A company looking for 4,000 sqm to lease in Bucharest would have a very hard time finding it, as there are only a few buildings that could suit their needs, according to officials from real estate consultant JLL.
“Part of the office projects that were announced for delivery in 2019 have been delayed, and the completion dates pushed towards 2020 or even 2022. The low vacancy rate of 8 percent shows that office space is hard to find. Even though the market is doing well from the point of view of employment, things have stagnated due to delays in authorizations, with the whole process of acquiring and preparing land,” says Marius Scuta, head of office department & tenant representation within JLL.
IT companies and co-working operators will remain the biggest players on the local market in 2019, but they will also have a hard time to find spaces with large surfaces.
In this context, the development of two new office areas is expected: one in the Expozitiei – Casa Presei area, opened by Portland Trust and George Copos, and one in Timpuri Noi, an area operated by Vastint.
But there is a problem. The Expozitiei Boulevard area depends on the construction of the subway line to Otopeni Airport, which would pass through it.
Many developers have bet on the new subway line to Otopeni, but Romanian authorities have not made it clear whether the plans to build it would go forward or not, as they have found an easier and less costly rail-based alternative to take passengers to the airport. Investors have found land available in the Expozitiei-Casa Presei area and bought plots for offices, but also for housing.
“Of course, everyone is betting on the subway, but we know that the focus has diminished, so it will not be ready by 2020. Where there’s already a subway line it’s easier, but where there isn’t and it’s just an expectation, it’s just a bet, which can work out or not – we will have to see three, four, five years from now,” says Marius Scuta.
Among the buildings to be developed in this area are Ana Tower, built by businessman George Copos, Expo Business Park, developed by Portland Trust, GTC’s Rose City or Atenor offices, while Impact is building over 600 apartments. The announced investments exceed EUR 300 million.
The office market in figures
- Modern warehouse with more than 2.64 million sqm of offices, of which over 58 percent are Class A buildings;
- New spaces delivered in the first nine months of 2018: 110,000 sqm, up 6 percent over the same period last year;
- Another 60,000 sqm will be delivered this year; 400,000 office squares will be delivered next year;
- Demand declined by 18 percent in the first nine months of this year, to 210,000 sqm;
- Average vacancy rate in Bucharest: 8.3 percent;
- Highest rent: 18.5 euro/sqm/month.