What would the world – and our day to day lives look like – without logistics? Even when faced with challenges of all sorts, this field is yet to tell its story, with innovative approaches and ambitious growth plans. Experts simply know that the potential is there. We are about to learn from Dana Bordei, Commercial Country Manager for VGP Romania, part of VGP, the European provider of high-quality logistics and semi-industrial real estate, about the local market challenges for this year and the ones to come and how far ahead the 5.0 era actually is (or isn’t).

How the company’s main financial indicators look like in the first half of 2022 and what are the main factors that support the business?

Although a complicated year in terms of political and economic stability, VGP’s committed lease portfolio grew by nearly 10% during the first 6 months. VGP Group is also expanding its European footprint in new European countries and its presence in the already developed ones. Within the Romanian market, major drive for further growth comes from regional distribution centres that are being established for FMCG, automotive and fashion industry. For VGP 20% of the local growth comes from already existing clients that expand their operations in our portfolio.

What is the forecast for the whole year, compared to 2021?

With a strong rental and asset growth, VGP anticipated to deliver +1 mio m² in 2022 and for its recurring rental income to grow to 280 mio Euro.

What are the current important trends in this market today? What are the factors that significantly influence the dynamics of negotiations with potential tenants?

Putting the geo-political issues aside for a moment, we see very supportive trends and profound changes in the market, such as the last mile logistics that continues to record a positive trend, boosted by growing elements such as e-commerce and technological innovation, as well as the establishment of manufacturing companies in strategically positioned areas. With VGP, we are continuing the investment strategy by offering high-quality, strategically located, tailor-made logistics and semi-industrial parks to meet the needs of our customers and potential tenants, these being the core factors that make potential tenants look for us.

Last year you announced the acceleration of the expansion on the Romanian market by launching the construction of new buildings in the industrial parks in Arad, Brașov and North Bucharest. What projects do you have in progress and what area of logistics and semi-industrial spaces are currently managed?

Our land bank remains one of our strongest assets and we are pleased that we have been able to increase the size by securing additional strategically located sites across Romania. We are proud to expand our offer with prime locations, a team of professionals, and high standards of energy efficiency and sustainability. We have consistent projects in progress, in some big

cities. In Arad, this year we finalized the first building, which is already rented over 70%. Now we have 5 tenants with logistics and courier activities present here. The existing park in Timisoara is 100% occupied and the company bought land for further development of the existing park near the airport. In Brasov, a second building from the park was finalised this year and we have already started the construction works for a third building of approximately 17,000 square meters, which we expect to be completed at the beginning of next year, where only 5,000 square meters are available for potential customers. In Bucharest, at the exit from A3 highway to Bucharest Ring Road we are building a new park for which we improved the infrastructure in the area by building a roundabout that gives us direct access in our park and will organize the reception for the first building in October 2022 and we are already starting construction for a second building, of approximately 14,000 square meters, that is scheduled to be delivered in Q1 2023 and which is 100% rented. In Sibiu, we have signed 5-year contracts for two very interesting new projects, in our already existing building, about which we will announce details soon.

What are the short and medium term development plans of VGP in Romania?

We look to solidify the tenant base of our existing parks and will look further to new locations that might fit our strategy and also for any built to suit requests depending on the industry for which these developments are needed.

The VGP Group committed to a number of sustainable development goals for the coming years. What are the results of implementing this strategy at the local level?

Sustainability is one of our core values and in the last years, despite the challenging environment, VGP advanced in critical areas such as climate change mitigation, sustainable building, and circular materials. Use of the state-of-the-art technology and energy efficiency are central parameters for the commercial properties developed by VGP. We are committed to reduce the net relative carbon emissions of our portfolio with 55% by 2030 and targets the level of BREEAM Excellent or equivalent for the sustainable certification of new builds. The Group remains committed to achieving carbon neutrality by 2025 for its own operations, supported by a Virtual Power Purchase Agreement for its pan-European offices powered by 100% solar energy generated on our own roofs since January 1st 2022.

The social environment represents an important pillar of our sustainability efforts. The Group aims to come together with its communities and stakeholders, building on each other’s strengths to create shared value. The VGP Foundation, established in 2019, is engaged in conserving biodiversity, unlocking opportunities for underserved communities, and preserving European cultural heritage. The foundation has already identified 29 projects that address social issues, nature conservation and the protection of cultural assets, and has received over €12 million in funding from VGP to date. VGP continues to engage in building an inclusive workplace that embraces diversity of our people.

How do we achieve all these objectives in Romania? New buildings bearing the VGP signature are certified by the BREEAM or DGNB assessment method, with target Excellent or Gold classification. If a client wants a higher certification, the company’s team can develop a plan of action in this regard. In addition, the roof of the buildings is equipped with solar panels, in order to produce green energy. Upon request, we are ready to provide for our clients:

– a comprehensive green roof concept during the project’s early stages (either hydroseeding or a vegetation strips system), including all building adaptations required for this purpose: structural, roof dewatering systems, etc. The green roof systems are placed on a waterproofing membrane and provide several benefits, such as: reducing the building’s energy consumption, contributing to water retention, and protecting roof elements against severe temperature fluctuations and ultraviolet radiation;

– a green façade wall concept can be offered in the project’s early stages that includes all required building

adaptations. Modular, flexible systems providing various configurations can be considered. The green façade systems provide several benefits, such as: reducing the building’s energy consumption and protecting the façade elements against severe temperature fluctuations and ultraviolet radiation;

– a photovoltaic panels installation that is dimensioned as per the tenant’s energy consumption needs;

– electrical vehicle charging stations for cars and trucks can be provided, adapted to the tenant’s requirements.

I should add that the group has a policy to use timber from certified, sustainably managed forests with FSC or PEFCT certification in development projects. Several pilot projects are underway to plan additional circular building materials concepts.

Interview by Ioan Dornescu

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