CBRE: IT&C companies lease over 100,000 sqm of office space in Bucharest in 2013

Almost 300,000 sqm of office spaces were leased last year in Bucharest, marking the highest volume of transactions ever recorded in the capital, according to CBRE.

Companies from IT&C were the most active players, leasing over 100,000 sqm. “IT&C tenants signed some of the biggest transactions ever recorded in Bucharest in 2013: the biggest renewal contract for a surface of 26,000 sqm for a lease length of 10 years, the biggest pre-lease for this year and several expansions for already present companies,” said CBRE representatives.

Renewals and renegotiations are expected to continue at a stable pace in 2014 also, however, the biggest change should come from pre-leasing, said Razvan Iorgu, managing director CBRE Romania. “With some large accounts already active since early start of the year, a number of pre-leases should be signed. With rents at close to the bottom-end, tenants can now get deals which will not be possible in the future. Our estimation is that at end of 2014, having in mind the estimated levels of new stock (124,000 sq m) and demand, the vacancy rate should go down from current 15.1 percent to under 13 percent,” he explained.

There are considerable differences in vacancy levels between the various sub-markets. The lowest level (under 10 percent) was reported in the west and central business district. At the other end of the spectrum, the north part of the city and Pipera sub-markets reached and even went beyond a 20 percent vacancy level. “It is worth mentioning that vacancy rate in the north sub-market has gone up, now comparable to the vacancy for Pipera area. These differences appear also by property type. In general, class A properties have a lower vacancy rate (10.7 percent) and thus less pressure to decrease headline and net effective rents. Class B properties, especially in non-metro areas, are confronted with less interest, more vacant space (17.8 percent) and a non-stable occupier demand, which is reflected in lower headline rents,” said CBRE representatives.

Prime headline rent remained stable over the past several quarters (EUR 18/sqm/month) and prime yield also stable at 8.25 percent. “Only in the presence of pre-leasing activity and limited amount of new stock we might see an increase of headline rent by maximum 2 – 2.25 percent by end of the year. Certain submarkets will continue to be a tenant’s market, translated into highly attractive financial packages,” they added.

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CBRE expects 124,000 sqm of new office space to be delivered in 2014 – out of which 70 percent “is built on a speculative basis”. Some of the projects that will be delivered there are Skanska’s Green Court Bucharest, AFI Park II and III by AFI Europe and Hermes BC by Atenor Group. Only three other projects are so far scheduled for 2015, totalling 31,000 sqm. Should pre-leasing activity go up, several other properties, already in plan, might start construction, said CBRE.

Simona Bazavan