Mihaela Petruescu is Partner Asset Services at the real estate consulting company Cushman & Wakefield Echinox. This department manages retail, office and logistics projects with a leasable area of over 400,000 square meters in Bucharest and other cities. We wanted to better understand her perspective on the near future, on the changes we might face, on the future of work, investments and PropTech.
- Bigger surfaces are needed in order to be able to follow safety guidelines
- Communication and collaboration impact the way we move forward
- Romania remains attractive for retailers, but the rhythm in which new projects develop changes
- Agents, landlords and tenants need the solutions PropTech startups can offer in order to make better, faster and safer decisions
Changes for the office spaces tenants and landlords
A new context translates both into new challenges, as well as into new opportunities. Mihaela says that they have noticed a change of decisional rhythm, both for tenants and for landlords: ”Companies that were planning to relocate from an older building to a newer one or that had plans to move from a smaller place to a bigger one are now waiting to see what will happen. It is difficult to make assumptions for the medium and long term and management strategies might change really fast also, according to the authorities’ decisions and recommendations.”
Another thing that has changed is the attention that landlords and tenants pay to safety and to implementing the best safety measures.
“We are focused on creating a safe space for those who continue to work from their office in the buildings we manage. For example, we redesigned the layout of our headquarters, applying the international Cushman & Wakefield concept called 6-Feet Office. Thus, we have returned to work safely, since April 23rd. This returning involved some essential steps that we implemented and that we also recommend to our clients:
- Running an analysis among management teams by using surveys or focus groups in order to identify the business needs regarding work spaces
- Technical analysis of the office space and the common areas, as well as providing solutions for the landlord regarding the existent HVAC system, access, potential contamination areas, office space
- Optimization and social distancing solutions – creating a new layout plan, optimizing employee density, setting walking paths through the office, managing meeting rooms and working schedules, visitor policies, budgets
- Solutions for the cleaning and disinfecting company, training the staff in order to answer today’s needs, thus decreasing contamination risks
- Using services that will help implementing the measures approved by management”
On leasing and the future of work
Each company adopted the best strategy for themselves and their employees. There are companies that still choose to work from home, pushing their return to the office even until 2021, while others are slowly returning to their office spaces. Cushman & Wakefield Echinox research team has recently conducted a study called Back2Office on a sample of 33 companies with approx. 17.000 employees and 180.000 rentable sqm.
This research showed the followings regarding leasing and office space management:
- during the lockdown, 96% of the respondents worked from home;
- after the lockdown, 40% said that they wanted to return to their offices;
- 60% said that they wanted to continue working from home
- 30% of the companies need a smaller office space
- 61% are comfortable with the same leased surface
- 9% of the companies need a bigger space
“We think that a bigger surface is extremely necessary in order to be able to respect and implement the best safety measures. But the budgets have become more and more restrictive so one of the options, at least for the next 6 months, is an equal distribution between the employees who work from home and those working from the office.”
Another study, conducted by the company’s research team – „Homeworking during Covid-19 lockdown”, that Mihaela shared with us, showed that:
- After this pandemic, employees prefer to work from home 1,6 days/week and 3,4 days/week from the office
- 26% of the employees consider working from home satisfying, 34% consider it good and only 14% consider it unsatisfying. The main reasons are related to saving money and time and also to avoiding physical contact
“During this whole time there have been permanent discussions between landlords and tenants, addressing the tenants’ requests for discounts, cancellation or delays of monthly payments. What we have noticed is that each of these discussions has been analyzed individually, with a constant focus on the principle of partnership between tenants and companies.”
The impact on other real estate segments
Mihaela says that the most affected segment, during the pandemic, is the retail sector. “Malls were temporary closed, tens of thousands of shops couldn’t function and this has led to unemployment for a lot of people. Except some businesses that didn’t stop their activity (stores that mainly sell food, electronic devices, pharmacies and pet shops, cleaning companies and optical shops), over 9.000 stores were closed at a national level in Romania, which led to losses of 15-20 million EUR.
What we see at an international level, is the involvement of big retailers and established fashion houses to fight against the virus. Big groups such as LVMH and L’Oreal started producing disinfectants. H&M or Inditex got involved in producing medical equipment. These things also take place because the fashion and beauty retailers have huge unsold stocks. We’ve never faced a cancellation of fashion week events or the fall-winter collection launches and the market must now adapt to these changes.”
Mihaela thinks that in order to move forward, we need all the industry players, from banks to landlords, retailers and state institutions to communicate and collaborate. She gives the example of the Colosseum Commercial Center, a property under their management and talks about the most important aspects for them:
“Even if we talk about employees or clients, we focus on their safety. The interior spaces are constantly disinfected, using materials and following procedures that respect INSP recommendations. The number of people that enter this space is controlled, so that we can avoid overcrowding, we’ve also placed direction signs to offer people safety and protection information. We installed dispensers with disinfectant gel, soap and hand dryers for public use and it is mandatory to wear a mask and keep a minimum 2m distance from other people.
Also, we have permanently been in touch with Colosseum Commercial Center’s partners and with their online community, offering constantly real time information about the schedule, changes, closed shops or special offers.”
This was a winning strategy for Cushman & Wakefield Echinox, as Colosseum registered a constant number of clients during these months.
Regarding the logistic and industrial segment, Mihaela says that couriers, e-commerce or pharmaceutical companies actually developed in this period. “This trend will continue and the need for more spaces will grow, given that some e-commerce companies estimate that this way of buying online will represent 50% of the retail sales in Romania in the following year”.
Is Romania still attractive for retailers?
In October 2019, Mihaela said that Romania was attractive for retailers. And it continues to be, although the rhythm changed, with many projects and openings being delayed for the 3rd of 4th quarter of 2020 or even for 2021 – it’s the case, for example, for the expansion for Colosseum Mall, and the opening of Shopping Center Târgu Mureş, Damboviţa Mall or AFI Braşov.
“Regarding the office segment, construction sites are still active, but depending on the evolution of the pandemic, we might see delays.
After an unprecedented situation in the 2nd quarter, we expect the 3rd and 4th quarters to bring a significative comeback in the investments market, as capital and financing resources are still there. The office and industrial-logistic markets will be the most active real estate segments, while retail and hotel markets will still need some time to recover.”
How can Technology revolutionize Real-Estate?
The role of technology is undeniable. Mihaela thinks its impact will be felt in the Real Estate industry in Romania in the following years, as there are many processes to be improved. “Agents, tenants and landlords need a better tracking of real time information, in order to take decisions faster. For example, in an office building, the information concerning the available spaces for rent can reach agents immediately using technology, through a simple notification in a shared app with the landlord.
Also, I think that in the near future, 3D showcasing with various space planning options will be useful for tenants and landlords. This new context will force us to use technology more and more.
PropTech in Romania
There’s still room for growth, but we see new initiatives and the context is favorable. “PropTech was on a growing trend until the pandemic and I think it will continue to grow because there is need in the market. The new context favors implementing as many PropTech solutions as possible and the startups with the best ideas will find their implementation solutions almost by themselves. But I think landlords must also be more opened to innovation and technology.”
It seems that as long as Real Estate stakeholders not only take all the necessary safety measures, but also communicate and collaborate, adapting to the new context will be easier. Technology will surely play a great part in the future of Real Estate, offering better showcasing and interaction solutions for landlords, tenants and agents. It can help them grow, innovate, keep up. Mihaela also considers we should take into account an idea she recently read, which she finds extremely suitable for the real estate industry: “Technology is good, but not for thinking. We need analogue thinking and digital implementation.”