“I think an interesting question is what will happen with the buildings being freed up, which tend to be class-B buildings,” Petrescu of Esop says. He says while office building owners were used to two or three large companies occupying a whole building, “they should also target middle-sized companies.”
The consultant believes office owners should put together a client mix similar to those in malls. Large tenants offer stability, but their departure creates more of an impact, while smaller tenants can pay higher rent per square meter and can be easier moved if a client wants to expand.
He says during the current crisis period renting a space again takes around 6-12 months and the impact on a building’s revenues is significant. If you consider a three-year period, and take a 10,000 square-meter building where half the space is vacant for nine months, the average rent obtained for every square meter of the building is EUR10.5 instead of EUR12 if the average rent for the occupied spaces is EUR12/sq m.
He believes this year a stronger migration will occur from companies headquartered in lower-quality villas to class-B buildings, while before the crisis there was an exodus of companies headquartered in one or more apartments to villas and lower-quality business centers.
This year to see 100,000 sq m delivered
Petrescu says currently medium-sized companies with 10 to 100 employees occupy over 1.5 million square meters, while class C buildings and villas cover around 1 million sq m.
“We believe for Bucharest’s B-class buildings this large pool of potential clients is a solution to reduce the vacancy rate.”
Another pressure factor for office owners will come from developers, who will deliver another 100,000 sq m to the market this year.
Esop is a “volume-oriented” consultancy, which last year brokered 67 small and medium-sized transactions on the office market, covering a total of 30,000 sq m, which accounted for 90% of the company’s revenues. For this year the company targets transactions involving around 40,000 sq m and revenues of $700,000-$800,000.
(English version by Daniela Stoican)