (sq m)

Vacancy Rate Class A & B

Headline rent – Class A

Headline rent – Class B

Service charge

Parking rent

50,000 sq m

13%

9 – 12 EUR/sq m/month

6 – 8 EUR/sq m/month

2.5 – 3.5 EUR/sq m/month

25 – 50 EUR/cps/month

2

3

4

5

6

FIGURE 2: LOCAL REAL ESTATE INDICATORS

Source: CBRE Research

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Photo source: Centrul de afaceri Sibiu



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FIGURE 3: EXAMPLE OF EXISTING OFFICE BUILDINGS IN SIBIU

5CBRE - Sibiu Real Estate 2016


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LABOUR MARKET

Sibiu is one of the main cities inRomania in which the IT&C sector isourishing.

Today almost 1,900 employees are working in Sibiu in IT&C. The

number of people employed in thissector is expected to increase in thenext period, as new companies arelooking to enter this market or

Increasing demand of human capital for all specializations makes companies aim to attract employees even fromsurrounding areas of Sibiu. They offer relocation and salary packages in order to attract employees from as far as morethan 60 km away from Sibiu.

existing ones are expending theiroperations.

Over 25,000 students are yearlyenrolled in post-secondary educationin all 5 big universities. IT&C domain

attracted annually 550 graduates, outof a total of 1,200 technicalgraduates.

The availability of German skills ishigher than national average, whichattracts employers looking for thisskill. Total estimated volume ofGerman speakers within themetropolitan area is around 3,000.

Approximately 800 persons aretrained in German language in 7different institutions in Sibiu every year.

Industry Entry Level Mid level Top level

FIGURE 5: MAJOR OFFICE TRANSACTIONS 2015

Source: CBRE (based on Romania Research Forum)

IT&C

Professional Sector

BPO

Financial

Medical & Pharma

Consumer Goods

Public Sector

350 – 450

300 – 400

250 – 350

250 – 350

300 – 350

225 – 350

225 - 300

750 – 1,000

550 – 800

450 – 500

400 – 450

400 -550

400 – 450

350 - 400

>1,500

>1,000

>900

>1,100

>1,000

>500

>500

FIGURE 4: PERCENTAGE OF ANNUAL GERMAN SPEAKERS BY INSTUTION

Source: Manpower

37%

25%

14%

9%

6%

6%

3%

Alma Mater University Lucian Blaga University

Samuel von Brukenthal National College

Andrei Saguna National College

Stephan Ludwing Roth College Gustav Gundish College

Energetic College



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7 CBRE - Brasov Real Estate 2015

METHODOLOGY & DEFINITIONS

Prime Rent - represents the topopen-market tier of rent that couldbe expected for a unit of standardsize (commensurate with demand ineach location), of the highest qualityand specication and in the best

location in a market at the surveydate. The Prime Rent should reectthe level at which relevant transac-tions are being completed in themarket at the time, but need not beexactly identical to any of them,particularly if deal ow is verylimited or made up of unusualone-off deals. If there are no relevanttransactions during the surveyperiod, the quoted gure will bemore hypothetical, based on anexpert opinion of market conditions.

Vacancy Rate - represents thepercentage ratio of total vacant spaceto stock.

Total Stock – represents the totalcompleted space (occupied and vacant) in the private and publicsector at the survey date. Includes

owner occupied space.

Business Process Outsourcing (BPO)– a specialized organization thatprovides specic business functions(or processes), usually non-produc-tion ones to third parties.

Shared Service Centre (SSC) – aseparated part of an enterprise thatprovides a service to an organizationor group where that service hadpreviously been found in more than

one part of the organization orgroup. The funding and resourcingof the service is shared and theproviding department effectivelybecomes an internal service provid-er.

Knowledge Process Outsourcing

(KPO) – a form of outsourcing, in which knowledge-related andinformation-related work is carriedout by workers in a different compa-ny or by a subsidiary of the sameorganization, which may be in thesame country or in an offshorelocation to save cost. This typicallyinvolves high-value work carried outby highly skilled staff.

‘’For the past few years, Sibiu has been recognized for its pool of skilled, talentedworkers, especially in manufacturing, where a breadth of experience and expertise isavailable both at the blue-collar and white collar levels. It has therefore been, andcontinues to be, an attractor for production companies, boosted also by its centrallocation in Romania, which increases the competition for talent and the exibility

needed to attract and retain it.’’

