When Business Parks Work in Tier 2 Cities: Romania and Elsewhere RCI IT Conference Zagreb, Croatia May 2006 John Mennel USAID Enterprise Development & Strengthening Project Booz Allen Hamilton

2 Romanian System of Business Parks Romanian Business Parks  Approximately 15 business parks, industrial parks and incubators in Tier 2 and 3 cities  Decentralized local management  Very wide range of services and models  Difference in success rates –Top 3 parks have created 6000 jobs and $400M in direct investment –Many of the bottom ten are not entirely active or operational Timisoara Cluj-Napoca Brasov Iasi Bucharest Arad Ploesti Sibiu Constanta Tg Mures Craiova Bacau

3 Why do entrepreneurs locate in business parks?  Unique Property Value –Cost and type of facilities –Availability and Lack of encumbrances  Unique Infrastructure –Telecomms and Power –Shared facilities and other services  Positive Cluster Effects –Services providers and peer companies –Education and training  Tax or Other Incentives –Subsidized rent, power and telecomms –Tax incentives Facilities will only be a small part of the company creation decision

4 Why do entrepreneurs locate in business parks? Tetarom Cluj-Napoca  Light industrial and office space use  Three phases of over 120 hectares  Land concessions for €1.5/m2/year  Over 40 tenants including Emerson Electronics, Ruwel  Unique Property Value  Unique Infrastructure  Positive Cluster Effects  Tax or Other Incentives

5 Why do entrepreneurs locate in business parks? Technopolis Iasi  Significant shared space for meeting rooms, etc. Universities own part of space  Space rental for €8/m2/year; land negotiable  Adjacent to planned exhibition space  Largest tenant is Siemens VDO  Unique Property Value  Unique Infrastructure  Positive Cluster Effects  Tax or Other Incentives

6 Why do entrepreneurs locate in business parks? Knowledge Oasis Muscat  Two technical colleges  Incubator  Below market rents  Subsidized electricity and telecommunications  Unique Property Value  Unique Infrastructure  Positive Cluster Effects  Tax or Other Incentives

7 Success Factors  Predictability and transparency of process  Facilities appropriate for initial anchor tenants  Low upfront cost  Provide appropriate city services  Park management with proper incentives  Park is only as attractive as the city

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