Bucharest office supply to reach record level in 2016, says DTZ Echinox

Newsroom 23/02/2016 | 17:03

The Bucharest office supply is expected to reach the highest level registered since 2009 this year, a study by DTZ Echinox shows. With 325,000 sqm of office spaces projected for finish this year, values will be increased fourfold over last year’s deliveries.

Pipera South will be the main point of development (32 percent), followed by the Central North submarket (30 percent) and West (24 percent). Since the Barbu Vacarescu – Floreasca (Central North) and Dimitrie Pompeiu (Pipera South) areas are within 10 minutes walking distance, DTZ estimates that by 2018 the two areas will merge and become the largest office hub in Bucharest in terms of stock.

Office demand is projected to reach record heights in 2016, with a take-up increase of up to 30 to 35 percent, mainly supported by new operations, consolidations and relocations within A & B class.

Rental levels will remain stable going forward. However, considering the level of supply and the need of both existing landlords and developers to retain / attract tenants, the gap between headline and net effective rents might increase.

The Bucharest office stock increased by 4 percent in 2015, reaching some 2.25 million sqm. Posting the lowest level of supply in three years, a number of 7 buildings totaling a GLA of 85,000 sqm were delivered.

Although y-o-y net take-up was lower by 19 percent, in 2015 Bucharest’s office market has been driven by new demand. With net take-up reaching 72 percent with 179,000 sqm transacted, new demand held a 63 percent share and relocations 37 percent. The largest contribution to the level of new demand was represented by new operations (new companies entering the market and existing occupiers opening new businesses), which year on year have increased by 62 percent.

IT and telecom businesses were most active on the Bucharest market in terms of new arrivals, holding a 70 percent slice of the new demand.

This proves that occupiers are finding Bucharest’s office market conditions suitable for their long term business plan. Other business sectors that had a contribution to the total level of new demand were professional services (11percent), manufacturing & industrial (8 percent) and retail (7 percent).

Pre-lease contracts have become quite customary, with 2015 bringing some 72,000 sqm of office space pre-leased (40 percent of net take-up). Renewal and renegotiation, on the other hand, has been lower by 11 percent as compared to 2014, with 32 percent of the transactions being concluded in Pipera South.

With take-up surpassing deliveries in 2015, the Bucharest vacancy rate for class A & B office space decreased by 130 bps. At the end of Q4, the general vacancy rate stood at 12 percent.

Natalia Martian

BR Magazine | Latest Issue

Download PDF or read online: December 2022 Issue | Business Review Magazine

The December 2022 issue of Business Review Magazine is now available in digital format, featuring the main cover story titled “Xclusiverse: Going Beyond the Traditional Ways of Doing Business.”
Newsroom | 19/12/2022 | 18:45

    You will receive a download link for the latest issue of Business Review Magazine in PDF format, based on the completion of the form below.

    I agree with the Privacy policy of business-review.eu
    I agree with the storage and handling of my data by business-review.eu
    Advertisement Advertisement
    Close ×

    We use cookies for keeping our website reliable and secure, personalising content and ads, providing social media features and to analyse how our website is used.

    Accept & continue