JLL’s land department head Attila Peli said the central-western part of Bucharest, where there is low office stock (nearly 70,000 square meters) and a low vacancy rate (5.6%), has high potential and is expected to see growth in the upcoming period because it boasts good quality infrastructure and it is well connected to the rest of the city.
He added, however, that the Floreasca-Barbu Vacarescu corridor in northern Bucharest, which has been the main focus point for office developments in recent times, tends to become saturated and risky because too many projects are delivered and the vacancy rate is high.
The overall vacancy rate in Bucharest is estimated at 14.4%. Vacancy rates continue to be very uneven between the various sub-markets of the city, which will likely be reflected in the evolution of rents. While in Baneasa and Pipera Nord vacancy is about 35%, in the Centre West, West, CBD and Dimitrie Pompeiu vacancy is below 10%, the report reads.
Gross take-up for 2013 was approximately 293,000 sqm, 22% higher than in 2012, while the office supply completed in 2013 reached around 119,000 sqm, almost 2.5 times more than in 2012. The modern office stock in Bucharest is currently estimated at 2.08 million sqm, according to JLL.
JLL consultants estimate the upward trend will maintain on this segment in 2014. Half of office spaces transactions in 2013 targeted new tenants, expansions and relocations, which translates into a 65% year-on-year increase.
According to the report, prime headline rents remained unchanged at EUR18.5/sqm/month in the fourth quarter of 2013. Over the last quarter, incentive packages remained consistent, with landlords usually offering both rent free periods and fit-out contributions. Incentive packages vary in value according to the terms of the requirements and become especially attractive for deals larger than 2-3,000 sqm. Bucharest continues to be a tenants market, which we estimate will characterize the office sector for the first part of 2014 as well.
The pipeline for 2014 is estimated at 120,000 – 140,000 sqm. Due to the large volume, the delivery of some projects may slip to 2015. Take-up is forecasted to continue its increase from the level of previous years with a more significant weight of net take-up, JLL also said.