Business Services Centres (BSCs) continue to be one of the leading sources of FDI and one of the biggest employment sectors in the CEE region
In the first half of 2021, tenants leased over 1.1 million m2 of modern office space across the capitals of the 15 CEE countries. The highest level of activity was recorded in Warsaw (249,300 m2), followed by Prague and Budapest. The Business Services Sector continues to generate a great deal of demand and occupier activity and is one of the largest employment sectors in the region according to the “ExCEEding Borders - Office Markets & Business Services in CEE-15” report just released by Colliers.
The total modern office stock in the 15 CEE capital city markets reached over 29 mln m2 at the end of H1 2021. New office supply in these markets during the first half of 2021 totalled just over 640,000 m2, with a further 2.2 million m2 currently under active development and due for delivery over the next 2-3 years.
Eriks Bergmans, Head of Agency at Colliers Latvia: “BSC has also got a remarkable share in a pie of modern office space in Latvia. Recently, we saw the opening of Swisscom office that has plans to grow substantially over the next couple of years. We also saw some newcomers, like TheSoul Publishing un Norwegian Air Resources Latvia, that have chosen highest quality offices in Riga as their new location. Office work has changed enormously in general over the last 18 months and it will never be the same as it became detached from physical location. However companies realised they need to create common platform – a physical place for meeting colleagues, socialising and more effective brainstorming. We see that larger offices rethink the usage of the space, creating more spacious areas for common work, recreation and socialisation, with less working desks for individual work and actively implementing clean/hot desk policies. Thus, the office spaces have not become smaller, the space has changed its focus and shape. ”
Kevin Turpin, Regional Director of Research for CEE at Colliers explains: “As a result of recent disruptions related to the pandemic, the biggest office markets in CEE in 2020 saw a YoY declines of up to -30% on average in demand. The first half of 2021 has seen similarly subdued results, however, some markets, including Warsaw, have started to see green shoots of recovery.
It is important to highlight that a great deal of demand, or occupier activity, across the CEE markets comes from the modern business services sector which is among the largest office occupier groups occupying ca 35% of the 15 CEE capital city modern office market stock. The spread of these BSS centres however is of course much wider than the capital city markets, particularly in the regional markets of Poland, Czech Republic and Romania.”
For many countries in the region, business services have become one of the leading sources of FDI and one of the biggest employment sectors, now estimated to employ well in excess of
1 million people in the markets covered in this report. Although the double-digit annual employment growth in the sector in many countries has reportedly slowed in recent times to mid and high single digits, the CEE region is still attracting new investment and seeing the expansion of existing centres. This success, which is set to continue for many years to come, is largely thanks to the regions labour pool of well-educated and highly talented people with a very broad range of language skills.
1. In this report we focus on the CEE-15 countries: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Montenegro, Poland, Romania, Slovakia, Slovenia and Ukraine