Old but Valuable: Commercial Potential Brings Historic Buildings to Investors’ Attention

Old but valuable: commercial potential brings historic buildings to the attention of investors

Old buildings in ultra-central areas represent an excellent business for a certain category of investors who have enough patience and a generous budget at their disposal. In the Capital, the value of this niche has risen to 100 million euros over the last three years alone. According to the most recent Esop Consulting report, about a third of the buildings included on the list of historical monuments in Bucharest have commercial potential and are already renovated or undergoing renovation.

True architectural gems, buildings erected during interwar Bucharest have once again come to the attention of real estate investors. The number of buyers interested in such constructions located in ultra-central areas has risen significantly, specialists say, as they renovate them and introduce them into the commercial circuit. Renovation budgets for old properties have exceeded 100 million euros in the last three years alone.

„An ultra-central property with valuable architecture represents a medium and long-term investment that maintains its value over time, or there are quite high chances for the value of these properties to increase. Promoted at a market-adjusted rent, it will find clients at any time, whether from the office, retail, or hotel sectors, etc. As a trend, we have noticed that in the last two years, larger buildings of over 1,000 sqm have also been chosen as investments, requiring major renovation budgets and more complex works, but also generating generous leasable areas that can serve mixed purposes. Among ESOP’s current potential tenants interested in such buildings are embassies, cultural institutions, marketing and advertising companies, business consultancy, law firms, medical clinics, private educational institutions, as well as other types of companies operating in the professional or personal services field,” says Alexandru Petrescu, Managing Partner at ESOP Consulting / Corfac International.

Investors include groups specialized in real estate investments such as NEPI, Global Vision, Iberia, Hercesa, S+B Gruppe, but also companies or individuals who view this market as an investment option, such as the FF Group Romania company, which is inaugurating a renovated historic building this month.

In total, the stock of the 2,058 historic buildings on the list of historical monuments in Bucharest totals approximately 926,100 sqm, of which about a third, with a total area of 277,830 sqm, are renovated or undergoing renovation and have commercial potential, according to ESOP Consulting estimates.

Historic building located in the Magheru–Universitate area. The latest property of this kind to enter the market is that of the FF Group Romania group, located in the Magheru–Universitate area, with a total built area of 4,858 sqm and a leasable area of 2,160 sqm. The building has two elevators, 24-hour security, CCTV, BMS, a 4-pipe air conditioning system with fresh air intake, and its own heating plant. The interior spaces are bright, with a height of about 3 meters to the ceiling, specific to old villas.

Another investor of the same caliber is the S+B Gruppe group, which recently renovated a historic building on Magheru Boulevard with an investment of 20 million euros and transformed it into a mixed-use center of offices and commercial spaces called Magheru One. In total, Magheru One has a leasable area of 3,828 sqm, with a height regime of six floors + a recessed floor, and 80 underground parking spaces. The building has BMS (Building Management System), a generator for vital systems, four-pipe air conditioning with fresh air intake, two elevators, and voice-data cabling.

Another recently renovated property is that of Global Vision, which invested in a business center resulting from the renovation of an old building located in the ultra-central area at Universitate, with a total leasable area of 2,285 sqm, arranged over B+GF+4 floors+attic. The office spaces for rent here are modernly partitioned in an open-space format, and the building benefits from all 21st-century facilities—air conditioning via split units, Schindler elevator, voice-data cabling, a generator for vital systems, and 24-hour security. Offices with areas ranging between 182 sqm and 1,291 sqm can be rented here.

The NEPI project in the Piata Victoriei area is another large-scale one, with the complex called Aviatorilor 8 set to be delivered in the third quarter of this year, totaling 9.142 sqm, of which 8,400 sqm are office spaces. Aviatorilor 8 has an old interwar historic building, the Mihai Oromolu House, at its architectural center. The project, in which NEPI will invest 37 million euros, will also have an underground parking lot with 204 spaces.

A pioneer in this market was the Romanian investor Ion Lazar, who renovated the former Glucose Factory, a historical monument building in the North area, transforming it into office spaces as early as 20 years ago. The first tenant for the office spaces in the Caro Complex, resulting from the renovation, was the multinational company Unilever, which signed a contract with a duration of 15 years from that date. The complex has been expanded several times over time.

The Austrian investor Soravia inaugurated a large center in 2008, also resulting from the renovation of a historic building, with the leasable area reaching 11,000 sqm (retail on the ground floor and an aparthotel). In the 2013-2014 period, the aparthotel was also transformed into offices due to high demand in this segment.

The Spanish groups Iberia and Hercesa represented another stage in the development of this business, buying ultra-central historic buildings in the Cismigiu Park area, which they renovated and delivered as leasable spaces in 2012-2013. Hercesa renovated the former Cismigiu Hotel, built in 1912, with an investment of about 15 million euros and transformed it into a beautiful office complex totaling 10,000 sqm, where the main tenant is the Cervantes Institute. Iberia bought another old building, erected in 1929, in the same area. Following the renovation works, another office space complex resulted, inaugurated in 2011.

„From our experience, office spaces in historic buildings are mainly chosen by companies that use them as headquarters for business consultancy, law, advertising and marketing activities, personal services, or top-tier IT, cultural institutions, or luxury retail. Among the Esop tenants who have chosen historic villas are the British Council, the Embassy of Macedonia, Queisser Pharma, Dren Company, Lindner, and Pendulum Jobs. Asking rents for office spaces in renovated historic buildings vary between 12 and 18 euros/sqm/month. The higher the occupancy rate of the building, the more the rent increases, with small vacant spaces in such buildings being listed for rent at 20-30% more than at the date the renovated property was inaugurated,” conclude the Esop Consulting representatives.