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Bucharest, second in the region for empty office spaces
The rate of non-occupancy of office space in Bucharest, at present in the top of the highest in the region will be reduced by 2014 by approximately five percentage points, at 9.8% as new surfaces of offices finalised in two years will drop in half, a study of the real estate consultancy company Cushman&Wakefield. The company estimates that in 2012 the average rate of non-occupancy of the office spaces in Bucharest is 14.4% to be reduced at 12% in 2013 and 9.8% in 2014.
“Despite the reduction of speculative developments, the activity of occupants has a limited effect on the erosion of the surplus of offers as they continue to give up excessive space. The economic perspectives will continue to discourage the occupants, but the percentage of vacant spaces will start to drop due to important leasing contract termination period in 2013” the consultants in Cushman&Wakefield appreciate.
By comparison to other markets in Central and Eastern Europe Bucharest is better at the surface of non-occupied office spaces in 2012 by comparison to Budapest – 26.3%. For the others, the markets taken into consideration in the study are -
Istanbul (8,8%), Moscow (11,5%), Prague (12,3%) and Warsaw (9,3%). There are fewer empty office spaces than in Bucharest.
In two years time, Cushman&Wakefield estimates an improvement of the situation in Bucharest against the other markets, so that only Istanbul will have a degree of non-occupancy inferior to that of Bucharest, 7.3% respectively. In Budapest, although they anticipate a reduction of the surface of empty office spaces, 22.9% of the stock will be left without occupants in 2014 as well. In Moscow, the degree of non-occupancy will drop at 10.5% over two years, in Prague it will be around 12.4% and in Warsaw it will increase to 12.1%.
As regards the new projects delivered in the next two years, the total surface finalised this year will be according to the real estate consultancy company 106,000 square metres, to increase to 117,000 square metres in 2013. For 2014, the projects of office space finalised will have a total only of 53,000 square metres, almost half of the previous years.
“The reduced level of speculative developments in the period of 2012 – 2014 will help to re-establish the balance between supply and demand, especially as improvement of the level of traded spaces will start to erode the existing surface, moreover that a number of old buildings are taken out of the stock” the study shows. Things are even worse than in Bucharest when it comes to development of new projects, so that in Budapest this year there were finalised 20,000 square metres of office spaces, the surface will drop to 12,000 square metres in 2013 and increase again in 2014, at 35,000 square metres.
In Prague, the offices delivered are a total of 100,000 sqm, in 2012, 86,000 sqm in 2013 and 100,000 sqm in 2014. Istanbul (226.000 sqm in 2012, 245.000 sqm in 2014), Moscow (526.000 sqm, 450.000 sqm, 600 sqm respectively) and Warsaw (236.000 sqm, 305.000 sqm and 179.000 sqm)are by far the markets in Central and Eastern Europe preferred by the developers of office spaces in the years to come.
At the same time, the real estate analysts estimate that on a short term the level of the rent will be stabilised, continuing to be influenced by the facilities packages offered by the owners, which include free of charge periods of rent and contributions to the furbishing of the office spaces.
At present the average rent is estimated at 19 euro/sqm/month with an advance of up to 19.2 euro/sqm/month in 2013 and at 19.7 euro/sqm/month in 2014.
The rents in Bucharest are the most reduced among the countries in Central and Eastern Europe analysed in the study, in Budapest and Prague the offices are rented on average for 21 euro/sqm/month in Warsaw for 26 euro/sqm/month, in Istanbul for 44 dollars/sqm/month ( almost 33 euro/sqm/month) and in Moscow for 1,150 dollars/sqm/year ( almost 73 euro/sqm/month).
There are no important changes for the other markets analysed as regards the level of the rent. In such conditions, Bucharest will be kept among the cheapest capital cities in Central and Eastern Europe from this point of view.