“Older” Bucharest offices, rented during the boom period as soon as construction started, are already under pressure from developers of new, more modern buildings, which accept flat or even lower rents in order to fill their space, and the companies with expiring contracts are a major stake both for owners and for real estate brokers.
In 2007, offices with an area of around 223,000 square meters were delivered, according to CB Richard Ellis’s estimates, namely over 10% of the total market stock.
Tenants start talks with office owners even a year before current contracts expire, to see what options there are on the market and to what level they can negotiate with the current owners, since moving out is not always the best solution given the costs and bureaucracy involved in such a decision.
Recently, law firms such as NNDKP, Tuca Zbarcea & Asociatii or Wolf Theiss, as well as other companies such as Ericsson, IBM or Coca-Cola, have extended their contracts in the offices they have filled in the past five years, while other companies have chosen to leave.
All of these companies have negotiated better conditions than in previous contracts since the office market is still a tenant’s market because of the high amount of free space – around 300,000 square meters.
As the Bucharest office space stock stands at around two million square meters, the average amount of office space rented or with leases extended will reach 300,000-400,000 square meters in a few years, considering that leases are signed for five years on average.
The office space stock will widen further, even though at a slower pace than in 2007-2009, given that developers such as GTC, Portland Trust or AFI Europe already have the new projects under various stages of completion.