{"id":4510,"date":"2010-06-09T05:49:29","date_gmt":"2010-06-09T03:49:29","guid":{"rendered":"http:\/\/http:\/\/www.iliaspapageorgiadis.ro\/en\/?p=4510"},"modified":"2015-01-26T20:16:45","modified_gmt":"2015-01-26T18:16:45","slug":"industrial-sector-stuck-in-the-slow-laneretail-developers-playing-a-high-stakes-game","status":"publish","type":"post","link":"http:\/\/www.iliaspapageorgiadis.ro\/english\/2010\/06\/09\/industrial-sector-stuck-in-the-slow-laneretail-developers-playing-a-high-stakes-game\/","title":{"rendered":"Industrial sector: Stuck in the slow lane. Retail developers playing a high stakes game"},"content":{"rendered":"<p style=\"text-align: center\">\n\t<strong>CEDER Conference: A must attend event for Real Estate professionals<\/strong>\n<\/p>\n<p style=\"text-align: center\">\n\t<strong>Part 2<\/strong>\n<\/p>\n<p style=\"text-align: center\">\n\t<strong>(to read part 1, click <a href=\"http:\/\/www.iliaspapageorgiadis.ro\/en\/2010\/06\/08\/romanian-real-estate-market-through-experts-quotes\/\" target=\"_blank\">here<\/a>)<\/strong>\n<\/p>\n<p style=\"text-align: justify\">\n\tI was not so sure whether i should attend this event or not. My programme was quite busy and a deal ready to be finalized. Plus, you know&#8230; we receive announcements for so many events, almost every week. But reading the list of panelists and knowing how serious and well informed are some of them, I thought that it should be pity to lose CEDER 2010 last Wednesday. And I was right, it worthed every minute of my time and every cent of the ticket i paid, in order to access the event.\n<\/p>\n<p style=\"text-align: justify\">\n\tJust about 80 &#8211; 100 people were there, plus noone was recording. The level of discussion was very high, straight to the point, speakers were quite relaxed and the discussions were excellent. It is rare to attend such discussions, with so many top experts gathered in a room. I decided to share with you the most important quotes that i collected. But I<!--more-->will not tell you the name of the person who stated each quote, respecting their privacy.\n<\/p>\n<p style=\"text-align: justify\">\n\t&quot;Industrial sector: Stuck in the slow lane&quot;<br \/>\n\tThe panel for this discussion was also very interesting, including several top market players. Their list:\n<\/p>\n<p>\n\t<a href=\"http:\/\/www.cijjournal.com\/ceder\/en\/speakers\/dumitrescu.html\">Vlad Dumitrescu<\/a> | <em>Development Manager<\/em> | Immoeast<br \/>\n\t<a href=\"http:\/\/www.cijjournal.com\/ceder\/en\/speakers\/maguire.html\">Craig Maguire<\/a> | <em>Managing Director Poland and Romania<\/em> | PointPark Properties<br \/>\n\t<a href=\"http:\/\/www.cijjournal.com\/ceder\/en\/speakers\/hanu.html\">Catalin Hanu <\/a>| <em>Business Development Manager<\/em> | CTP Invest<br \/>\n\t<a href=\"http:\/\/www.cijjournal.com\/ceder\/en\/speakers\/Badea.html\">Silviana Badea <\/a>| <em>Country Manager<\/em> | Valad<br \/>\n\t<a href=\"http:\/\/www.cijjournal.com\/ceder\/en\/speakers\/lokere.html\">Ivan Lokere<\/a> | <em>CEO<\/em> | Alinso Group<br \/>\n\t<a href=\"http:\/\/www.cijjournal.com\/ceder\/en\/speakers\/albarosa.html\">Umberto Albarosa<\/a> | <em>Director Real Estate<\/em> | Cefin<br \/>\n\tVictor Constantinescu | <em>Partner<\/em> | Biris Goran\n<\/p>\n<p style=\"text-align: justify\">\n\t<strong>The discussion&#039;s outcome was that the industrial segment will be the first one to rebound after the crisis. Today there is no developer willing to risk a development without preleases, but the available stock is considered not sufficient for the country&#039;s needs. <\/strong>\n<\/p>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;We don&#039;t have any prelease today and we can not develop without&quot;.\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;Vacancy expands from Arad, Timisoara area and the rest of west towards Bucharest&quot;.\n\t<\/li>\n<li>\n\t\t<span class=\"list\"><strong>&quot;Big occupiers (clients) are back in the table of negotiation after 12 &#8211; 15 months of silence&quot;.<\/strong><\/span>\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;We will follow the Polish way of reviving, 6-9 months after Poland&quot;.\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;We secured 3 preleases so far, this year we have a project of 6.000 sq.m. on A1&quot;.\n\t<\/li>\n<li>\n\t\t<span class=\"list\"><strong>&quot;The market was dead but it is not anymore&quot;.<\/strong><\/span>\n\t<\/li>\n<li>\n\t\t<span class=\"list\"><strong>&quot;Last year if I would ask someone &quot;how much space would you need over the next 3 years and how much is your budget for this&quot;, he didn&#039;t know what to reply. Now he does and this is a good start&quot;.<\/strong><\/span>\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;West side of Romania has high levels of vacancy&quot;.\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;The interests of developer &#8211; investor and tenant are opposite nowadays. This is why the negotiations last long&quot;.\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;The market moves only for &quot;build to suit&quot; solutions&quot;.\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;We bought in moments when the land was expensive. We can&#039;t afford renting with 2, 3 or 4 Euro \/ sq.m.&quot;.