Total demand for modern office space shrank nearly 10%, down to 112,000 square meters in the first six months of 2021, compared to the same period in 2020. New demand for office space reached roughly 38,000 sqm, lower by 15% at the end of the first half and by 22% versus the first six months of 2019.
Companies have already started to organize, resize and reconfigure offices to meet the needs of a post-COVID society.
In January-June 2021, just 36,000 sqm of modern office space was delivered. The completion of the Campus 6.2 project by Skanska (almost 19,800 sqm) and of the Tiriac Tower project in the portfolio of Tiriac Imobiliare (16,500 sqm) boosted the modern office space stock in capital Bucharest above the level of 3 million sqm.
Initial forecasts for 2021 envisaged the delivery of approximately 260,000 sqm of new modern offices, and analysts expect the second half of 2021 to be pretty hectic, although some of the future deliveries may rather be postponed for the first half of 2022.
The vacancy rate touched a seven-year high, at the end of the first six months of 2021, reaching 15.75%, from 11.25% in 2020.
However, the market is much more developed than in 2014, when the vacancy rate would touch such levels, and the modern office space stock was approximately 1.7 million sqm, compared with little over 3 million sqm currently.
Although the average net rental rate in Bucharest probably is nearly 10% lower than the pre-pandemic level, this dynamic was generated by older buildings which had to offer more incentives in order to attract and retain tenants.
The IT&C sector remains the market engine, accounting for almost half the transactions reported, but the industrial services and other professional services also have a significant contribution in 2021.
The Bucharest office space market remains pretty complicated, but Colliers consultants say the effects of the coronavirus pandemic were not uniform. It is worth noting that two of the newest buildings finalized in Bucharest, namely, the Campus 6.2 and 6.3 of Sweden’s Skanska, were sold to an investor for a post-2008 record yield of 6.75%.
Colliers consultants believe the low supply of modern office space in Bucharest per capita is an isolating factor on the long term and the modern office space stock is rather expected to start growing again in several years. Consequently, it could exceed 4 million sqm until the end of the new decade and even near the threshold of 5 million sqm, unless another (economic) crisis occurs.