Emil Minciu, Director of Operations, Manpower Romania (a ManpowerGroup brand)

7 CBRE - Sibiu Real Estate 2016


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INDUSTRIAL STOCK

Its strategic location, the adequateair, road and rail infrastructureconcluded in investmentopportunities for many companies.They found here qualied humanresource in the industrial eld, localand state incentives packages along with good local real estateconditions.

Sibiu county has a well-establishedindustrial cluster more than 100foreign manufacturing companiesare based in the newly createdindustrial parks and industrial areas. Amongst those companies we nd:Continental Automotive Systems,Marquardt, Siemens, HartingRomania. Many of the greenelddevelopments are owner occupiedtheir investment being partlysustained by the local authorities which created premises for

industrial parks. In Sibiu countythere are three existing state ownedindustrial parks and another twoprivate owned. The most importantstate owned industrial parks and

Sibiu Industrial

industrial areas: Western SibiuIndustrial Park and Sura MicaIndustrial Park positioned in the Western part of Sibiu.

Lately foreign industrial developers were not present in Sibiu market, therecent land acquisition done by WDPand CTP near Sibiu conrms the latehigh interest coming fromproduction companies. As many other counties in Romania,Sibiu county beneted from an oldindustrial tradition which made it apreferred option amongst manyother.

The industrial area Sibiu - Sura Micabenets from a newly created roadinfrastructure one of the reasons whybig names of the European industrylike: Continental AutomotiveSystems, Marquardt Schaltsysteme,Khunke Production, Brandl E,Takata, SNR bearings are here, hiring

over 6,300 employees. Apart fromthem, there are other companieslike: Gühring OHG, Bramac, PhoenixMechano Switzerland, RUDKettenfabrik Rieger & Dietz, Polisano

Pharmaceuticals, MEWA, TAS,Siemens, Delphi, Grainer, PoliexKrupp - Bilstein, Tondach, Winerberger, Compa (factory inSibiu with old traditions inmechanical engineering). To thementioned businesses we can addthose related to the automotiveindustry, building materials,industrial robots, moulds, plasticsand pharmaceuticals.

Another area that may be subjectedto a process of investment is Mediascity, where there is the Romania'sgas resource largest coordinatingcentre, coming along with the otherrelated industries branches.

Here we could also nd several AutoComponents manufacturingcompanies amongst them Kromberg& Schubert or Automecanica.



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No Quarter GLA (sq m) Transaction Type

1 3

3

2

3

3

Company

Antolin (CML Innovative Technologies)

Swoboda Hartmann Sibiu Phase 2

Continental Automotive Systems, Sibiu Phase 2

Siemens Sycatec

Tursib

12,406

2,970

8,000

7,500

20,000

Parc Industrial Vest Sibiu

N/A


WDP Park Sibiu


Industrial Park

Owner occupied

Owner occupied

Owner occupied

Pre-lease

Owner occupied

Grade

A

A

A

A

A

2

3

4

5

FIGURE 6: MAJOR INDUSTRIAL TRANSACTIONS-SIBIU

Source: CBRE Research

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Photo source: Siemens



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Cisnadie, which has over 100 yearstraditions within light industrialmanufacturing could be considereda viable option by productioncompanies. Textile companies suchas Somarest, Transeuro Textile, Raguare based here.

The county is crossed by the highwaycomponent of European Corridor 4beginning at Nuremberg - Vienna -Budapest Nădlac - Arad-Deva - Sebes– Sibiu. The motorway is currently inprogress and will be completed oncertain sections shortly.

The current infrastructure is comple-mented by upgraded roads that allowquick connection with Medias andother cities as Agnita, Dumbraveni,and favours rapid transportation of

goods and passengers also invest-ments in transport infrastructure which has as purpose to become afast and efficient with the othertowns of the county Avrig, Cisnadie,Talmaciu.

As already mentioned, the mainasset of this county is that it can

provide products which are morecompetitive in all sectors and ahighly qualied human resource.This is being regarded as a crucialfactor in the decision makingprocess as it can help generate a riskinvestment assumption.

The county has a modern airport with adequate infrastructure devel-opment activity for cargo typetransports (buildings and infrastruc-ture which are operating for thispurpose), a large enough runway which enables the landing of largeaircras and climatic conditions which provide over 300 operatingdays per year without fog. The airportconnects major cities throughoutEurope and the operators areestablished companies in the eld.

LABOUR MARKET

Sibiu has a highly qualied humanresources, especially in the industrialeld. The county engineers offerquality work while labour costs arelow, compared to wages in WesternEurope.

The economic potential of thecounty is supported by an education-al system that provides a highlyskilled workforce in the existingpre-university colleges and profes-sional schools, which are very welladapted to the needs of the labour

market, not only in cities like Sibiu,but also in Saliste, Cisnadie, Agnita,Medias and Dumbraveni.

