URBAN POLICY PAPERS URBAN PLANNING SERIES #1 From industrial Pipera 2020 (Photo credit: Ionuț Moldovianu) platforms to business districts DEVELOPMENT OF A NEW URBAN SUB-POLE: Most cities in Romania had a strong industrial component since the 1950s and continued until the 1990s. In Challenges in achieving the new context after the fall of communism and the transition to the sustainable development capitalist system, these industries became bankrupt and the former The Pipera Case industrial districts became huge empty The Pipera case offers an example of the potential mixed fortunes spaces in the late 1990s. Abandoned platforms, without people, without of large scale re-developments (in this case only kilometers utility and without the chance of apart in Pipera North and South) and can serve as case study to revitalization. extract lessons for officials and city leaders when planning and implementing such projects. The shift to the new market and service economy system has created a significant demand for adequate office space and an opportunity for revitalization of brown fields areas. Bucharest, especially the Pipera area, started the conversion of industrial platforms into new buildings to meet the demands of hundreds of corporations that have opened offices in Romania. Almost 20 years after this start, Iasi, Cluj, Brasov, and dozens of other cities Pipera in the 1920s (Photo credit: Romanian National Aviation Museum) are still in the conversion phase of the former industrial platforms or filling in the empty fields in peri-urban areas. The collaboration between the local authorities, While redevelopment comes with investors and the inhabitants of the targeted areas many benefits there is also a risk of is essential for the transformation of these areas negative consequences in the fields of economics, health, and urban planning. into sustainable urban poles. URBAN POLICY PAPERS URBAN PLANNING SERIES #1 URBAN POLICY PAPERS URBAN PLANNING SERIES #1 PIPERA - new business district with 850,000 sqm PIPERA NORTH ~10,000 employees ~5,000 vacant workstations LEGEND 1 I PRIVATE REAL ESTATE DEVELOPMENT New building in PIPERA Located in the north of Bucharest, until the 2000s, the Pipera area was known as the Pipera Industrial Platform, NORTH located near the metro station of the same name. A short history of the real estate evolution in the area shows the spectacular growth, but also the main obstacles. 2005 2008 2011 2020 Building 1990-2000 - factories 2005-2009 - office spaces the vacancy rate increases high resilience and opens which filed for insolvency are privatized, some are put to use in new from 1% to 20%. Pipera North another 205,000 sqm of transformed, but most buildings in Pipera South has 50% vacancies and office space New building demolished. (303,000 sqm) and Pipera many real estate projects go 2019 - Pipera South rental in PIPERA North (186,000 sqm) bankrupt with losses of tens 2000-2005 - foreign rate 90% (12-13 euro/sqm) SOUTH of millions of euros and domestic investors 2008 - the economic crisis and Pipera North 63% (8-9 ~50,000 employees massively buy plots of land drastically reduces the 2010-2020 - Pipera South euro/sqm), where access is PIPERA SOUTH ~4,000 vacant workstations in Pipera South and North demand for office space: (near the subway) has a much more difficult. *Data provided by Cushman & Wakefield Echinox MODERN OFFICE STOCK EVOLUTION IN PIPERA NORTH AND PIPERA SOUTH OFFICE 600,000 PITFALLS AND SOCIO-ECONOMIC CONSEQUENCES 500,000 PIPERA NORTH Public health: intense pollution Ionut Ciurea, executive 400,000 director of the Existing Stock 65,000 people move daily from different parts of Bucharest to the Pipera area. Extremely crowded traffic causes very high emissions of hazards, endangering, with long-term Proinfrastructure 300,000 New Supply implications, the health of the population working and living in the area. Association, further 200,000 Unrealized potential of the private and state sector points out that there PIPERA SOUTH In Pipera North, where access is even more difficult due to the lack of adequate is a great risk that the Existing Stock infrastructure for the scale of the real estate project, the economic losses are entire area will suffer 100,000 New Supply substantial. The occupancy rate of office space is on average 63%, with finished from further gridlock buildings that have not been put into use even for a day. Other real estate projects 0 have declared bankruptcy, with creditor banks recording losses of tens of millions and congestion in years 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 of euros. The low occupancy rates and the lack of economic activity also have an to come - effect on the local administration, which loses an important source of income from the related taxes and duties. “We must plan 2 I LOCAL ADMINISTRATION Eroding the confidence of citizens and the private sector in the (…) not to risk a From an administrative point of • Lagging infrastructure investment capacity of the administration complete suffocation view, the entire Pipera area spans The private sector construction of new buildings at a very fast pace was not supported The time lost in traffic every day, 1 hour / way, lack of infrastructure elements (sidewalks, of road traffic in 7-10 across three administrative areas: by enabling economic infrastructure investments of the same magnitude and speed. bike paths, green squares), daily congestion in public transport, which causes a lot of the City Hall of Sector 2, the City Over the years, there has been well documented public criticism of this investment lag stress and frustration to over 