100,000 sqm of office space to be delivered in 2012, up 12 percent y-o-y says DTZ Echinox

Rents for local office spaces have increased by 3 percent in the first quarter of this year compared to the last months of 2011, reaching EUR 18.5–19.5 per sq m per month (central area) as little new space was delivered and demand showed signs of picking up, reveals a market report from DTZ Echinox.

Only 2,500 sq m of new office space, represented by the completion of the Barbu Vacarescu project developed by Expert RoInvest Development, was delivered. The planned supply for 2012 is anticipated to reach approximately 100,000 sq m, representing an increase of 12 percent compared to 2011.

“Historically, 2011 represents the lowest level of completions since 2004, amounting to a total of approximately 90,000 sq m,” according to DTZ.

The total office supply inBucharestamounted to about 1.84 million sq m at the end of 2011. The list of the most important office buildings delivered in 2011 includes  Platinum Business & Convention Center (41,000 sq m),  CrystalTower(16,200 sq m) andNovoPark– building  G (13,000 sq m).

Looking at the demand for office spaces, the net take-up volume registered at the end of 2011 reached 225,000 sq m with the second quarter at the  forefront of the occupational activity, amounting to  approximately 40 percent of the annual total.

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After the last three months of 2011 registered the lowest activity in the last two years with about 20,000 sq m reported as net take-up, Q1 2012 saw a significant increase in the take-up. “Thus, the net take-up volume (comprising new lease transactions, pre-leases and expansion deals) reached 46,000 sq m including the largest transaction tracked in Q1– Raiffeisen Bank’s lease of 22,946 sq m inSkyTower,” reads the report.

By the end of 2012 DTZ estimates that the level of transactions will be similar to the volume registered in 2011, with the prelease activity increasing its share in the total take-up volume.

Rents went up 3 percent in Q1 compared to the same period of last year, to a level which ranges between EUR 18.5–19.5 per sq m per month for the central area. For the semi-central locations the rental level ranges between EUR 13–16 per sq m per month and EUR 10–12 per sq m per month for remaining areas.

“For 2012 year-end we estimate a constant rental value forBucharestbusiness districts including the premium locations which will remain stable at €18.5–19.5 per sq  m per month,” reads the DTZ report.

In Q1 2012 the vacancy rate decreased from 13.9 percent registered in Q4 2011 to 13.4 percent. The vacancy rate recorded a significant decrease in the last 12 months meaning 250 basis points. The lowest vacancy of office space is still found in the central and western submarkets whilst the highest rates are still associated to the northern subzone, such as 20 percent in Pipera.

Simona Bazavan