Where value meets convenience
According to the Global Office Fit Out Cost Guide 2024 report published by Cushman & Wakefield, the costs of fitting out generation 1 offices in Latin America range from $60 to $130 /m², while in the United States, they range from $130 to $225 /m². The most significant cost categories include electrical systems (approximately 22%) and mechanical systems, fire protection, and water & sewage networks (18%). Compared to the pre-pandemic period, these costs have increased by more than 30%. At Zity, we are in the process of converting a 1000 square meter office space into smaller, 2nd generation offices. The estimated costs amount to approx. $97/m², positioning them near the lower end of the cost spectrum for 1st generation offices in the Americas. The works are being carried out internally, a decision that facilitates cost savings. The ultimate objective is to create smaller offices with amenities equivalent to those of a 1st generation office, but at the rental cost of a 2nd generation office. Our solution is scalable, ensuring a modern and productive work environment, adapted to a constantly evolving economic climate, and motivating us to continuously adapt as well.
We expect to end 2024 with an annual increase of our business in the low double digits. This is a significant evolution of our income generating operations, given the context. Operating on the same footprint of the leasable area portfolio, we earned improved revenues due to growing businesses of our commercial anchors and adjustments of rents in our office business. Do we have margin for improving? Definitely. We see tangible potential in upgrading our modern office stock and continue to supply the market with best-in-class value, albeit our market is class B office premises. On a lesser tangible level, we continue to search for our next big partner that will associate with us in delivering the next big retail project, for which we conserve our best location and amenities. This is a pipeline for the next 2 years. There is also our cornerstone ambition to finally reengineer our complex starting with former Zorile building, going back to its architectural roots, elevating it to a symbol building while upgrading it with all necessary technical features. That should unlock its full commercial potential for the next decades.
Zity Office is making a significant step toward sustainability by launching the LEED (Leadership in Energy and Environmental Design) certification process — a globally recognized standard developed by the U.S. Green Building Council for evaluating building performance and efficiency. The LEED certification reflects the Owner`s strong commitment to creating a responsible built environment. The evaluation is based on a range of criteria, including reduced energy and water consumption, use of durable and recyclable materials, improved indoor air quality, natural lighting, and access to sustainable transport solutions. The certification process will be implemented in phases, in collaboration with international specialists in the field. It will include a series of optimizations and technical analyses designed to align Zity Office with internationally recognized sustainability benchmarks.
Traffic to our properties stabilized at 2,2 million visitors in 2024. It remained flat against 2024, taking into consideration that some of the upgrades we made to our properties February last year prevented visitors from accessing some of their favorite stores in the complex. We are cautious about 2025 in terms of drawing substantially more shoppers to Zity as we do not see sufficient macroeconomic prerequisites for substantially improved purchasing power. Inflationist pressure remaining high, Moldova only targets around 3% of economic growth in 2025. We reckon the international interest around the settling of the military conflict in the region will incentivize economic optimism and persuade Moldovans to shop more confidently, including returning to the emotional shopping as well. What could function well is partnering with new retailers, preferably new to our country even. We might have something in the pipeline for this year and look forward to convince future international businesses of our utmost interest to develop mutually long-term-profitable partnerships.
After a long process that started in 2023, we are happy to deliver our upgraded entertainment venues, namely Zity Entertainment Park and Zity Playground. Originating in a conceptually ”age-dependent” bifurcation, we have ended in accepting that entertainment has no age prescription and should be involving, diverse and even challenging. Both our concepts revolve around the desire to inspire offline activities mostly. Still, technology is in the veins of our kids more than we would like. As of today, our partners for both the projects, i.e. Walltopia, Kompan, ImSim, Hologate and MagicPlay, provide offline and electronic entertainment facilities in our projects. This makes us extremely proud as we want our clints to the acquire the most elevated and the safest entertainment experience in town. We look forward to play with you.
