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Office non-occupancy rate in Bucharest falls to 9 pct in H1
The first half of the year saw the non-occupancy rate of offices in Bucharest drop close to 9 percent, compared with the rate of approximately 13 percent at the end of 2016 business-review.eu informs.
Louis-Maxime Juhel, director of office department at BNP Paribas Real Estate Romania, said: “The high demand was registered not only in office sector, but also in retail and logistic. The office market from Bucharest has a high potential, as in the first half of the year a record volume of signed contracts was recorded for 157,000 sqm, by 7,000 sqm more than the one registered in the same period of 2016. This year many of the new office buildings will be fully rented before finalization of construction works.”
Despite the delivery of new office buildings of A class, it’s estimated that in the following quarters the high level of demand for qualitative buildings can lead to a drop in the non-occupancy rate under 7-8 percent. In this case, the offices market will slowly transform in a landlords’ market.
The main factors of this demand don’t relate anymore to localization and rent. The elements that add value to a building, such as architecture, applied technology, ecological solution, become more and more important.
According to BNP Paribas, it’s a slight probability for office rents to grow, however, despite the high demand and the limited offer, we can expect the level of incentives for tenants to drop in the following quarters. It’s estimated that currently the stimulus packages represent 15-20 percent of the contractual rent, while in the long-term rental contracts the value can increase up to 25 percent.
Northern Bucharest area is the most active in the office market, but the analysts estimate that the market development model will change in the next 2-3 years due to the 200,000 sqm to be delivered in the central-western Bucharest area.