Office take-up increases by 38 pct in 2014, says DTZ Echinox

The total leasing activity involving office space in Bucharest stood at 298,000 sqm in 2014, out of which take-up was of 221,000 sqm, according to data from real estate services firm DTZ Echinox. The take-up was up by 38 percent y-o-y an reported the highest level since 2008, according to the same source.

Out of this, new demand represented more than half. The new demand – meaning expansions, relocations from old stock to class A & B office space, existing tenants opening new operations or new companies entering the market was up by 60 percent compared with 2013, according to DTZ Echinox data.

“Considering that Bucharest is the most developed office market in Romania and that given the overall occupancy costs and workforce productivity it continues to be an attractive destination in the CEE region, we estimate that new demand will represent an important share of the total leasing activity this year as well,” said Madalina Cojocaru, head of the office department at DTZ Echinox.

The new demand structure reveals that relocations within the modern office stock amounted to 108,000 sqm (with pre-leases representing 61 percent), relocations from old stock to class A&B office space represented 40,000 sqm, while the volume of expansions and new entries was of 74,000 sqm.

Most of the take-up was registered in the Central North submarket – 46 percent, followed by Pipera South – 24 percent and West – 13 percent. Compared with 2013, renewals and renegotiations dropped by 23 percent.

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Pre-leases represented the largest transactions by size in 2014. “Considering that a significant pre-lease transaction has been registered every quarter last year, 2014 becomes a reference year in terms of pre-lease activity,” said DTZ Echinox representatives.

Source: DTZ Echinox

Bucharest’s modern office stock stood at 2.16 million sqm at the end 2014. Twelve office buildings totaling 117,000 sqm were delivered last year. This was up by 6 percent y-o-y. This year’s new supply is expcted to be up by 30 percent, according to DTZ Echinox.

The report also reveals that between Q1 – Q4 2014, Bucharest’s average vacancy rate for class A & B office space dropped from 16.7 percent to 13.3 percent. The lowest levels was reported in CBD (central business district), followed by West and Pipera South (Dimitrie Pompeiu area).

The prime headline rent has remained “stable throughout the first three quarters of 2014. A slight increase of EUR 0.5 was recorded in Q4”. The prime headline rent at the end of last year was EUR 18.5 /sqm/month, however, “net effective rents continue to be lower by 10 – 20 percent”.

Simona Bazavan