65,000 employees, deeply erode citizens’ confidence in years“. Hall of Bucharest and the City and that the local administrations did not included the citizens’ views in a coherent the capacity of the administration. This trust is absolutely necessary in the case of a Source: www.libertatea.ro Hall of Voluntari. vision of development. Many planned large scale infrastructure investments (e.g. new democratic state and is necessary for the legitimation and support of future projects. metro station) has also not moved beyond plans into implementation. • Lack of shared vision and medium to long term development plan Economic development and the creation of tens of thousands of jobs, without being supported by a common vision and a strong partnership between the administration and real estate developers, has resulted in what now seems like unsustainable development. “If the evolution in Pipera had been normal and the planning of the infrastructure had been respected, it probably would not have experienced the difficult moments it is experiencing now.” Gheorghe Patrascu, chief architect of the Capital (2008-2016). Ionut Ciurea, executive director of the Proinfrastructure Association, further points out that there is a great risk that the entire area will suffer from further gridlock and congestion in years to come - “We must plan (…) Average speed not to risk a complete suffocation of road traffic in 7-10 years”. These local governments 13 km/h have different visions • Poor partnerships – between public and public (3 administrations) Photo credit: Octav Dragan for the World Bank Photo credit: Mihai Petre and public and private and priorities and very Over the lifetime of the development of the area collaboration between authorities At the level of the private sector, this trust in the administration is also a different resources and have not been systematically integrated, characterized by ad-hoc discussions and necessary element for the development of future projects and not to invest its once-off solution finding efforts. The absence of the design and development of a commitments. coherent infrastructure approach to the entire Pipera area is evident today. capital in other areas. Programul Operațional Capacitate Administrativă E U RO P E A N U N IO N Competența face diferența! The lack of public space leads to a lack of community development. The platform with office space in Pipera did not create a sustainable “small town” for people, but rather a sterile social space that strictly serves the economic function. In the absence of an urban development strategy that incorporates small infrastructure elements (sidewalks, pedestrian alleys, gardens and squares), the district offers a low quality of social life. “In Pipera South there is chaos and in no case can we talk about public space. Quality street furniture and green spaces are very important. You have to allow people to “consume” the space, not just go through it.” - Diana Culescu, president of the Landscape Association. Source: www.libertatea.ro At the public debates on the urban planning, various NGOs and groups of citizens emphasized on many occasions that throughout the period 2002-2020 there was no intention from the local administration to establish conditions necessary for a balanced development: density limitation, diversification of functions, imposing conditions on the creation of public green spaces, endowment of the area with public functions - schools, kindergartens, cultural spaces. Thus, the opportunity for management of diversified development and of the newly built space adequate to the Photo credit: Ed Yourdon, licensed under CC BY 2.0 community development with a high level of quality of life was missed. CAUTIONARY TALE Producing 3.5 billion euros annually, and totaling more RECOMMENDATIONS: than 65,000 employees, Pipera is Romania’s largest and most productive business district. From the former factory • Local government has an important role to play ruins to the modern glass and steel blocks, Pipera could in initiating and mediating real debate around be considered a very successful economic model. But the the re-development of industrial complexes; lack of partnership between the authorities and real estate developers, a common vision and an integrated development • Inclusion of both citizen views and private plan, based on the development of infrastructure and social sector partners are crucial to ensure an and human needs, turned Pipera into a “cautionary tale”. appropriate mixed-use urban fabric, with Cluj, Iasi, Brasov, Timisoara and other cities in Romania public service facilities, are achieved; are still in the phase of transforming the former industrial • Long term infrastructure planning could platforms into business districts. Of course, the local context stimulate private property development. If may differ from city to city, and so the solutions may be these plans do not materialize, trust is eroded, varied, but the basic principles outlined above are essential for sustainable development and avoiding collapsing “under and negative urban outcomes can result. its own weight.” This note is produced by the World Bank under a Reimbursable Advisory Services (RAS) engagement with the Ministry of Public Works, Development and Administration for the Romania Urban Policy. The objective of the RAS is to put in place a clear urban policy, in line with the next EU financing ROMANIA period, and create a platform of dialogue on urban development issues for relevant stakeholders. URBAN POLICY For further information, please visit mlpda.ro. Ministerul Lucrărilor Publice, Dezvoltării Și Administrației