3 trends that keep the office rental market high in 2023

The strategies of companies to return to the office, amid increased inflation and the advantage of the large number of workplace facilities, lifted the office space rental market in 2022, registering a growth of 5% compared to 2021 and 20 % compared to 2020. The trend will continue in 2023, the year when the demand for office space is greater than the supply for this type of service, with more than 112,000 square meters of space available for rent in new office buildings, according to Market Outlook 2023 report, launched by CBRE Romania, the leader of the real estate consultancy market.

Thus, the modern stock of office spaces will reach 3.4 million square meters in Bucharest by the end of the year, with five office buildings under construction. Among them, the second phase of the U-Center Campus project (35,000 sqm), the second phase of the One Cotroceni project (34,500 sqm) and the second phase of the @Expo project (28,600 sqm).

According to the analyses of CBRE Romania, the leader of the Office segment in 2022 with a market share of 25%, transactions in this segment will maintain the growth trend, even in a context where some multinationals have still not made a firm decision on how they will continue to use the office spaces.

Thus, the following trends will dominate the market in 2023:

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1. The office leasing will maintain its upward trend

After a 2022 with intense activity in the Office segment, in which spaces were rented in all areas of Bucharest, mainly in the Center – West, Center and Floreasca Barbu Văcărescu areas, which stood out by attracting over 70% of the total rental activity, the office space rental market is drawing near the pre-pandemic level, a growth trend that will remain in 2023.

Also, a positive signal is the constant increase of approximately 7% year-on-year in the areas representing new rentals and expansions, reaching a percentage of 28% in 2022, which represents the peak of the last 5 years for this type of transactions.

2. Demand will surpass supply

The context of 2023 is created by a market where demand will be greater than supply. Compared to the office space rental in 2022, 60% of this activity consists of new transactions, excluding renegotiation and contract extension transactions, representing an increase of 5% compared to 2021 and 20% compared to 2020.

Meanwhile, the number of square meters to be delivered in 2023 is much lower than the Bucharest standard, with an expected delivery of 5 new office buildings, totaling a surface area of approximately 112,500 sq.m., much lower than the traditional annual standard from Bucharest between 200,000 sqm (2020) and 300,000 sqm (2022).

3. The office tools are changing preferences against remote work

Productivity is higher and results are achieved more easily when employees work together or talk face-to-face in the office. That is why office work increases in preference versus remote work when a hybrid system is implemented.

Last year we have noticed that, in the context of the existence of more and more facilities available at the company headquarters, employees have chosen in greater numbers to work from the office, and the requests at the beginning of 2023 support this trend.

We believe that offices should offer tools, spaces and experiences that cannot be easily replicated elsewhere, and as we succeed in this, people will return to using the spaces at a new level of productivity and creativity.

“The office space rental market is growing and experiencing an exceptional period with unprecedented beneficial changes. Office buildings are no longer about class A or B, but about office spaces in green buildings, in projects that support the appropriate human interactions and about efficient ways to build communities around facilities that one cannot find elsewhere. As more and more companies look for spaces that meet ESG criteria and fulfill people’s desires, workspaces underwent a transformation, with facilities and design concepts for employees, with a focus on developing communities, which makes office work grow in people’s preferences”, says Tudor Ionescu, Head al A&T Services Office at CBRE Romania.

According to CBRE, 74% of office buildings in Bucharest have green certificates and meet ESG conditions, a trend that continues to grow, as one of the main criteria in the companies’ choice of office space.