“Bucharest is certainly one of the major tech hubs in the Central and Eastern Europe, if we take into account the investments made in the last few years by the companies active in this sector. From a real estate perspective, IT&C companies have leased over 1 million sqm of offices in Bucharest alone during the last decade, having a share of almost 40% of the volume transacted in that particular period. Even though there have been many challenges in 2022 so far, tech companies continued to be active on the office leasing market, with around 80,000 sqm contracted in the first nine months of the year, accounting for 35% of the total demand in Bucharest,” said Madalina Cojocaru, partner Office Agency, Cushman & Wakefield Echinox.
Therefore, even though the prime headline rents in Bucharest continued to increase in the third quarter, reaching a level of EUR19.5/sqm/ month, compared with EUR18.5/sqm/month at the beginning of the year, the capital city remains among the less expensive destinations in Europe in terms of office occupancy costs. In comparison, the prime headline rents in Budapest and Warsaw are of EUR24.5 and EUR24/sqm/month respectively, while in Prague the level is even higher reaching EUR27/sqm/month. In Sofia, offices are leased for a maximum of EUR15/sqm/month.
Moreover, a regional study produced by Cushman & Wakefield reveals that the average annual income of the IT&C specialists in Bucharest is 40% lower than the level registered in Warsaw and it is only half of the one from Prague.
Between January and September 2022, a total 222,600 sqm of office spaces have been transacted in Bucharest, reflecting a 5% increase compared with the same period of 2021, while the net take-up (excluding renegotiations/renewals of existing contracts) had a share of over 60% of this volume, namely 137,000 sqm.
It should also be noted that the net take-up exceeded the total new supply in the first three quarters of 2022 in Bucharest (105,500 sqm), therefore the overall vacancy rate in the city has slightly decreased to 14.4% in the third quarter.
The pipeline remains quite low, with only six projects with a combined area of 129,000 sqm being scheduled for delivery by the end of 2023.