Esop: Office rents slump to 2004 level, demand for space declines

Compared to 2008, demand for office space is down 15-20 percent from SMEs and around 25-30 percent from the corporate segment, large and multinational companies. Relocation budgets have shrunk accordingly, with companies now assigning EUR 1,800-6,000 for spaces of 100-500 sqm, according to the study. Larger companies are looking at spaces of 800-1,200 sqm within B and B+ class office buildings, with a rental budget of EUR 8-12 per sqm.
But while they claim to be aware of the crisis, only 40 percent of developers have enough understanding to have adjusted their offers to the current market conditions, say Esop consultants. “Many owners maintain their expectations for sale price margins, in the hope of better market conditions. In our opinion, on a new market when the consumer is more powerful, developers should take a more flexible approach when negotiating a transaction,” said Irina Petrescu, partner at Esop.
Owners with vacant spaces in their office buildings do not lower their asking price for four or five months, thereby losing the rent for that period. Some 60 percent of owners have just completed their projects and are renting for the first time, a segment which adapts more easily to the current market conditions.
Magda Purice