This situation is expected to remain constant on a medium term at least, given the plans announced by developers, according to data from Cushman & Wakefield Echinox.
The Q1/2023 office supply in Bucharest consisted of the second building of the One Cotroceni Park (photo) mixed – use project (34,500 square meters of gross leasable area (GLA) developed by One United Properties in the Center – West submarket and also of the Muse building (7,500 sqm GLA) in the Expozitiei area. The office stock in Bucharest thus reached 3.35 million sqm at the end of the quarter.
The Center – West area, where almost 300,000 sqm of new spaces were delivered during the last 3 years, reached a stock of 614,000 sqm, compared with 589,600 sqm in Floreasca – Barbu Vacarescu, where the new supply amounted to 132,000 sqm since 2019.
Dimitrie Pompeiu (440,700 sqm), Center (412,500 sqm) and CBD (357,300 sqm) are the other top five office markets in Bucharest.
In terms of the Q1/2023 leasing activity, the demand was low, as only 55,800 sqm were transacted, the lowest level since Q1/2021, while also corresponding to a 31% year-over-year decrease.
”The first quarter of 2023 was relatively poor in terms of transactions because it is more difficult to adopt business decisions in an unpredictable economic context. However, the market sentiment remains relatively strong, as a series of important deals are currently under negotiation and the leasing activity is expected to pick up starting from Q2. The pipeline remains limited and therefore the short-term demand will increase the absorption of available spaces, especially those located in easily accessible areas, but also those which are developed according to sustainability standards and certifications”, said Madalina Cojocaru, Head of Office Agency Cushman & Wakefield Echinox.
The vacancy rate in Bucharest decreased to 14.8% in Q1/2023, as a net absorption of almost 40,000 was registered during the quarter at city level.
The evolution of demand in Bucharest follows the trend observed in the other capital cities in the Central and Eastern Europe, a region where the transaction activity has seen a 22% decrease compared with the first quarter of 2022.
A further rental growth was recorded in Q1/2023, with the prime headline rent in the CBD area reaching EUR21.00/ sqm/month, a level which reflects an year-over-year increase of 13.5%, while other submarkets should also see such increases especially when it comes to prime assets.
This upward rental movement in Bucharest also comes in a more regional context of higher rental costs throughout CEE, where corresponding benchmarks of EUR28.5/sqm/month, EUR25/ sq. m/month and EUR24.5/ sqm/month were recorded in Prague, Budapest and Warsaw, respectively.