An additional 125,000-200,000 m2 will be delivered in 2014 and 2015, considering the announced office projects that are currently in the planning stages but have not started construction.Ending the descending trend of the past 3 years, new supply is showing signs of increase in the following years, as multiple well-known, experienced developers expressed their intentions to build in the Bucharest office market and several development projects have already been actively marketed and received approval from the local authorities.
In the first six months of 2012, 40,000 m2 of new spaces were added to the modern office stock, comprised in three projects delivered to the market, of which two are already fully let. Out of the total office space currently under construction, 85,000 m2 are represented by projects located in the Floreasca-Barbu Vacarescu area, where the absence of available space, combined with high interest from tenants, stimulated new development activity.
“As the first half of 2012 indicates, there will be significant movements in Bucharest’s office market in the next few years – especially in terms of renegotiations, relocations and consolidations. Adding-up to the new deliveries expected on the medium term, leases totalling more than 650,000 m2 will reach their termination date between 2013 and 2014. We anticipate that these expiring contracts will generate mostly renegotiations and relocations, while tenants with multiple office spaces will focus on consolidating their operations by moving into new buildings. Thus, as competition among building owners accentuates, price will not dictate the decision-making process anymore, but rather the right balance between financial terms, location, space efficiency and quality of the building, corporate image and tenant relationship”, states Viorel Opait, Corporate Services Director of Colliers International in Romania.
Asking rents remained stable in the first half of 2012. For pre-leasing transactions, rents were usually 15% less than the rent for an existing building in the same area. Pre-leases represented 40% of the 72,000 m2 representing the total occupational activity in H1 2012, following the ascending trend started in 2011 by banks and medical operators. The IT segment was the only sector to lease space in buildings to be delivered, while also registering for more than half of the total take-up (65.000 m2).
Several tenants vacated important office areas, thus raising the vacancy level, or made arrangements for future relocations. The relocation of several banks and large companies, such as Unicredit or Raiffeisen, vacated or plan to vacate important areas, thus impacting availability.