The average vacancy rate of office spaces in Bucharest set at 14.4% in 2012, and will further reduce to 12% in 2013 and 9.8% in 2014.
“Despite a scaling back in speculative development, occupier activity is having a limited effect on eroding the overhang of supply as they continue to shed excess space. Sluggish economic prospects will continue to deter occupiers, although with key lease expirations in 2013 vacancy will begin to decline,” according to Cushman&Wakefield.
Compared with other markets in Central and Eastern Europe, Bucharest outruns only Budapest, which scored 26.3%, in terms of unoccupied office spaces in 2012. The other markets analyzed in the survey had lower vacancy rates than Bucharest, as Istanbul had 8.8%, Moscow, 11.5%, Prague, 12.3%, and Warsaw, 9.3%.
Over the next two years, Cushman&Wakefield forecasts an improvement of the unoccupancy rate in Bucharest compared with other CEE markets, Istanbul being expected to reach 7.3%, Budapest 22.9%, Moscow, 10.5%, Prague 12.4%, and Warsaw, 12.1%.
As regards the newly completed office spaces, the survey forecasts 106,000 square meters of new office space will be finished in 2012, 117,000 square meters in 2013, and only 53,000 square meters in 2014.
“Lower levels of speculative development between 2012 and 2014 will help to re-establish a better balance between supply and demand, especially as improving take-up levels will begin to erode the overhang of space, coupled with the fact that some more obsolete buildings are removed from stock,” the survey also read.
The analysts with Cushman&Wakefield forecasts a stable level of rent on short term, which will be influenced by the incentive packages offered by the landlords.
The office space rents in Bucharest are among the lowest in the CEE countries analyzed in the survey, at EUR19 per square meter per month, with Budapest and Prague accounting for an average rent of EUR21/sqm/month, Warsaw for EUR26/sqm/month, Istanbul for $44 (around EUR33)/sqm/month, and Moscow for $1,150/sqm/year (around EUR73/sqm/month).
Bucharest is expected to remain among the cheapest capitals in CEE by the level of rents of office spaces, despite a slight increase to EU19.7/sqm/month in 2014, as no major changes are seen on the other markets.