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Real estate: Office rental market may grow by 25% this year
The office rental market may grow by 20-25% in 2016 as a result of legislative changes and big consolidation of multinational company headquarters, said Alexandru Petrescu, managing partner ESOP Consulting.
According to Petrescu, 2016 may be the first in the stage of giving up low quality offices in Bucharest. Fewer company headquarters will be located in old communist apartment houses, in unsafe areas in case of earthquake or in buildings not protected against fires.
“Several factors with major influence on the office market will gather in 2016. There will be migrations in all office market segments in Bucharest, on the background of increased office offers: big company tenants will consolidate headquarters in the newest and best located office buildings in centre-northern and centre- western areas. Medium size companies will take their place in smaller central buildings erected in the last ten years, renting offices of 500- 2,000 sq.m.”, Petrescu said.
For companies with less than 50 employees there will be several modern office variants such as instant offices, business hubs, offices in small or middle size centres with more affordable rents.
The migration of companies with less than 50 employees from apartment houses will take place because of higher tax on properties for these buildings and the possibility of rent increase and harsher laws on quake risks and norms against fires.
According to ESOP, at least three pre-rentals will be announced in 2016: two big players in the banking field and one in the IT&C field want to consolidate offices and are looking for solutions for areas over 15,000 sq.m.
“In the next 2-3 years, offices located in houses or apartments in Unirii and Victoriei areas will no longer be attractive for the office market and we estimate they will return to the residential market, either for rentals or sale. Not consolidated and nor modernized villas will be probably sold in the residential market, except for renovated historic villas located in premium areas, which yield special image,”Petrescu added.
ESOP is one of the main real estate consultants and has been working for 15 years in the office and residential markets.