Bucharest, 18th of February 2014 – The healthy demand on the Bucharest office market, totaling 70,000 m2 in 2013 (30% of the total leasing activity), is set to increase in the following years, highlighting the continuous development of companies active on the local market – according to The Bucharest Office Market X-Ray, a comprehensive study recently published by Colliers International Romania.
Mature markets are characterized by a small proportion of expansions and new entries in the total leasing activity, whereas relocations and renegotiations tend to have a bigger weight. In emerging markets such as Bucharest, however, an increased share of new entries and expansions is considered to be healthy, given the fact that this type of lease transactions are responsible for the absorption of current stock and leads the way for future developments. The healthy demand acts as the barometer of the current state of the local economy, its ascending trend being directly correlated to new companies entering the local market and increased activity of companies that decide to expand their current office premises.
”Bucharest’s office market is finally settling into young adulthood, after a few years of struggling to get back on track. We have witnessed it rise and fall much like a teenager would, and now we are watching it slowly mature, towards stability and sustainable growth. This however does not mean that we can no longer be surprised by the weak demands of a market which is constantly growing”, states Daniela Popescu, Head of Research within Colliers International Romania.
The total activity on the Bucharest office market stood at 195,000 m2 on average in the last four years, according to the study. 2013 surpassed the analyzed period’s average by 20%, recording 250,000 m2 in the transactions closed. The net take-up, consisting of all the leasing transactions reducing the vacancy rate (expansions, relocations from non-competitive stock and new entries), had a share of 54% in the total leasing activity in the period comprised between 2010-2013. However, this percentage varied between 40% (2013) and 65% (2010) during the analyzed period.
Expansions and new entries alone, the main sources of the healthy demand, added between 40,000 and 70,000 m2 of GLA to the total transactional volumes yearly. This is translated into an average yearly share of 30% in the total demand.
The IT & C segment was the main driver of the healthy demand recorded on the office market (42% of the total expansions). The companies active in this sector targeted areas such as Dimitrie Pompeiu, Victoriei and Barbu Vacarescu – Floreasca.
Another 14% of the total expansions on the market came from the financial sector. One of the fastest growing sectors before the financial crisis, this segment saw an increase in the occupied spaces in 2010 but it remained subdued in the last three years.
The Energy & Industrial sector was continuously growing in the last four years, reaching 8,000 m2 in expansion transactions in 2013.
Dimitrie Pompeiu, Victoriei and Floreasca – Barbu Vacarescu were the top 3 most targeted locations in the last four years by companies that either extended their occupied spaces or set their first office on the local market.
“As the question regarding the difference between a healthy demand on the office market and the total activity pops out very often in discussions with our clients, it is essential to underline the positive evolution of new entries and expansions on the office market. Provided that the economic environment will strengthen in the following years, we expect an increase in the total activity to be generated by companies that either expand their occupied spaces or start their operations in Bucharest”, states Oana Sîrbu, Associate in the Office Agency team of Colliers International.