The local higher education systemconsists in Lucian Blaga University,an institution with European recog-nition that provides a wide range ofspecializations in accordance withthe requirements of companiesactive in the local market and hasdeveloped a partnership with them,the Romanian – German University,

Alma Mater University and the LandForces Academy "Nicolae Balcescu".

Clients Surface (sq m)

Plant Manager

Production manager

Logistics Manager

3,500-4,000

2,000-2,500

1,500-2,000


Production engineer

Quality engineer

Maintenance engineer

750-1,500

750-1,500

700-1,100


Shift leader

Skilled operator

Unskilled operator

575-650

275-400

195-225

FIGURE 7: MAJOR INDUSTRIAL TRANSACTIONS SIBIU

Source: Manpower


‘’Sibiu is not only a tourist destination, it’s also an economic location and a culturalcity. With the new shopping center, we are trying to make the retail offer complete for

Sibiu. Through its dynamic architecture and its multifunctional nature, the shoppingcenter will provide a modern, effervescent facet to the downtown of Sibiu, comprising

under one roof the entire range of shops, services and leisure facilities required by amodern downtown mall.’’

Daniel Tanasoiu General Manager, Primavera Development


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FIGURE 8: MAJOR INDUSTRIAL PARKS IN SIBIU



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COMMERCIAL TERMS AND

MARKET PRACTICE

ASKING RENTS• Class A 4.5-5 EUR/sq m/month• Class B 2.5-3 EUR/sq m/month• Class C&D 0.5-1.5 EUR/sq m/month

LEASE TERM

• 3 years in existing buildings• 7-10 years for built-to-suit (BTS)projects

HEADLINE RENT• Paid monthly in advance; quoted inEUR, paid in RON• Annual indexation linked to CPIindices (usually HICP Index)

EFFECTIVE RENT• Average rent accounted over entirelease period, including nancialincentives provided to tenant by

landlord (e.g. rent free periods,t-out contribution)

SERVICE CHARGES• Class A 0.8 EUR/sq m/month• For class B buildings the servicecharge is usually covered by the rent• Paid monthly in advance; generallyquoted in EUR, paid in RON

• Based on ‘open book principle’,reconciled annually

SCOPE OF SERVICES INCLUDED INSERVICE CHARGES• Security of park - common areas;Property taxes; Property insurance(excl. tenant internal area); Propertymanagement; Maintenance andrepairs; Landscaping / site cleaning;Snow removal; On-site personnel

LEASE SECURITY

• Bank guarantee (common) ordeposit (rare), equal to 3 - 6 months’

rent + service charges + VAT• Parent company guarantee (espe-cially in the case of new companies)

INSURANCE• Liability insurance, insurance forown installations and owned equip-ment - covered by tenant• Building insurance and landlord

liability insurance included inservice charges - covered by tenant

REPAIRS• Internal - covered by tenant• Structural and common areas -covered by tenant (part of the servicecharge)

TENANT INCENTIVES• Rent-free periods• Partial t-out according to tenant’sspecication and the required

adaptation works

METHODOLOGY & DEFINITIONS

Prime headline rent (in Euro per sqm) represents the top open-markettier of rent that could be expected fora unit of standard size commensu-rate with demand in each location, ofhighest quality and specication andin the best location in a market atthe survey date. For the purposes ofthis report, a unit of standard size isassumed to be around 2,000 sq mGLA.

Vacancy Rate - (in sq m) representsthe total net lettable (or rentable)oor space in existing properties, which is physically vacant and being

actively marketed at the survey date.Prime headline rent (in Euro per sqm) represents the top open-markettier of rent that could be expected fora unit of standard size commensu-rate with demand in each location, ofhighest quality and specication and

in the best location in a market atthe survey date. For the purposes ofthis report, a unit of standard size isassumed to be around 2,000 sq mGLA. Effective rent – an average rentover the whole lease period which

includes tenant’s incentives.

Build-to-suit (BTS) – a non-standard warehouse or industrial schemedesigned according to specictenant’s requirements regardingsize, location and buildingstandards. The design is based onthe client’s technology process. Theprojects are usually dedicated for onetenant, newly built or aer generalrefurbishments. BTS projects are

more and more popular, especiallyfor production companies. Clientspreferring BTS investments overconstructing their own buildings,limit the risk by choosing an experi-enced developer, shorten the timenecessary for the development

process and reduce the developmentcost by using the developer’s resourc-es. Lease agreements are moreadvantageous than the constructionof a company’s own facilities, mainlybecause such projects do not require

the involvement of their own capitaland provide exibility for futureextension or relocation.