\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;We will build only &quot;build to suit&quot; projects, even if we have to wait 12, 18 or 24 months&quot;.\n\t<\/li>\n<li>\n\t\t<span class=\"list\"><strong>&quot; Many people don&#039;t want to go to buildings built back in the 70&#039;s, without any improvements or springlers, just because their price is 2 Euro \/ sq.m.&quot;<\/strong><\/span>\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;Minimum lease accepted by the banks is 7 years&quot;.\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;5 years lease is what we usually get and some companies don&#039;t accept more&quot;.\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;People are more conscious now. We need to take some risks in the business&quot;.\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;Vacancy in Cluj is almost zero&quot;.\n\t<\/li>\n<li>\n\t\t<span class=\"list\"><strong>&quot;After a period of silence everyone now is interested in returning to business&quot;.<\/strong><\/span>\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;Industrial Real Estate is only 3-4 years old, while all the other segments are older. It will double eventually, as there are needs to be covered&quot;.\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;There are many manufacturers who come with specific demands. 60% of demand comes from local manufacturing companies, not multinational ones&quot;.\n\t<\/li>\n<\/ul>\n<p class=\"list\" style=\"text-align: justify\">\n\t. <strong>&quot;Nobody can afford to lose a client. We have solutions even for small surfaces, we cut surfaces, etc&quot;.<\/strong>\n<\/p>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li>\n\t\t<span class=\"list\">&quot;Retailers were historically the second bigger tenants after industry&quot;.<\/span>\n\t<\/li>\n<\/ul>\n<p style=\"text-align: justify\">\n\t<strong>On the edge: Retail developers playing a high stakes game<\/strong><br \/>\n\tLast but not least, the retail segment. Many top market players, including the majority of the top developers in Romania. Their names:\n<\/p>\n<p style=\"text-align: justify\">\n\t<a href=\"http:\/\/www.cijjournal.com\/ceder\/en\/speakers\/klomp.html\">Gijs Klomp<\/a> | <em>Managing Director<\/em> | ING Real Estate\n<\/p>\n<p style=\"text-align: justify\">\n\tGraham Kilbane | <em>General Manager<\/em> | Omilos Group<br \/>\n\t<a href=\"http:\/\/www.cijjournal.com\/ceder\/en\/speakers\/ergen.html\">Ergun Ergen<\/a> | <em>CEO<\/em> | Baneasa Developments<br \/>\n\t<a href=\"http:\/\/www.cijjournal.com\/ceder\/en\/speakers\/seth.html\">Surinder Seth<\/a> | <em>Country Manager<\/em> | InvestKredit<br \/>\n\t<a href=\"http:\/\/www.cijjournal.com\/ceder\/en\/speakers\/savin.html\">Silviu Savin<\/a> | <em>Managing Partner<\/em> | Centerra Partners<br \/>\n\t<a href=\"http:\/\/www.cijjournal.com\/ceder\/en\/speakers\/nissen.html\">Ingo Nissen<\/a> | <em>Director, Development Romania<\/em> | Sonae Sierra<br \/>\n\tBlake Horsley | <em>Investment Manager<\/em> | Colliers International<br \/>\n\t<strong>Tal Roma<\/strong> | <em>Business Development Manager<\/em> | AFI Europe Romania\n<\/p>\n<p style=\"text-align: justify\">\n\t<strong>This was probably the most &quot;juicy&quot; of the discussions. Everyone agreed that there will be no new development without 50 &#8211; 60% preleases, while they also confirmed that everything happened too fast and there were plenty of bad products and inexperienced retailers.<\/strong>\n<\/p>\n<p style=\"text-align: justify\">\n\t<strong>The most important line of the whole event was stated by Mr Nissen, by Sonae Sierra: &quot;Building more shopping centers in one area doesn&#039;t mean that you add more consuming potential to the population, you probably just split the expected consumption in more pieces&quot;.<\/strong>\n<\/p>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;There used to be 120 projects before the crisis. Now just 6-7 are still ongoing&quot;.\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;The market is very difficult&quot;.\n\t<\/li>\n<li>\n\t\t<span class=\"list\"><strong>&quot;We just have 300 &#8211; 400 retailers, the options are few&quot;. <\/strong><\/span>\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;The market is still very young, just few years old&quot;\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;Things in the past had been out of control, the retailers had crazy expectations&quot;.\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li>\n\t\t<span class=\"list\"><strong>&quot;I am worried about the market over the following months. Salaries go down, taxes are getting higher, everything will get worse&quot;.<\/strong><\/span>\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;In one case the developer had only 30% preleases. That was back in 2008. Until today, he failed to find even 1 (one) supermarket&quot;.\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;Lots of retailers want to try in Bucharest first and then expand. But Bucharest is different comparing to other cities&quot;.\n\t<\/li>\n<li>\n\t\t<span class=\"list\"><strong>&quot;It is purely a tenants market. The tenants check everything and all costs very carefully&quot;. <\/strong><\/span>\n\t<\/li>\n<li>\n\t\t<span class=\"list\"><strong>&quot;You need 50 &#8211; 60% preleases in order to get financing&quot;.<\/strong><\/span>\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li>\n\t\t<span class=\"list\"><strong>Question: &quot; Would you start a project with 30% prelease?