Bucharest’s office market at the end of 2014 reached around 2.2 million square meters and 70% of this area is concentrated in 50 projects with areas ranging between 11,500 and 93,000 square meters, reveals a ZF analysis.
The 50 largest projects can be valued at some three billion euros, taking into account a price of EUR2,000/rentable square meter.
As regards owners, 40 of the 50 projects are controlled by foreign groups, while Romanian investors own ten of the largest business centers, with their total area standing at 342,000 square meters (23% of the analyzed area).
IRIDE business park of Pipera owned by Austria’s Immofinanz is still Bucharest’s biggest office project and the company this winter also embarked on expansion, being set to add a 20,000-sqm building, due to be completed in 2016.
Immofinanz has been the biggest office owner in Bucharest for almost one decade, with a portfolio of more than 200,000 square meters. However, considering the deals and developments started in the past two years, Globalworth fund owned by Ioannis Papalekas has started threatening Immofinanz’ position.
The biggest portfolio held by a Romanian belongs to Liviu Tudor, owner of business parks Novo Park and West Gate. The projects could be expanded, but only after the signing of firm contracts with potential tenants.
Other Romanian office owners are Barba family (Twin Towers of Pipera), Burton family (Conect project), businessmen Gabriel Popoviciu and Radu Dimofte (with Baneasa project and other buildings), Marius Ivan (North Gate) or Ion Chirescu (with Art Business Center buildings).
Despite the crisis, developers further erected new office buildings each year with an area of around 100,000 square meters. The biggest projects completed in the past five years are Sky Tower owned by Raiffeisen Property, Floreasca Park, Oracle’s main headquarters, the first three buildings of AFI Park project, or Green Gate building of Piata Chirigiu.
The past two years have also brought a rental activity rebound, so that, despite deliveries, the vacancy rate has started slightly falling and now ranges between 13% and 14%, so that the area of vacant spaces revolves around 300,000 square meters.
The filling out of these spaces would mean the creation of 30,000-35,000 new jobs, as well as additional revenue of EUR35-40 million per annum for the owners of the buildings.
Rents have remained quite flat in the past year, starting from EUR5-6/sqm monthly in the Pipera-Turnari and going as high as EUR18-18.5/sqm in several buildings of Piata Victoriei-Piata Charles de Gaulle.
Like owners, tenants are mainly multinationals, with the biggest spaces being filled by banks, telecom and IT companies, pharma, energy and consulting services companies.
The most important office sector development is now being registered in Barbu Vacarescu-Floreasca area, but several new buildings are also expected to emerge near Basarab passageway.
Investors now have under construction or are preparing new office projects with a total area of around 700,000 square meters, so that it is only a matter of time and demand until the stock of Bucharest reaches 3 million square meters, similar with that of Budapest.
(English version by Catalina Apostoiu)