Bucharest, 14 February 2019 – The vacancy rate on the Bucharest office market dropped last year to a historic minimum of about 6,6%, compared with 9.2% at the end of 2017. The decrease occurred on the background of a lower development activity compared to the demand of office space.
Thus, last year, developers completed new office projects totaling 145,000 square meters, as the surface leased through real estate consultants was 335,000 square meters, of which 45% (150,000 square meters) represents new demand (pre-leases, new contracts, extensions of existing surfaces and relocations from other buildings than Class A and B buildings).
If we also consider direct transactions between tenants and landlords, the leased area far outstrips the new offer put on the market by developers. In addition, some of the spaces delivered in 2018 were already contracted from previous years.
JLL was involved in the the largest office space leased in 2018, being the market leader at national level, with 23% of the total traded, as well as Bucharest, with almost 25%, among the most important transactions being Microsoft (24,200 square meters) or Thales (5,300 square meters).
“Even though there are significant differences between the 12 office sub-markets in Bucharest in terms of office space available, the vacancy rate continued to decline in 2018 to a historic minimum, amid a relatively modest development of activity in 2017 and 2018. Net demand remained at comparable levels over the past two years, around 150,000 square meters, absorbing the new offer”, said Marius Şcuta, Head of Office of the Agency and Tenant Representation JLL Romania. Thus, the fewest available spaces are in the Center-North, Floreasca Barbu-Vacarescu, Center, Center West and CBD areas, where the vacancy rate is below 5%, while in the Baneasa and Pipera Nord are located most of the empty spaces. “We see areas where practically there are no options for a potential tenant who wants to expand. Against the backdrop of low availability of premises, we may witness an increase in rents, so those looking for offices need to make quick decisions in this regard. For those who want to move in the first half of this year, the speed of reaction and decision-making is crucial to getting attractive rents. We are currently seeing a gap between the speed of developing new projects and the pace at which companies are expanding, which will most likely begin to reduce this year if we look at the developer plans for 2019 and 2020, namely the construction of about 700,000 square meters of new projects “, said Maria Florea, Head of Office Agency JLL Romania. The prime rent in Bucharest continued for five years in a row at the level of 18.5 euro/sqm /month, with changes being recorded at the level of the incentives packages offered by the landlords. In 2019, if all the announced projects are completed, the stock will grow by about 300,000 square meters, of which 50% is already pre-leased. The areas with the lowest vacancy rates will also benefit from the highest deliveries this year, so two large projects, totaling more than 40,000 square meters, will be completed in Floreasca – Barbu Vacarescu, the CBD will increase the stock by 30,000 meters squares, and in the West-West are announced three projects with a total of over 80,000 square meters.
Vacancy rate at the end of 2018: