OFFICES IN BUSINESS CENTERS
At the beginning of 2014, the volume of office spaces available in business centers reaches the level of 784,000 sqm, i.e. 5% higher compared to the same period of the previous year.
Approx. 125,000 sqm of these are represented by deliveries of new projects (completed during 2013), most of them being higher class projects (A or B+), feeding primarily the segment of spaces with rent over EUR 15/sqm. This market segment currently represents 21% of all available spaces.
PREMIERE. Four large?size reconversion projects started in 2013, involving properties initially designed as retail spaces or hotels. These properties, having a total area of approx. 45,000 sqm are listed in the table below.
OFFICES IN VILLAS
The stock of office spaces located in villas increased by 23% at the beginning of 2014 (compared to the same period of last year), reaching the level of 171,900 sqm. In terms of structure, the dominant segment remains that of the villas with rent up to EUR 11/sqm, which represent 67% of the total volume (3% higher than the previous year).
In ESOP’s portfolio, the highest leasing activity with villas was in the Aviatorilor – Primaverii ? Dorobanti area, followed by Universitate?Romana area.
DEMAND and TRANSACTIONS
2013 continued the increase of the relocation intentions within the context of re?launching the expansion plans within certain industries, in particular in IT & C field, or continuing the comfort and price optimization, as the case for other industries.
By the end of the year, these intentions materialized into Take?up of 181,683 sqm represented by lease, pre?lease and expansion transactions, i.e. 8% higher compared to the previous year. The Total Leasing Activity (including besides the Take?up also the Renewals) reached a level of 293,864 sqm.
Source: ESOP, with Forum data
DEMAND ON MEDIUM SIZE COMPANIES SEGMENT
The demand on the medium size companies segment increased by approx. 22% in 2013, compared to 2012. There were minor, but positive changes in the structure of the demand, by company budgets. Thus, 2% of the companies migrated from the category of rent budgets up to EUR 11/sqm, to rent budgets of EUR 11.1?15/sqm.
OFFICE TRANSACTIONS IN OTHER MAIN CITIES
In 2013, outside the Capital, the total leased area of office spaces was 23,218 sqm, i.e. more than four times higher than in 2012 (when the total leased area was approx. 5,000 sqm) and two times more than in 2011 (when the previous record was reached, with 10,572 sqm).
The tenants, most of them from the IT&C industry, preferred recently built, high standard buildings.
The increase in the number and volume of transactions concluded outside the Capital is due, on one hand, to the personnel recruitment limitations that the IT&C companies face in their expansion plans on the Bucharest market and also, to the supply of high quality office spaces in the big cities.
Considering also that some of these main cities are also well developed university centers, offering highly qualified work force, including for the IT&C industry, the office markets outside Bucharest will continue to be viable complementary alternatives of growth for the large size corporations.
RENT LEVEL
In 2013, the rents were maintained at a relatively stable level, with slight upwards and downwards adjustments (of up to +/?10%), depending on the area and on certain specific factors, such as the quality of the space, the vacancy period and the spaces available in similar buildings.
The asking rents mentioned above have a negotiation margin, which varies depending on the location and the quality of the spaces. In general, the negotiation margins practiced at the beginning of 2013 are maintained, i.e. 8?15% in the Central?North and Downtown areas, and 10? 17% in the other areas.
Highlights of certain interesting evolutions in various Bucharest sub?markets:
CENTRAL?NORTH AREA: The asking rents of the business centers in the Central?North area (especially in the Barbu Vacarescu – Calea Floreasca area) registered a slight decrease (of 0,5?1 Eu/sqm compared to the previous year), in the case of A class buildings, due to the consistent volume of office spaces available on the market and on pipeline. This area is yet the most dynamic area of the city, and the opening of Promenada Mall in end 2013 increased its attractiveness and comfort for the employees of the (potential) tenant companies. On medium and long term, it remains open the challenge of a correct adjustment and improvement of the public and road transport infrastructure, on order to be able to service the increasing needs of the area.
NORTH AREA: Pipera area was positively influenced by the infrastructure works completed at the beginning of 2013, more specifically the Pipera Bridge and the Pipera Avenue expansion. Since the vacancy level is still high, there was no improvement in the level of the rents, however the long?term perspectives of the area have to a certain extent improved.
WEST AREA: The limited supply in this area, and the fact that IT & C companies have a preference for this area (industry that generated 32% of the Take?up in 2013), have resulted in the lowest vacancy rate at the level of higher quality spaces (class A and B+), below 5%.
SOUTH AND EAST AREAS: The asking rent level in the case of higher class spaces registered a slight decrease in these areas, from EUR 11?13/sqm, to EUR 10?12/sqm.
RENT LEVEL IN VILLAS
Office spaces in villas have maintained a relatively constant rent level, compared to the beginning of 2013. In 2012, there was a high demand for historical villas/villas dated since the period between the two World Wars. This was also due to the presence of this type of buildings on the market, with a rent of EUR 10?12/sqm.
FORECASTS
By the end of 2014, 15 office building projects will be completed, with areas comprised between 1,200 sqm and 31,000 sqm, and a total area of approx. 160,000 sqm. Over 32% of these spaces have been pre?leased, however the remaining volume of spaces is significant (approx. 109,000 sqm), adding to the existing stock of business centers.
The year 2014 shows favorable conditions for the intensification of pre?leases, considering that several important projects are going to be delivered and, therefore, will be motivated to lease a significant part of the available spaces before the completion of the construction works.
For the potential tenants, within the context of a significantly lower number of projects started and estimated to be delivered in 2015, the current year stands out particularly attractive for relocation operations, offering the chance of obtaining good financial packages.
On the medium and long term, there is a need to balance the development of the capital by areas; thus, the most interesting area for future developments appears to be, at a first future stage, the Central?West area.
The public transportation infrastructure modernization works, such as Uranus Boulevard, with its first section (Piata Victoriei?Berzei), commissioned at the beginning of 2014, or the works executed on the 5 subway line, with its first section (Drumul Taberei – Eroilor) scheduled to be completed by the second half of 2016, open a number of opportunities in the neighboring areas.
