The office market in Bucharest and in the major regional cities – Cluj-Napoca, Timisoara, Iasi and Brasov – continues to develop, with local and foreign investors having projects under construction or scheduled for delivery with an area of approximately 500,000 square meters that will be put into use in the next 16 months, according to Bucharest Office Market and Office Regional Cities Reports, conducted by the real estate consulting company Cushman & Wakefield Echinox.
The most active market remains Bucharest, with projects of about 340,000 square meters scheduled for delivery by the end of 2021, followed by Timi?oara (80,000 square meters), Cluj-Napoca (36,000 square meters) and Bra?ov (25,000 square meters).
The most active developers in terms of surfaces scheduled to be delivered in the next period are One United (94,000 sqm), Iulius Group (60,000 sqm), Portland Trust (45,000 sqm) and Forte Partners (41,000 sqm).
At the end of the first semester, the modern office stock in Bucharest was about 2.9 million square meters leasable area, without taking into account the buildings occupied directly by the owners, while the stock in regional cities was approaching the 1 million square meters threshold, the largest markets being Cluj-Napoca (347,000 sqm), Timisoara (245,000 sqm) and Iasi (226,000 sqm).
The medical crisis caused by the Covid-19 pandemic significantly influenced the use of office spaces, with companies adopting various methods to protect their employees, but it had a lower impact on the space occupancy, as most companies are still analyzing the best medium and long term solutions to carry on their activity. Thus, the vacancy rate varies from 10.3% in Bucharest, with values of 4.7% in Floreasca – Barbu Vacarescu and 7.4% in CBD, to 5.6% in Cluj-Napoca or 5.7% in Brasov.
Madalina Cojocaru, Partner, Office Agency, Cushman & Wakefield Echinox: “The need for modern, qualitative constructions in attractive locations will not disappear given the Covid-19 pandemic, whether we talk about office, residential or commercial spaces. The developers, banks and investors understand that is all about the rethinking of how office spaces will be used, not the lack of need for such spaces, which is why the activity on all large construction sites has continued at a steady pace, both in Bucharest and in the country. A sign of confidence in the potential of the local office market is also given by the fact that developers such as Speedwell or Iulius Group started building new projects during this period, in Bucharest and Timi?oara, and in Iasi respectively, while banks continue to finance this sector, and the transaction market has remained active.”
The prime headline rents remained stable, at a level of 19 euro / sqm / month in Bucharest and 15 euro / sqm / month in Cluj-Napoca or Timisoara, after a long period in which the competition between developers kept the local market rents at a competitive level compared to similar cities in Central and Eastern Europe.