Currently, this year’s office delivery is estimated at 130,000-150,000 square meters, with almost 50,000 sqm already pre-leased.
“Although only a few office projects are currently under construction and due for completion in 2014, we estimate a pipeline in the region of 70,000-90,000 sqm. Leasing activity is forecasted to exceed 2012’s market activity with major new players expected to commit to the Bucharest market,” the report reads.
On the development front, quality projects have been announced, with the majority seeking green certification (either BREEAM, LEED or DGNB certified), as a response to the increased interest of investors and corporations in such office spaces.
With only two small office buildings completed in the fourth quarter, totaling 4,800 sqm, the total annual office supply stood at only 49,000 sqm last year, or 54% of the supply delivered in 2011 and 17% of the supply finalized in 2010.
Jones Lang LaSalle estimates prime rents will decrease in the first half of 2013.
“Incentive packages are still common practice, although there is an ever increasing variation in amounts provided depending on location, project specifics and leasing stage – that is, existing versus pre-leasing requirements. The overall vacancy rate is estimated at 16%. As always, we caution against drawing wide conclusions from this overall level, as the vacancy levels vary significantly depending on the specific submarket. We envisage a decrease in overall vacancy rate for the end of 2013. The extent of this decrease will be highly dependent on occupiers committing to existing buildings, maintaining the pace of lease renewals/renegotiations and there being few consolidations in the market,” reads the report.
Both the number of new retail projects and the space delivered decreased in 2012.
“We expect this to continue in 2013 as well, as financing continues to be the most important obstacle that developers face. The supply pipeline for 2013 is forecasted at 132,000 sqm (in 5 projects/4 cities), whereas the 2012’s supply is estimated at 166,000 sqm (in 7 projects/5 cities),” according to JLL.
Monthly prime shopping center rents range between EUR60-70/sqm, while rents for prime high street units are at EUR60-65/sqm/month.
“In 2013, we could see a soft decrease of prime rents for both shopping centers and high street units. While for shopping centers the decrease could be in the range of 3-5%, a greater decrease is considered likely for high street units,” JLL estimates.
On the industrial space market, the gross industrial take-up in 2012 reached 170,000 sqm, of which up to 80% was recorded in modern industrial stock. Bucharest attracted 50% of the gross industrial take-up, followed by Ploiesti, with 20%, and Timisoara, with 16%.
“The recent industrial take-up information indicates the spread of interest of local and international occupiers to all major regional cities of Romania. Though there is still preference for Bucharest’s main industrial hubs, Ploiesti, Timisoara, Cluj and Constanta are emerging as tier two industrial hubs. However, industrial developers active in the afore-mentioned industrial hubs are cautious and have no preference for speculative development,” according to the report.