&quot;<\/strong><\/span>\n\t<\/li>\n<li>\n\t\t<span class=\"list\"><strong>Reply: &quot;No.<\/strong><\/span>\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li>\n\t\t<span class=\"list\"><strong>&quot;After the austerity measures were announced, retailers have dramatically changed their attitude and they re-calculate everything&quot;.<\/strong><\/span>\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;Small retailers face the risk of elimination&quot;.\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li>\n\t\t<span class=\"list\"><strong>&quot;We ask the retailers: what have YOU done in order to increase your sales? We see lots of people with 100.000 Euro. They borrowed another 100.000 Euro, leased a space and they felt they are &quot;retailers&quot;, sitting and waiting to cash in, doing nothing&quot;. <\/strong><\/span>\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;We came to Romania with high expectations, but we were proved wrong&quot;.\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;Romania gave us new experience. We had to deal with new problems. We never had to solve problems in an economy falling from a clif&quot;.\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;We assumed that the lease agreements are strong&quot;.\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;Retailers were just presuming that they will have sales&quot;.\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;There are few smart small retailers who look to expand, taking advantage of the opportunities&quot;.\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li>\n\t\t<span class=\"list\"><strong>&quot;Now negotiations start AFTER the LOI is signed&quot;(!)<\/strong><\/span>\n\t<\/li>\n<\/ul>\n<p class=\"list\" style=\"text-align: justify\">\n\t&nbsp;\n<\/p>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;Our clients went to Czech Republic and Poland. It is very difficult to sell to our clients the country now. Romania is considered risky&quot;.\n\t<\/li>\n<li>\n\t\t<strong><span class=\"list\">&quot;Romania depends only on foreign investors, they don&#039;t have strong domestic market&quot;.<\/span> <\/strong>\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;The crisis is more than 50% psychological&quot;.\n\t<\/li>\n<li>\n\t\t<span class=\"list\"><strong>&quot;In Romania commerce moves with cash. We don&#039;t have consumer credits. Once this will start, the market will improve too&quot;.<\/strong><\/span>\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li>\n\t\t<span class=\"list\"><strong>&quot;As long as you have a steady income that pays at least the interests you have, the bank does not press you to sell&quot;.<\/strong><\/span>\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;I saw banks which very reluctant in the past and they become very conscious now&quot;.\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li>\n\t\t<span class=\"list\"><strong>&quot;There might be 2 shopping centers crashing this year&quot;. <\/strong><\/span>\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;It&#039;s a complete lack of trust between developers and banks. It reminds me the crisis in England during the 90s&quot;.\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;In western Europe, my investment is protected by the law and the zoning approvals, which is good for investor, tenant, etc. Here things are slightly different and there were too many approvals, without any plan for the future&quot;.\n\t<\/li>\n<li class=\"list\">\n\t\t&quot;For the next 5-10 years we will not see many developments close to existing retail projects&quot;.\n\t<\/li>\n<li>\n\t\t<span class=\"list\"><strong>&quot;I never heard a retailer saying &quot;I have to choose between you and a high street, it&#039;s always between developments&quot;.<\/strong><\/span>\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;The market will shift from small stores to bigger ones&quot;.\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li class=\"list\">\n\t\t&quot;You have to be patient while developing and you should trust your beliefs&quot;.\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<\/ul>\n<p style=\"text-align: justify\">\n\t&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>CEDER Conference: A must attend event for Real Estate professionals Part 2 (to read part 1, click here) I was not so sure whether i should attend this event or not. My programme was quite busy and a deal ready to be finalized. Plus, you know&#8230; we receive announcements for so many events, almost every [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":59454,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[216,205,231,17,204,236],"tags":[],"_links":{"self":[{"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/posts\/4510"}],"collection":[{"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/comments?post=4510"}],"version-history":[{"count":0,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/posts\/4510\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/media\/59454"}],"wp:attachment":[{"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/media?parent=4510"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/categories?post=4510"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/tags?post=4510"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}