The massive entry of Central and Western European developers on the local market has had an impact on technical specifications as well as design for office buildings and will put pressure on local developers to improve their standards, according to Charles Krick, associate director for Jones Lang LaSalle in Romania.
The local office market, now landlord-friendly due to the very high take-up comparable to the level of Prague and Budapest, will become more tenant-friendly in a few years, JLL representatives say.
On the office market demand continues to exceed supply. Vacancy rates are lower than 2 percent – the average for Bucharest – while rents are among the lowest in the CEE region, between EUR 20 and 22 per sqm, per month.
Office stock is expected to exceed demand in 2008 or 2009, but the bureaucracy, high prices on the construction market and limited number of construction companies currently engaged in too many projects might diminish potential supply, say JLL experts.
The retail market currently faces a lack of supply, which results in very high prime retail rents, even higher than in Milan, Berlin, Paris, Madrid and Amsterdam, according to JLL. Local retail rents, between EUR 30 and 70 per sqm, per month for shopping centers and EUR 80 and 120 per sqm, per month for prime high street locations, are topped only by Brussels and Moscow.
Moscow is also the only city which outdoes Romania in terms of prime office yields. “Current yield levels for prime products have approached the 6 percent level, with some trophy assets able to command sub-6 percent levels,” finds the JLL report. In Moscow, prime office yields reach 8 percent.