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RETAIL MARKET

The local retail sector is benetingfrom the fact that Sibiu is a majortouristic destination in Romaniamainly due to its Saxon heritage andalso to the fact that it was theEuropean Capital of Culture back in2007. Initially the modern retail wasuntil the recent years representedmainly by big box units locatedthroughout the city (Lidl, Kauand,Penny Market, Metro).

HIGH-STREET

A larger part of the on street retailstock is located at the ground oor ofold historical buildings locatedmainly in the city center (alongsidethe Nicolae Balcescu Street and within the main old square). Otherimportant arteries in terms of on

street retailing are Mihai ViteazuStreet, Vasile Milea Boulevard and Alba Iulia Road.

Sibiu

Retail

SHOPPING CENTERS

The local market includes two various types of shopping centers:from one opened before 1990 andrefurbished in mid-2000’s -Dumbrava, located in the city center,to a hypermarket-led scheme - SibiuShopping City (2006), located in theSouthern part of the city, alongside

the main entrance from Brasov andRamnicu Valcea.The occupancy rate is high (over97%) within Sibiu Shopping City.The rents are in range with the levelsregistered for similar cities in sizeand potential.

DEMAND

Among the most important retailerspresent in Sibiu we can name: H&M,C&A, Decathlon, Zara, NewYorker,

Orsay, Takko, dm, CCC, Deichmann,Humanic, Douglas, Yves Rocher, Altex, Flanco. Food retailing is wellrepresented: Billa, Lidl, Penny

Market, Kauand, Carrefour, Auchan, Metro. DIY sector: Dede-man, Leroy Merlin, Hornbach, Ambient, Bricomat.

OUTLOOK

Due to its size, location and roadconnections Sibiu has the potentialto attract new retails and investors.During the booming years at leastthree other centers were announcedin the city (Festivall Mall, Tiago Mall,Sibiu City Center). Two of them wereabandoned following the downfallregistered aer 2008, while anotherone (Festival Mall) seems to berevitalized in the past months.

Looking ahead, a rise in privateconsumption nation-wide, will leadto an increase in purchasing powerfor both the inhabitants of Sibiu

County and the numerous tourists visiting the area. This might allowfor space for development of a newretail scheme in Sibiu.



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Scheme GLA (sq m)

Shopping City Sibiu

Dumbrava

80,000

4,000

Type Owner

Shopping Center

Shopping Center

ARGO Real Estate Opportunities Fund

Cometex SA Sibiu

FIGURE 9: SHOPPING CENTERS SIBIU

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"Shopping City Sibiu remains the dominant retail property in the prosperous county of Sibiu. With a GLA of 80,000 sq m, Shopping City Sibiuis the 3rd largest retail park in Romania in terms of size and tenant mix,holding two hypermarkets - Auchan and Carrefour, as well as Mobexpert, Leroy Merlin and Altex, Flanco, Decathlon, H&M, C&A as anchor stores.The park features a shopping centre which presents a well arranged blend

of strong international retailers and local outlets".

Argo Real Estate Opportunities Fund (AREOF)


Photo source: ARGO Capital Partner


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FIGURE 10: EXISTING RETAIL SCHEMES IN SIBIU



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CBRERazvan IorguManaging Directort: +40 21 313 10 20e: [email protected]

Manpower RomaniaIleana CiochinaRegional Managert: +40 256 309 481e: [email protected]

Contacts

Disclaimer: Information contained herein, including projections, has been obtained from sources believed to bereliable. While we do not doubt its accuracy, we have not veried it and make no guarantee, warranty or representation

about it. It is your responsibility to conrm independently its accuracy and completeness. This information is presentedexclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be repro-duced without prior written permission of CBRE.

Daniela GavrilResearch Analystt: +40 21 313 10 20e: [email protected]

Tudor MunteanResearch Analystt: +40 21 313 10 20e: [email protected]

Laura Dumea-BenczeHead of Researcht: +40 21 313 10 20e: [email protected]

Walter Wolfer

Senior DirectorHead of Retail CEE CBRE GmbHt: +43 1 533 40 80 97e: [email protected]

Joerg KreindlSenior DirectorHead of Industrial CEEt: +48 22 544 8006e: [email protected]

Gjis KlompHead of Investment Propertiest: +40 21 313 10 20e: [email protected]

CBRE Sibiu Real Estate Report A4 Bleed 5 Mic

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