Size does matter on local office market

Newsroom 20/11/2007 | 16:46

The biggest office leasing transaction this year was so far that of Romtelecom, which has rented 9,000 sqm in City Gate office building, according to a report from DTZ Echinox Romania. The biggest such transactions this year vary between 3,000 leased sqm and the 9,000 sqm record.

The companies which needed over 3,000 sqm of office space come mostly from the IT&C industry, from car manufacturers, construction materials companies and banks.
The market thus continued with trend of pre-letting office space with up to one year before the building is ready to receive its tenants. This shows both the scarcity of offer on the Romanian market in terms of new, large office buildings, and the need for large companies to keep their departments in the same place.
The demand for larger office space and even for bigger floor space from some companies has lead developers to build larger buildings. The largest such building underway, to be completed by 2009, is Swan Office park. It is developed by Arca, and has 46,500 sqm. It is followed by City Gate, GTC's office development, with other 42,000 sqm.
The wave of large companies moving to larger buildings will leave several smaller office buildings empty, which in return could be occupied by small and medium companies. These companies would thus upgrade from villas or even apartment-like headquarters to proper office buildings.
Office developers are usually starting construction works when a certain volume of pre-leases has been reached. However, the market sees an increasing number of developers which start construction works without having already rented parts of the building. Such speculative developers are taking advantage of the under-supplied market, shows a DTZ Echinox report.
The availability of office space to be delivered in the next 6 to 8 months stands at 45 percent, according to the report. This means that 55 percent of the office space to be delivered in the coming period has already been leased.
The average building size has only recently reached 10,000 sqm, with the delivery of several business parks and larger towers in the last six months, according to DTZ.
Most of the buildings under development in Bucharest are concentrated in the north and center north, and a small portion in the emerging areas of west and along Dambovita, towards A1 highway, according to a report from Jones Land LaSalle. JLL forecasts record absorption rates, of up to 200,000 sqm of offices, by the end of this year, mainly triggered by multinational companies willing to enter or expand on the market.
However, by the end 2008, the offer is expected to exceed demand.
Several offices buildings were completed in the first part of this year, the largest so far being S-Park, with 34,000 sqm. Millenium Center brought 14,000 sqm, North Gate, 20,000 sqm, North Center, 8,500 sqm, Victoria Park, 10,000 sqm, while Novo Park building E, another 14,500, according to JLL.

Corina Saceanu

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