“In the past two years, new demand for office space was relatively stable, of around 300,000 square meters, which led to a drop in the vacancy rate as deliveries were fewer. However, deliveries totaling around 300,000 sqm are scheduled for delivery next year, and projects totaling about 500,000 sqm are on the pipeline. This new stock is a trigger warning because demand is just half of transactions throughout a year, while the rest are relocations and renegotiations,” said Marius Scuta, head of JLL’s Bucharest office.
He explained only 140,000 sqm of all office transactions in 2014 were covered by new demand (expansions and new entries) and new demand is estimated at 150,000 sqm this year.
“If all projects that have been announced are delivered, we expect a rise in vacancy rates in 2016, after a slight drop this year. The vacancy rate could go back to the level from a few years ago (of more than 17% – e.n.) and pressure on rent will rise in certain areas,” Scuta said.
JLL estimates the average vacancy rate will decrease slightly in 2015, after reaching 13.3% in 2014, a six-year low, due to large new deliveries, pre-leases and high demand. Considering Bucharest’s modern office stock of 2.16 million sqm, over 287,000 sqm remain unoccupied.
JLL brokered office deals of more than 8,000 sqm this year, its best start of the year since the start of the financial crisis, Scuta said.
He added 2014 was a good year, which allowed the company to switch to double digit profit. In 2013, JLL had a turnover of RON14.7 million (EUR3.32 million ) and a loss of RON2.8 million.